INCOME, MARKETS, STRATEGIES
The 20% Letter
Tim Melvin is a 30-year plus veteran of financial markets. He is also the editor of The 20% Letter. Mr. Melvin uses rigorous quantitative analysis based on the principles used in deep value and private equity styles of investing to help investors compound their wealth using strategies designed to maximize profits and minimize risk. He uses in-depth research efforts to uncover special situation opportunities that can profit regardless of market direction. Mr. Melvin has also developed models for building alternative income portfolio that can help individual investors uses income producing portfolios previously available only to individuals. He believes that individuals have powerful advantages over institutions but are not taught how to use them. Mr. Melvin wants to be the one who helps individual investors stop taking entirely too much risk for too little return.
Predicting financial markets is a waste of time. We can make far more money reacting to what the market actually does. All my research shows that when the market allows you to buy good companies at bargain valuations, patient-aggressive investors can earn outsized long-term returns. With that in mind, I recommend Granite Ridge Resources (GRNT), suggests Tim Melvin, editor of The MVP Letter.
Spiking energy demand has combined with underinvestment in the oil and gas industry to create some massive profit opportunities in undervalued energy stocks. One company I like is TC Energy (TRP), formerly known as TransCanada Corporation, explains Tim Melvin, editor of The 20% Letter.
If we step back from the indexes and look at our two major market sectors—banks and real estate—we see a certain picture emerging. Most of the assumed “facts” surrounding both industries have been smoke, mirrors, and hype. One Real Estate Investment Trust (REIT) worth looking at is Highwood Properties (HIW), explains Tim Melvin, editor of The 20% Letter.
High-yield, high-quality bank stocks were recently as cheap as they were during the last three major bear markets – or sometimes, even cheaper. While our financial stocks have staged an impressive rally since then, we are not done yet. Banks have merely gone from ridiculously undervalued to the point of gross stupidity to merely deeply undervalued. I like Sandy Springs Bancorp (SASR), highlights Tim Melvin, editor of The 20% Letter.
Banks are currently trading at about a 50% PE multiple of the historical average multiple with a discount to the S&P 500 PE above 50%. Ever wonder why your local banks get gobbled up by the big banks? Because scale matters. Banks below $1 billion in assets are starting to feel a sense of emergency as margins are thin and competition is intense. They need to find a profitable niche that allows for high returns in equity and assets or sell their bank. Buying smaller banks and taking out costs (as much as 30% or more) and raising the ROA on acquired assets is still the best way to grow EPS for bank executives worried about how they'll grow. Shareholders in these small banks - that's us - often see big profits when takeovers are announced. Thanks to Covid and inflation, there is pent-up M&A demand on the part of both sellers and buyers. In this presentation, Tim Melvin will show you his three rules for evaluating small banks as potential takeover targets, his strategy, and even a few names and tickers to consider adding to your portfolio.