IBM kicked butt this quarter.  Google hit it pretty well.  No big concerns there.

Friday is a big day.  Own financials?  Tomorrow will be a big day for you.

Friday, July 17
Before The Open Actual First Call Yr Ago Yr/Yr Rev
A.O. Smith AOS 0.50 1.03
Amcol ACO 0.29 0.58
Badger Meter BMI 0.54 0.48
Bank of America BAC 0.28 0.72
BB&T Corp BBT 0.21 0.69
Bemis BMS 0.41 0.46
Citigroup C -0.31 -0.49
First Horizon FHN -0.33 -0.11
First Niagara FNFG 0.14
General Electric GE 0.23 0.54
Marshall & Ilsley MI -0.69 -1.52
Mattel MAT 0.00 0.03
Prosperity Bancshares PRSP 0.50 0.52
Webster Financial WBS -0.44 0.42

Other major business events and economic events scheduled for Friday:

Commerce Department releases housing starts for June, 8:30 a.m.
House Financial Services Committee hearing on the president’s proposed financial overhaul.
European Union foreign trade stats for May are released.

Dead Cat Bounce

I have been rather active in the last few days.  I have been trying to resist the urge to be greedy.  I am going against my mantra of “Don’t turn a trade into an investment and don’t turn an investment into a trade!”.  I did sell some long term plays last week, but avoided my past mistake of simply putting the proceeds on the sideline.  I sold out of some dead money positions (so I thought) and moved into a couple of firm plays that are also dividend plays (BLK, PFE, BP, GS).  BP has been a solid winner and has a yield above 6% a year.  Thanks for the BP call Teddy!!

I am currently in a TimothySykes.com short of DRGZ.  I will stomach the short term pain over the next couple of days since I don’t expect to be able to find shares to short.  Short them while you can.  I had some success with a past call where shares were available during the run but not during the fall (GWSC).

I am speculating on the earnings of FNFG (First Niagara Financial Group).  They are a regional bank (In my back yard) who have been clicking on all cylinders for the past 6 months.  They did 2 offerings during the worst of it.  Took TARP and were one of the first to pay it back.  They report earnings on Friday.  My option play is a speculation that the numbers will be good and will move this stock back up to the level the reached in late April.

I also placed a buy of ERX (energy bull).  This is a volatile way to play oil and the energy sector.  As I write this, half of my position sold off (7.48% gain in 1 day).  I am holding the other half to speculate on the EIA petroleum status report due at 10:30 today.

I have written many times about how much I like Corning.  I placed an option trade and the shares got caught in the market downturn.  I bought 10 more contracts.  I sold 8 of the 10 contracts yesterday for a 33% gain.  I am holding my last 9 contracts for a longer term play. If the recovery is real, Corning will be a big winner.  These are Nov 15 call options.  Plenty of time left and well into the money.

Bob

Check out my trading log to stay up to date with what I am up to.   I might not be writing lengthy articles regarding each move, but you can catch up on my thoughts with the Bob and Scott Twitter feed.

BTW: Scott has been on Vacation.  He’ll be back to share.

First Niagara appears to be clicking.  Their stock has lagged the rest of the sector.  Perhaps that is the case because too much is known.  It is almost like the upside is limited because the picture is clear.

I could equate that to the NBA where a prospect like Kwame’ Brown (I know, remember that stellar pick) will generate much more interest than a proven player like Shane Battier.  The one hit with the unknowns might make up for  5 busts.

The unknowns in C, BAC, BKK, STT, USB, etc….. could provide a greater long term upside than a steady company with good, but not stellar, upside.

First Niagara - FNFG

First Niagara Financial Group said it has become one of the first banks in the country to repay the federal government’s capital investment, freeing the Lockport-based bank from an array of restrictions the government placed on recipients.

Read More: First Niagara Bank becomes one of first in the nation to pay off federal loans : Latest Local News : The Buffalo News.

Taking my loss on my FNFG position (400 shares) and moving on today.  I didn’t like this as a “trade” as soon as a place it.  I do consider this a long term hold.  I will hold in my trading account as a solid regional player who could be in the catbird seat if the banking sector makes a full turn.

Upon a turn, I would expect some consolidation.  A stock deal of a strong regional for one of the “big banks” could help their ratios and would not be dilutive if the deal is right.  When banks get back to being banks and leave the CDS and MBS business to “investment banks” deals should come along.

First Niagara CEO

As I have mentioned before, you want your CEO to be discussing a sound business strategy.  In the current market, that would include being a buyer of assets when others are forced to sell assets.  With a nice sized war chest, FNFG is clearly on the hunt.

First Niagara CEO ready to compete.

If there is a lagging name in the banking group that I watch, it might just be FNFG (First Niagara Financial Group).  FNFG is well capitalized, is looking for aquisitions, and wants to repay the TARP money that they received ($184 million).   I first mentioned FNFG in my regional bank post on 4/1/09.

FNFG has raised more than $500 million in the past few months and recently acquired a number of branches from PNC.  They are expanding their footprint and operating like a traditional bank.   I like their chances.

FNFG is not a new story to readers of this blog.  They are a regional player and really highlight what is good about the banking business.

Plain and simple.  This is how you want a bank that you invest in to be talking…

To say we’re on a real high is an understatement. We’re absolutely clicking on all cylinders.

John Koelmel (4/28/2009)

CEO: First Niagara is in a ‘sweet spot’ – Business First of Buffalo: .

First Niagara Financial Group executive G. Gary Berner told a Congressional committee on Thursday that proposed legislation to correct mortgage abuses should be modified so it doesn’t inadvertently hamstring traditional loans to credit- worthy borrowers.

Speaking on behalf of the American Bankers Association trade group, Berner called for lawmakers to be cautious in considering any legislation so as not to cause more harm than good by over-regulating the industry.

He said banks like First Niagara never engaged in subprime or inappropriate lending, and were “part of the solution,” not the problem. And he told lawmakers to encourage a return to old-fashioned and safer banking habits, and to extend such practices, regulations and “duties of care” to everyone, including nonbank lenders, to ensure a fair and level playing field.

via First Niagara executive VP wary of proposed mortgage reform : Business : The Buffalo News.

Regional banks could be the greatest long term play that has been seen in more than 15 years. At the end of the S&L crisis, when the RTC stepped in, strong regional players jumped in to buy assets on the cheap. FDIC assisted takeovers are tantamount to discounted employee stock ownership plans.  You get a known asset at a discounted price.

Names to consider FNFG, FMER, IBOC.

Other banks to consider are BK and STT.