…and I note that during April of 2020 (COVID!!) we were able to buy it around $14. Interest rates are the newest factor, and Jim noted that their earnings are getting into possible dividend cut territory…so, if they did cut, what’s the guess on how far?
Also, given a dividend cut to say, $.20 ( 29% below the current $.2825), what would be a good price to buy more TFSL?
Cheers!
Murph
BL Home Fool
(long TFSL)
I would not touch it.
At any price? $10? $8 $5?
I take it that you would recommend anyone holding TFSL should sell, correct?
Murph
TFSL has some structural issues. I don’t see anything beyond dividend to get excited. There are better opportunities out there. Clearly you are interested in the reasons, rather trying to pick an argument.
Good luck. caveat emptor
I take it that you would recommend anyone holding TFSL should sell, correct?
The question is not posted with any good/ positive intent. Still…
However difficult and painful, sometimes getting out of some situations/ positions are worth it. Here is one of my favorite quote
“Soros is the best loss taker I’ve ever seen. He doesn’t care whether he wins or loses on a trade. If a trade doesn’t work, he’s confident enough about his ability to win on other trades that he can easily walk away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you’re extremely confident, taking a loss doesn’t bother you.” – Stanley Druckenmiller
?“Fear is the traitor, And make us lose the good we oft might win, By fearing to attempt.” – William Shakespeare
Hey, Murph,
It’s a buy at some price, right?
But this is one that I wouldn’t be too hasty to get into right now. FWIW, the one-year chart looks absolutely terrible, so it will inspire no confidence in potential buyers almost regardless of whether anything is going right here.
I’d wait and see where they trim the dividend to (assuming they do), and then re-assess.
They still have a ton of money at the HoldCo (not the MHC) that could be used for repurchases. They’ll announce their dividend plans in short order (at this time of year), because they need pre-approval to pay out.
So this one is all wait-and-see from here for me. When does the company start repurchasing stock? That’s one thing I want to see.
Jim
They still have a ton of money at the HoldCo (not the MHC) that could be used for repurchases. They’ll announce their dividend plans in short order (at this time of year), because they need pre-approval to pay out.
From Thursday’s 8-K:
During the six months ended March 31, 2022, a total of 69,059 shares of our common stock were repurchased at an average cost of $17.23 per share. The Company’s eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,822,020 shares remaining to be repurchased at March 31, 2022.
I hope they more aggressive in April.
“I hope they more aggressive in April.”
Me too, Matt!
Jim
Hi Jim, in an earlier post you state,
They still have a ton of money at the HoldCo (not the MHC) that could be used for repurchases.
Can you explain the difference between the HoldCo and the MHC?
If they have all this cash (book value over $30/share!) at the HoldCo why can’t they just continue to pay out all of the earnings in dividends for a long, long, time.
I thought I understood this whole mutualization thing but to just decide to never take the second step has me confused. If the dividend is at risk of being cut wouldn’t they be better off taking the second step so they can release the war chest?
Randy
Long TFSL (for a long time now…)
Originally, when this was a ‘pure’ mutual, the shareholders were the depositors, the account holders.
Now, who are the shareholders of the MHC, versus the customers of the bank? Is every new customer at the bank an owner at the MHC, too?
Do new shareholders of the MHC ever come about, or is Mr. Sunshine and Blue Skies prepared to wait out other shareholders at the MHC or buy out shareholders at that level?
Hey, Randy,
The HoldCo is the coroprate structure that basically every publicly traded banks has, a corporate entity that holds the bank that does the actual loans, deposits, etc. The MHC is specific to thrifts, and it represents (or is supposed to represent) the majority interests in the two-step thrift.
They could continue to pay out all the earnings as dividends, as long as they get a non-objection from regulators and the MHC waives its right to dividends.
Jim
Rob–
Well, there aren’t shareholders/owners of the MHC. The MHC is supposed to represent the interests of that majority stake, which of course is not outstanding yet.
Becoming a customer of the bank gives you the potential to participate in the second-step conversion, if it ever happens. But depositors during this limbo stage have no claim at all on that underlying book value – until the bank decides to convert (same as in one-step conversions). During the first step of the two-step conversion, however, depositors were allowed a claim on some of the book value, a minority position in the bank, if they subscribed to the offering. In second step of the two-step conversion, they’ll gain the ability to make another claim on the remaining majority position in the bank. Then the MHC is dissolved because there is no long a majority stake to represent.
Jim
I was just wondering that between the first step and the 2nd step if there was a difference in the rights of a new customer at the bank to participate in the demutualization, versus a customer from the “fully mutual” time?
I’m just sort of brainstorming all the ways this guy is an “evil genius,” because as Randy brought up, this business of staying in-between is weird. It cannot just be a matter of job-safety, there have to be other angles to it, too.
I’m just sort of brainstorming all the ways this guy is an “evil genius,” because as Randy brought up, this business of staying in-between is weird. It cannot just be a matter of job-safety, there have to be other angles to it, too.
I, too, wonder about this. I found a blog entry that I think describes the situation pretty well (it was written 8 years ago but much still applies)
https://nocalledstrikes.com/2014/08/21/the-hidden-value-at-t…
We know TFSL has been run by the Stefanski family since its founding. Marc Stefanskis is now 68, I believe, and it’s not clear that any of his children have an interest in following in his footsteps. I think if/when a succession plan is announced we will have an answer regarding the second step.
It’s absolutely a question of it being a family legacy. The importance of the family aspect is mentioned repeatedly over time. And we all know the likely effects of a thrift becoming fully public.
Jim
Thanks Jim, but I still. Have to ask, who makes up the MHC? Officers / customers? How can they represent a group that doesn’t exist?
Randy
Here’s the verbiage from TFSL’s risk section:
Third Federal Savings, MHC, as our majority shareholder, is able to control the outcome of virtually all matters presented to our shareholders for their approval, including any proposal to acquire us. The same directors and officers who manage the Association also manage the Company and Third Federal Savings, MHC. The board of directors of Third Federal Savings, MHC must ensure that the interests of depositors of the Association (as members of Third Federal Savings, MHC) are represented and considered in matters put to a vote of stockholders of the Company. Therefore, Third Federal Savings, MHC may take action that the public stockholders believe to be contrary to their interests. For example, Third Federal Savings, MHC may exercise its voting control to defeat a stockholder nominee for election to the board of directors of the Company. Additionally, Third Federal Savings, MHC may prevent the sale of control or merger of the Company or its subsidiaries, or a second-step conversion of Third Federal Savings, MHC, even if such a transaction were favored by a majority of the public shareholders of the Company.
Best,
Jim
Thanks Jim and holy smokes!!!
So the management and officers of the company can basically do anything they want in the name of the non-existent MHC owners. Since the MHC owners are the majority, they could just give the company executives and officers large raises every year forever claiming that they are helping the depositors by keeping them happy.
So they supposedly represent the depositors and yet there are no depositors on the committee. They don’t represent the present shareholders or the officers but there are only officers on the committee.
How is that even legal?
Randy
A somewhat baffled long time TFSL shareholder.
Read the backstory on PBIP and Joe Stilwell in my book. Lots of self-dealing happened there at one point.
Jim