A Bank Stock Investor's Case of Follow the Leader
.jpg "Blue Ridge Bankshares (BRBS)")
In any field, there are certain players who are just plain Good at Their Game.
One of those players in the Game of Community Bank Stocks Investing is a gentleman from the Keystone State named Ken Lehman.
Lehman's Game is pretty straightforward: Find a troubled bank that has good deposits and a capable management team open to a turn around and exit strategy. Buy 40% of the stock cheaply, fix the problems, and maximize value through a sale of the bank.
Of course, most of us do not have the financial means or other wherewithals Lehman has to play like this, but we all can benefit from riding his tail wind. Over the past 20 years, this GOAT has coached 15 different banking teams from limping to Over the Finish Line.
That's why I am bullish on Blue Ridge Bankshares.
Disclosure: As of this posting, I own shares of BRBS and may subsequently either dispose of them or purchase more.
Prospective Buyers
| I suspect these two banks are most likely to acquire Blue Ridge, as its $856M in Richmond area deposits would solidify their own presence in a market they both covet.
Atlantic Union Bankshares, Glen Allen, VA (AUB)
TowneBank, Portsmouth, VA (TOWN)
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Financial Snapshot
†as of 06/30/2024 |
* Adjusted for warrant conversion, BRBS tangible book value per share is currently estimated to be $3.81
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Luminaries
| G. William Beale, President and CEO Kenneth Lehman, Shareholder with 40% ownership stake
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Gold Stars
| Lehman's Leadership at Blue Ridge Bankshares began when he agreed to invest $50M in a December 2023 private placement. That gave other investors confidence, enabling Blue Ridge to raise $150M. Blue Ridge's CEO, Billy Beale, had come out of retirement to play the turnaround game here just seven months earlier. I'm bullish on Beale, because in his prior capacity as CEO of Bowling Green's Atlantic Union, AUB stock increased nearly tenfold. Some of Blue Ridge's wounds will heal naturally with time. For example, the prior CEO had invested in longer term securities, which suffered temporary losses when interest rates rose. As time passes and interest rates continue to drop, the Available For Sale Securities (AFS) / Accumulated Other Comprehensive Income (AOCI) marks against this portfolio will zero out. If Beale succeeds in helping Blue Ridge recover to even marginal profitability, its book value can grow to $4.50 in two years, enabling the company to sell for 125% of book or more. This means that investors who buy BRBS at today's $2.82 price could see its value grow to $5.50 or more in as little as two years for an exhilarating 95% return. | ||||||||||||||||
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