Author Topic: BPOP - Banco Popular  (Read 3850 times)

PlanMaestro

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BPOP - Banco Popular
« on: January 24, 2013, 10:22:27 AM »
It took me some time to get comfortable with the very weak Puerto Rican economy and a dilutive capital injection. But it looks like the credit indicators (NPLs, NPAs, 30-89) are finally starting to relent and capital ratios are improving.

http://finance.yahoo.com/news/popular-inc-reports-net-income-130000110.html

Dominant position in Puerto Rico facing a weakened competition after the crisis. Already profitable with a PTPP probably in the $760 million range (too many one-offs), that could make it a 1.3-1.4% ROA bank in a more normal environment.

At 0.7x TBV and 3x PTPP it's very cheap.

Common equity per share    $39.35
Tangible common book value per common share (non-GAAP)    $32.55
Tangible common equity to tangible assets (non-GAAP)       9.38%   
« Last Edit: January 24, 2013, 10:37:37 AM by PlanMaestro »

constructive

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Re: BPOP - Banco Popular
« Reply #1 on: January 24, 2013, 10:35:35 AM »
How much PR bonds do they hold? What will be the effect on BPOP if PR is downgraded to junk?

http://www.bloomberg.com/news/2012-12-17/puerto-rico-facing-junk-has-worst-year-since-08-muni-credit.html

PlanMaestro

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Re: BPOP - Banco Popular
« Reply #2 on: January 24, 2013, 10:53:10 AM »
How much PR bonds do they hold? What will be the effect on BPOP if PR is downgraded to junk?

http://www.bloomberg.com/news/2012-12-17/puerto-rico-facing-junk-has-worst-year-since-08-muni-credit.html

On August 8, 2011, Moody’s Investors Service downgraded the rating of the outstanding general obligation (GO) bonds of the Commonwealth of Puerto Rico from ‘A3’ to ‘Baa1’, with negative outlook. Moody’s new Baa1 rating is at par with Fitch’s BBB+ and one notch above the BBB rating Puerto Rico received from S&P last March when the latter upgraded Puerto Rico’s credit rating for the first time in 28 years.

At December 31, 2011, the Corporation had $1.3 billion of credit facilities granted to or guaranteed by the Puerto Rico Government and its political subdivisions, of which $0.1 billion were uncommitted lines of credit. Of these total credit facilities granted, $1.2 billion were outstanding at December 31, 2011. A substantial portion of the Corporation’s credit exposure to the Government of Puerto Rico is either collateralized loans or obligations that have a specific source of income or revenues identified for their repayment. Some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services or products, such as water and electric power utilities. Public corporations have varying degrees of independence from the central Government and many receive appropriations or other payments from it. The Corporation also has loans to various municipalities in Puerto Rico for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment. These municipalities are required by law to levy special property taxes in such amounts as shall be required for the payment of all of its general obligation bonds and loans. Another portion of these loans consists of special obligations of various municipalities that are payable from the basic real and personal property taxes collected within such municipalities.

Furthermore, at December 31, 2011, the Corporation had outstanding $158 million in obligations of Puerto Rico, States and political subdivisions as part of its investment securities portfolio. Of that total, $154 million was exposed to the creditworthiness of the Puerto Rico Government and its municipalities.

PlanMaestro

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Re: BPOP - Banco Popular
« Reply #3 on: January 24, 2013, 10:58:01 AM »
Investors presentation: http://www.snl.com/Cache/1500045935.PDF?D=&O=PDF&IID=100165&Y=&T=&FID=1500045935

Check EVERTEC the transaction processing subsidiary: 48.5% stake carried at $74 million; $24 million cash dividend; adjusted EBITDA first 9 months 2012 $117.8 million.
« Last Edit: January 24, 2013, 10:59:32 AM by PlanMaestro »

constructive

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Re: BPOP - Banco Popular
« Reply #4 on: January 24, 2013, 12:34:18 PM »
Sounds pretty good.

Kasper Gutman is short BPOP, you may want to check out his stuff.

http://stableboyselections.com/2012/11/30/its-up-to-the-ratings-agencies-whether-puerto-rico-will-fail-its-really-that-simple/

Despite the limited risk from PR downgrade, I wouldn't want to be holding a large position when a downgrade hits, since that seems like a predictable negative catalyst.

PlanMaestro

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Re: BPOP - Banco Popular
« Reply #5 on: January 24, 2013, 01:10:18 PM »
Thanks. Hey I wasn't long, but to be short BPOP at those prices? Not a good idea.

Sounds pretty good.

Kasper Gutman is short BPOP, you may want to check out his stuff.

http://stableboyselections.com/2012/11/30/its-up-to-the-ratings-agencies-whether-puerto-rico-will-fail-its-really-that-simple/

Despite the limited risk from PR downgrade, I wouldn't want to be holding a large position when a downgrade hits, since that seems like a predictable negative catalyst.
« Last Edit: January 24, 2013, 01:16:58 PM by PlanMaestro »

luck

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Re: BPOP - Banco Popular
« Reply #6 on: February 16, 2013, 10:39:49 AM »
interesting idea and interesting article. just noticed that stableboy/kasper is already at -50% on his short in a few months and second curve, paulson, and valinor all seem to be betting against him per the just released 13f's.

PlanMaestro

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Re: BPOP - Banco Popular
« Reply #7 on: April 09, 2013, 05:11:37 PM »
Evertec is selling about 21.1m shares, or 26.5 per cent of the company, at a price range of $18-$20.

muscleman

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Re: BPOP - Banco Popular
« Reply #8 on: October 16, 2013, 09:56:58 AM »
It took me some time to get comfortable with the very weak Puerto Rican economy and a dilutive capital injection. But it looks like the credit indicators (NPLs, NPAs, 30-89) are finally starting to relent and capital ratios are improving.

http://finance.yahoo.com/news/popular-inc-reports-net-income-130000110.html

Dominant position in Puerto Rico facing a weakened competition after the crisis. Already profitable with a PTPP probably in the $760 million range (too many one-offs), that could make it a 1.3-1.4% ROA bank in a more normal environment.

At 0.7x TBV and 3x PTPP it's very cheap.

Common equity per share    $39.35
Tangible common book value per common share (non-GAAP)    $32.55
Tangible common equity to tangible assets (non-GAAP)       9.38%

Hi Plan,
    I am looking at this bank right now. It seems to me that as they aggressively get rid of the NPA, the PPTP is dropping as well. If we use the PPTP of the Q2 2013 data multiplied by 4, the one year PPTP would be around 590 million, which makes the current price/PPTP ratio to be around 4.1, which is less cheap than a few months ago.
   So at current price, maybe it is a potential 2x? The other way to measure the upside is to use its current total asset multiplied by your expected 1.3% ROA. Then we get to 480million per year net income in a normalized environment. Am I missing something here? :P
   I can't find any valuable info regarding its TARP, except one slide of its presentation saying that the TARP has been dealt in a way that is most shareholder friendly. Do you have any info?


Thanks!
MM
« Last Edit: October 16, 2013, 09:59:02 AM by muscleman »

muscleman

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Re: BPOP - Banco Popular
« Reply #9 on: November 30, 2013, 10:51:36 AM »
I have acquired a 10% stake in BPOP around $26. I have been following PlanMaestro for a few years and he almost always give decent picks on bank stocks. ;D