CHAPTER 12

Investing in Bank Stocks

The old idea of “permanent investments” exempt from change and free from care is no doubt permanently gone.

—Benjamin Graham and David Dodd, Security Analysis1

Buying a bank stock is different from buying an entire bank, of course, yet similar principles of analysis apply. As Fidelity’s Peter Lynch has famously said, “Behind every stock is a company.”2

So far this book has conveyed information intended to help buyers of entire banks or bank holding companies in M&A transactions. This chapter will provide additional guidance for partial acquirers—buyers of small, noncontrolling positions in one or more banks, especially banks undergoing mergers or divestitures.

All of the chapters so far can be used to make ...

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