Welcome to Bankstocks.com, the premier free web site for news and commentary about the financial services industry. Whether you’re an industry insider, investor, or outside observer, the articles you read here are designed to enhance your understanding of the financial services business and the issues facing it.
Bankstocks.com is operated by hedge fund manager and former bank analyst Thomas K. Brown.
- 9-time top-rated bank analyst on Wall Street, by Institutional Investor magazine
- Host of American Banker’s annual Retail Delivery Conference
- Manager of hedge fund that invests solely in financial services companies
- Highly regarded thought leader within financial services industry
- Regular speaker at banking conferences, board meetings, and management offsites
- Host of annual “Financial Services CEO Retreat” held each fall in Arizona
Conflicts We Face and How We Resolve Them
As noted, our chairman operates an investment firm that invests in financial services companies. Bankstocks.com is a separate entity from that firm. As you might imagine, however, there can be tensions between what we post on this site and how our chairman manages his firm’s investment portfolios. You should be aware of that when you read this site. We have put in place a number of policies and procedures to minimize the conflicts between our Bankstocks.com postings and the investment adviser’s trading. In general, our strong bias toward is to resolve these tensions in favor of our chairman’s fund investors. Highlights of our policies and procedures include:
- Our chairman’s firm won’t trade in a stock immediately before, and immediately after, we post a piece about it on the site. To keep from benefiting from any volatility that our postings might create, our chairman’s firm won’t trade a stock for a full trading day before, and a full trading day after, we write about that stock on the site. For instance, if we post a piece on a company before the market opening, the firm will not have traded the stock during the entire prior trading session, and it will not trade the stock in the entire trading session that will occur that day. If we post a piece on a company in the middle of a trading session, the firm will not have traded that stock during the entire prior trading session, nor will it trade it during the current trading session, or the next day’s entire trading session.
- If we change our mind about a company, we won’t necessarily post a story to say so. The reason we don’t post updates is simple: we’re time constrained, and do not believe that providing follow-ups to past articles is the best use of a scarce resource. Even so, like all other investors, we change our minds about companies from time to time.
- There are times when our chairman’s firm might be sellers of a stock that we say good things about. We believe every word we post on Bankstocks.com. But there are other factors besides a company’s fundamental outlook that determine whether our chairman’s firm buys or sells the stock in that company. For instance, there might be limits to the size of the positions the firm can take in a stock. That means that if the firm has a maximum-sized position in a stock that is rising faster than its portfolio overall, the firm will have to sell that stock to keep the position below its limit—even though the firm is so bullish on the stock that it literally owns as much as it can. Here’s another example: suppose one of the firm’s fund manager decides to cut his portfolio’s overall equity exposure. One way he might do that would be to sell every stock in his portfolio in equal proportion—even the ones his most bullish on. (Such broad portfolio moves, and other such moves, would still be subject to the near-term trading restrictions, described above, that the firm imposes on itself when we post articles on individual companies.)The bottom line: there may be times (although it doesn’t happen often) where our chairman’s firm’s portfolio actions might literally be counter to what we say on the site. We disclose this in our disclaimers, of course. The reason we mention it now is so that you know we really mean it.
- Sometimes we’ll post positive articles about companies our chairman’s firm doesn’t own. There are a number of reasons that the firms won’t own stock in companies we like a lot. Valuation, for instance. There’s a difference between a company and its stock, after all. Thus there may be plenty of times that we might profile a company with a great strategy, led by a brilliant management, that is absolutely shooting the lights out—whose stock simply seems too rich for our chairman’s firm to want to invest in. That doesn’t mean, though, that the company isn’t as terrific as we say it is.
We know we have a responsibility to our readers, just as our chairman’s firm has a responsibility to its fund investors. We work hard to manage those responsibilities carefully—which is one reason we’re explaining all this to you now.
Matthew Stichnoth is the Editor-In-Chief of Bankstocks.com. In addition, he’s a member of Tom Brown’s investment firm’s Portfolio Team. Prior to joining Bankstocks.com in June of 2001, Matt ran a special-topics writing group at Goldman Sachs’ research department in New York. Before that, he was a staff writer and columnist in Bloomberg’s magazine group. Matt also spent several years writing and editing his own stock market newsletter. Before that, he ran the research desk at Kidder Peabody in New York. Matt has a BA from Vanderbilt University.