Bofi earnings

When I sold out of Bofi, I explained that I was worried about marked slowing in their growth.

<iWhy have I been selling? Well, Bofi’s tangible book value growth rate has slowed each quarter for six quarters in a row, from 36 to 34 to 32 to 30 to 27.5 to 25.5 to 24%. Its efficiency ratio has risen from 31.7% in Mar to 38.3% and 38.9% in June and Sept. Its growth rate of earnings per share the last two quarters has slowed down to 16%.

They just announced results. Let’s see how they did.

tangible book value growth rate has slowed each quarter for six quarters in a row, from 36 to 34 to 32 to 30 to 27.5 to 25.5 to 24%.

This quarter they continued the descent to 22%.

growth rate of earnings per share the last two quarters has slowed down to 16%.

This quarter they continued the descent to 13.6%.

They didn’t announce their efficiency ratio yet.

I have no regrets about selling.

Saul

16 Likes

Hello Saul,

They didn’t announce their efficiency ratio yet.

The efficiency ratio for the past year was 37.27%

Best regards,

Mike

I have not yet had a chance to listen to the conference call…does anyone know whether the ongoing litigation was mentioned and, if so, what management said about it?

thanks

to quote a wise man “We all often worry when stocks we have sold go up. I try to ignore them and figure that once they are sold they don’t matter any more. I’d like to post this great quote from Huddaman: “I don’t really need to be right for the stocks I sell, I just need to right about the stocks I own.” Boy! Doesn’t that really say it all! It simply doesn’t matter what happens to a stock after you sell it. You can’t hold all the stocks in the market. Some stocks you don’t hold are going to go up. A lot! So what!!! The only thing that matters is what the stocks you are holding do!”

Key Metrics
Tangible book value: $11.72 per share (FY 2017.Q2 actual) vs. $9.60 per share (FY 2016.Q2 actual) [+22.1%]
Total assets: $8,167.9 M (FY 2017.Q2 actual) vs. $6,662.2 M (FY 2016.Q2 actual) [+22.6%]
Loan portfolio growth YoY: $1,166.2 M, [+20.7%]
Deposit growth YoY: $1,410.7 M, [+27.1%]
Non-performing asset ratio: 0.43% (FY 2017.Q2 actual) vs. 0.55% (FY 2016.Q2 actual)

I know they are down in after hours with these good earnings results. I’ll sell if there is no pop or a drop after the lawsuits are settled. We’ll see if the H&R Block deal brings in a good next couple of quarters. I guess you’ll keep one eye on it too.

Just glad you decided to get into oil Saul. It is going to be volatile, but I’m betting this administration (the President and the ExxonMobile CEO for the last 10 years, I mean Secretary of State) is going to help the Koch brothers and Russia by making the oil prices go up. This is a market sector point, not a political point. I think being in the right sectors at the right time by far decides your fate more than the right stock.

4 Likes

Hi F1Fun

I’m betting this administration (the President and the ExxonMobile CEO for the last 10 years, I mean Secretary of State) is going to help the Koch brothers and Russia by making the oil prices go up.

It’s possible and certainly the Secretary of State might but I remember hearing DJT publicly complaining about expensive oil and blaming the government for being held hostage by OPEC and not doing anything about it when oil was 100-150. Perhaps between the two they will generate a goldilocks scenario for oil prices.

This is a market sector point, not a political point. I think being in the right sectors at the right time by far decides your fate more than the right stock.

I’d be careful here - it means that you would have to select the sector and get sector rotation timing on cyclical investments right every time.

Saul tries to avoid cyclical businesses and actually Warren Buffet says the opposite - concentrate on the stock selection not the sector - he makes the point that cars and aviation did very well in the 20th Century but 80% went bust and all you see are the survivors. He adds you would be better off shorting horses than going long on airplanes and cars.

This could be a great opportunity for infrastructure and O&G comeback and I’m invested in it but I’m not planning on cyclical rotation timing etc. It’s either a value play or a one off growth play to me (or in some cases a yield play for income) but it isn’t a trading and timing play for me.

Ant

4 Likes

The efficiency ratio for the past year was 37.27%

The transcript said:

“The efficiency ratio was 35.8% for the second quarter of fiscal 2017”

…does anyone know whether the ongoing litigation was mentioned and, if so, what management said about it?

The following is Garrabrants statement from the transcript regarding this, all sounds good to me…“one of the trolls”, love it:

I’ll now provide a brief update on our litigation. As I said last quarter, I’ll not spend much time on this, because these lawsuits are old news. The events alleged by disgruntled and apparently from his latest court filing, now chronically unemployed former Junior employee Erhart happened two years ago by his account. One of the world’s largest law firms conducted an independent investigation of his allegations and found his allegations to be without factual basis and cleared management of the alleged wrongdoing.

Subsequently, the Bank has completed two record-setting fiscal years, two successful quarters after the close of our most recent record-setting fiscal year, close two deposit acquisitions that both required regulatory approval, successfully completed three mid-cycle examinations, two full annual examinations, multiple Federal Reserve regulatory examinations, and received regulatory non-objection in the last six months to launch a refund advance product with H&R Block.

The Bank remains in a strong regulatory standing with no enforcement actions, has not been fined a single dollar of any regulatory agency, and is not been required to modify its products or business practices. Additionally, we currently do not foresee any future impact to the underlying business as a result of these frivolous lawsuits and the short seller Internet trolls fake news hit pieces.

Our management team and employees remain focused on running the business. However, despite all the time that is passed and all the positive results in our business since these outright fabrications have been published in lawsuits and Internet troll fake news hit pieces, we still see activity from at least one of the trolls.

Recently, an attorney who represents one of the trolls, who wrote many defamatory fake news blogs over the last couple of years called under false pretenses one of our largest shareholders pretended to be a mutual fund interested in investing in BofI and asking for information about that shareholders current ownership.

I raise this issue to note of the short-selling conspiracy is likely still active. All shareholders should be alert for suspicious activity and report this activity to us. We are dedicated to holding these individuals and funds accountable for their actions, and each report of their misbehavior will assist us in holding them accountable.

15 Likes

BOFI hits 52 week high on a two day market down trend, up 6-7%. Seems like pretty strong support to me! The squeeze is coming.

3 Likes

I like the market’s reaction but since I am overweight the name I’m taking the opportunity to sell some covered calls as a hedge.

Rob

I think I know that “one of the trolls” :wink: