Investcraft – The Art of Investing

Wow, what a year it’s been for stocks! I hope anyone who has been keeping up with Investcraft has profited nicely. For those of you who are just starting to follow this blog, let’s recap what I’ve been writing about this whole year. I think the story this year, at least for Investcraft, has to be banks. I have pounded my fist repeatedly about the potential of many regional banks as well as national banks.

If you take a look at my current portfolio, you will see that I am still weighted heavily in the financial/banking sector. I took some money off the table and cashed out on some of the regional banks. That’s not to say that I am bearish on them. I am still very bullish on banks — but a smart investor also knows how to diversify and take profit when necessary.

With that said, here is my current portfolio going into 2011.

ALBCF – Alibaba.com Limited
ARUN – Aruba Networks, Inc.
ARX – Aeroflex Holding Corp (IPO)
BAC – Bank of America Corp
BPOP – Popular, Inc.
BPOPO – Popular, Inc Preferred A
C – Citigroup, Inc.
ETFC – E*Trade Corp
FBCM – FBR Capital Markets Corp
FHN – First Horizon National Corp
FLT – FleetCor Technologies, Inc. (IPO)
HBAN – Huntington Bancshares Inc.
LOCM – Local.com Corp
LPLA – LPL Investment Holdings, Inc. (IPO)
SINA – Sina Corp
SKS – Saks, Inc.
SNV – Synovus Financial Corp
YHOO – Yahoo! Inc.

Notes:

SINA – I am particularly intrigued by SINA. They operate a microblogging site called Weibo which is similar to Twitter. However, since Twitter is blocked in China, Weibo has become the leader in the microblogging space there. With the valuation that Twitter is getting these days, it appears to me that Weibo’s value hasn’t been fully recognized in SINA’s current share price of $71.

YHOO – Another value play here in the Internet space. I think that at some point, investors will have to recognize that the sum of YHOO’s different parts is worth more than YHOO together. YHOO owns Yahoo! Japan and has a 40% stake in Alibaba (which owns Taobao aka eBay of China, Alipay aka Paypal of China, and Alibaba.com). Not to mention Yahoo still owns some extremely popular and sticky properties in Yahoo Finance, Yahoo Sports, etc. I hope Carol Bartz is able to reinvent Yahoo! into something new — and shed the old, tired image of Yahoo! that many investors have grown accustomed to.

BAC, C – Large banks are going to recover and start paying dividends again 2011. When that happens, look for the stock price to recover considerably. Particularly, BAC looks like a real bargain (see my earlier article on BAC). The uncertainty surrounding certain banks are going to create some “fear factor” that will keep the stock prices volatile on these banks. But once the dividends start kicking in, it’ll be impossible for analysts to ignore and the stock price should follow shortly.

Regional Banks – A few regional banks paid off their TARP. Many others will follow and this is going to provide a spark for all regional banking stocks. SNV looks like a potential takeover/buyout candidate. Keep your eyes peeled for mergers and acquisitions in the smaller regional banks.

FINAL PREDICTION

ETFC – I have one prediction for 2011. I believe ETFC will be bought — most likely by Ameritrade (NASDAQ: AMTD) or Charles Schwab (NASDAQ: SCHW). It’s impossible to ignore E*Trade’s 2.7 million brokerage accounts and 4.2 million total accounts. I bet SCHW and AMTD are both salivating at the thought of adding that many accounts to their customer list. Mark my words, I truly believe this will happen in 2011. I don’t know what price but it’s going to be better than the $16 that it’s currently trading at. I suspect the buyout price will be at least $25. If you twist my arm and force me to guess when this buyout happens, I would have to say Q2 2010. Of course, I could be completely wrong so take it for with it’s worth — if nothing, it’ll be entertaining to see if I’m right or wrong about this prediction.

Good luck everyone and as always, do your own due diligence! May you all have a prosperous 2011. Happy Holidays!