Thrift Conversions Are Classic Value Investing

During his recent interview with Tobias, Jim Royal Ph D, the author of The Zen of Thrift Conversions: How To Turn Hidden Bank Stocks Into Big Gains, discussed Thrift Conversions Are Classic Value Investing. Here’s an excerpt from the interview:

Tobias: That’s two of my favorite things, undervalued stocks with an activist involved. I think that that’s a really good way to get some pretty reasonably safe good returns in the market.

Jim: Yeah, exactly. You’ve got an activist who’s getting stock repurchase., and you’re buying below tangible book, and on and on and on. There’s just multiple, multiple ways to win here, I think. In a lot of ways, I think it’s classic value investing.

Thrift conversions are classic value investing, but I think perhaps, maybe unlike classic value investing, there’s a clear lifecycle in terms of you buy cheap, and then you get that sellout, that acquisition by a rival. There’s a clear endgame or a catalyst to that value that’s well understood. And yet, these things still pop up in the market. As I said, a couple months ago, I was buying a stock at 70% of tangible book value that was consistently profitable and had a ton of equity.

Tobias: Fantastic discussion. Absolutely fascinating.