Stock price when the opinion was issued
Last week she was going to sell this, but this morning she woke to see the game has completely changed. (Shares soaring 32%.) One bank's loss is another's gain. Signature Bank is hugely accretive to NY Comm's earnings with total book value rising 15%. NY is paying down debt, reducing reliance on costlier wholesale borrowing and the yield is capital neutral, so there's no need to raise capital.
NYCB tried to calm investors today, but also at the same time said it was exploring asset sales. These situations are often binary. Either it survives, and the stock doubles, or more, or it goes to zero. We would consider any long position in options as exceptionally risky, essentially a lottery ticket. The stock is at 27 year lows. One thing to remember in the banking sector is that it runs on confidence. If confidence goes, the company often follows. We would not endorse such a trade unless one just wants a pure 100% speculation with money they don't care about.
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NYCB is the second largest multi-family portfolio lender in the US, it trades at 8x earnings, under book value and supports an ROE of 30%. We like that cash reserves are growing, while retiring debt and buying back shares. It pays a good dividend, backed by a payout ratio under 20% of cash flow. We recommend a stop-loss at $10, looking to achieve $15 -- upside potential over 21%. Yield 5.6%
(Analysts’ price target is $15.34)