Year-end plans, and BOFI
What I plan to do for year-end, is to review each of my stocks, and talk about what happened with the stock since I bought it. Some will be losers and some winners.
I’ll start this post with BOFI.
I bought BOFI just over two years ago, taking my initial position at $28. It went pretty much straight up and hit $106 about 10 months ago, which was probably getting ahead of itself. It then fell (with a bounce or two) over about seven and a half months, to reach a bottom of about 65, all the time having no bad news at all. I bought more and more on the way down from about $90 to $65. It’s now back up to $78. With all those gyrations it’s almost exactly flat for the past year. I have a loss on what I added above $79, and a gain on what I added below $79. (There’s a bit more that I bought below $79). So on this year, I’m roughly flat. On my original investment at $28, I’ve almost tripled in two years.
Now let’s see what’s happening with the company. I have 12-month trailing earnings dating back every quarter from Sept 2011 to Sept 2014. Here they are:
What can we see from this? Well it’s a steadily increasing list, and a steadily rising upward slope. And even better, the slope is increasing! As the company has gotten bigger, instead of slowing down, the RATE of growth has increased.
Comparing last quarter’s trailing earnings to three years ago, it has more than doubled (from 2.01 to 4.18). Compared to one year ago, it’s up more than 50% (from 3.05 to 4.18). At the current price, the PE is 18.9, which isn’t bad for a company growing earnings at over 50%. I’ve let this company grow to an outlandish 14.5% of my portfolio.
Fletch pointed out the same thing about their Tangible Book Value. Not only is it growing, but the rate of growth is increasing. (I’m sure you’ve all read Fletch’s great write-ups on BOFI on this board, if not on the MF RB board).
Tom Engle (TMF1000), another well thought of member of the MF community, recently wrote a review of last quarter’s results on the RB board. I’m paraphrasing from his conclusions here:
The stock is currently priced at $79.63, which represents a PE ratio of 18.96 and a Price to book value of 2.89. I think they are attractively priced for long-term investors. I own them and plan on keeping them for the extreme long-term, which for me means that these shares will likely be inherited.
I never liked investing in bank stocks. I feel even the strongest of them suffer during recessions, but BOFI has such a strong loan growth with excellent loan discipline that I believe they will do much better than the average bank even during recessions. This one could be my next superstock. I am very happy I invested in it.
Thus, while this is a very high conviction stock for me, which is my largest position and which makes up 14.5% of my portfolio, it has essentially been flat for the past 12 months, while the earnings caught up to the stock price, which had gotten inflated. I have no regrets. It’s currently attractively priced and should continue to do well.
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