Today’s new Top Pick for 2014 is a bank that offers products and services to small and middle-market businesses, professionals, and individuals in the California counties of San Mateo and Santa Clara—the hot spots of technological innovation.
Avid Bank Holdings (AVBH)
From BankNewsletter.com
Avid Bank Holdings (AVBH) is a mini-power located in the hottest market in the USA—Palo Alto, California—home of Facebook. This bank has a great niche and great earnings power.
The stock trades just under book value and is worth two times book. That alone is enough to take a major stake in this bank now. It has just 4.2 million shares outstanding, so buy it slowly and use limits.
The recent private placement—at $9.75—seems to be a steal for all investors. The management team bought 25%. Were they giving themselves a gift when they sell for $20.00 in a few years? I would have to say yes.
I think Avid could have increased the issue price by at least $1-$2 a share more if the bank had done a public offering of stock. But management did save fees, and they did get it done. But a little more color would have been nice for current shareholders.
The bank has very strong asset quality—almost perfect. The company is about ten years old now, and management is very smart.
Buy this one all year under $11.00.
Douglas Hughes, Hughes Investment Management, www.banknewsletter.com, 888-814-7575, December 17, 2013