the evolution of financial intelligence game changers

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Ken Burns on Jackie
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THE EVOLUTION OF FINANCIAL INTELLIGENCE
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WORTH.COM
VOLUME 25
|
EDITION 01
L E A D I N G W E A LT H A D V I S O R
|
DEERFIELD, IL
Should I
consider adding
local banks
to my stock
portfolio?
BY E.A. HORWITZ LLC
Left to right: Jay Brahin,
Vice President–Investments;
Robert Youman, Managing
Director; Ed Horwitz,
Manager; Gerald Horwitz,
Senior Portfolio Manager
E.A. HORWITZ LLC
1650 Lake Cook Road, Suite 190, Deerfield, IL 60015
FEATURED ADVISORS
Robert Youman, CPA, Managing Director
Jay Brahin, Vice President, Investments
NUMBER OF CLIENTS
1350
LARGEST CLIENT NET WORTH
$100 million
MINIMUM FEE FOR INITIAL MEETING
None required
224.632.4600
MINIMUM NET WORTH REQUIREMENT
$250,000 (for planning and
investment services)
METHODS OF COMPENSATION
Assets-based and fixed fees (planning
and investment services)
PRIMARY CUSTODIAN FOR
INVESTOR ASSETS
National Financial Services LLC
FINANCIAL SERVICES EXPERIENCE
Brahin, 30+ years; Youman, 25 years
PROFESSIONAL SERVICES PROVIDED
Planning, investment and insurance
products, investment advisory and
money management services
EMAIL
[email protected]
[email protected]
[email protected]
[email protected]
WEBSITE
www.horwitzadvisors.com
ILLUSTRATION BY KEVIN SPROULS
E.A. HORWITZ LLC
could be an investment right around the
corner from you—literally—that:
a) you know and trust, and
b) has products and a business model
you will have no trouble understanding.
That investment is your local bank.
Or, if not your local bank, one of more
than 7,000 banks and savings and loans in
the United States—which has more banks
per capita than any other country in the
world. While very low-profile, the stock
offerings of local banks have important
things in common that may make them a
complement to your portfolio:
W
When we think of opportunities in
the stock market, we tend to think
of really exciting areas like technology and social media. But there
Local banks may lack volatility compared to
other indices and sectors, and strive to pay
consistent dividends.
Regional banks are generally well-run businesses rooted in their communities and offer a
familiarity with customers and local businesses.
Their stocks may offer lower volatility compared to other sectors of the stock market.
Because of this, professional investors tend
to pass on them as too simple, or even boring. But for you, that could be a good thing.
You do not need a finance degree to understand how a bank works. It is a fairly
simple proposition. A bank gathers deposits,
then makes loans to good borrowers at
higher rates than it pays its depositors.
And, given your regional bank’s small size,
with little effort you can actually sit down
ABOUT US
W
with the CEO and discuss what makes the
bank unique. When you buy any stock, you
are buying a management team. So, it’s
important to know its players.
Additionally, many local banks build
enough capital to expand and repurchase
their own stock, which may indicate a return
of capital to shareholders in the form of dividends and buybacks. Local banks may also
offer a classic value investment compared to
other sectors of the market. Local banks,
considering all relevant factors, may trade
at lower than price-to-book value and
price-to-earnings ratios compared to other
ITH OVER 80 YEARS OF COMBINED EXPERIENCE, THE ADVISORS OF E.A.
HORWITZ LLC POSSESS A CONSERVATIVE INVESTMENT PHILOSOPHY
AND A HIGH SENSE OF INTEGRITY, PROVIDING TIME-TESTED ADVICE AND
STRATEGY. The firm follows simple guiding principles to help create individualized
and harmonious financial plans. Jay Brahin has been involved in the markets for three
decades, first from a commodity perspective, followed by securities. He has studied
technical analysis as an integral component of his fundamental approach to stock
analysis. Mr. Brahin works with high net worth individuals and retirement accounts.
companies within the same asset class.
Local/regional banking is a fragmented
market that has been consolidating for
years and should continue to consolidate
in the coming years. The result of this fragmentation and consolidation has produced
one group of banks that wants to sell, and
another group that wants to buy. That is
also good news for you. Banks that trade
at a significant discount to the average
takeover multiple of book value, may offer
an opportunity to include it in an investment portfolio.
Furthermore, local banks may lack volatility compared to other indices and sectors,
and strive to pay consistent dividends. Local
banks may offer returns through buybacks
and takeovers, with the average takeover
value being 1.38 times their book value at
the time of the sale.1 Banks that are sold
through a takeover may offer an investor the
opportunity to participate in any upside in
the price of the stock.
Local banks may be a complement to a
value investor’s stock portfolio. So, while the
latest biotech or cybersecurity offering may
grab the headlines, local and regional banks
may contribute to a balanced portfolio. l
He specializes in research and the selection of equities and bonds, following the Ben
Graham philosophy, "Look for value not fads; buy when others are selling." He bases
his decisions on personal research combined with consensus research from many
firms. Robert Youman has worked in the securities industry since 1991 as a financial
advisor and investment representative. Previously, he worked for KPMG, specializing
1
http://www.investopedia.com/articles/investing/100715/
regional-community-bank-stocks-next-big-thing.asp
National Financial Services LLC, Member NYSE, SIPC, is
an independent company not affiliated with Horwitz &
Associates. 749961.1.0
in audits of community banks. Mr. Youman lives in Oak Park, IL, with his family. l
WORTH.COM
F E B R U A R Y- M A R C H 2 0 1 6
113
Robert Youman, CPA
Managing Director
Jay Brahin
Vice President, Investments
E.A. Horwitz LLC
1650 Lake Cook Road, Suite 190
Deerfield IL, 60015
Tel. 224.632.4600
[email protected]
[email protected]
www.horwitzadvisors.com
REPRINTED FROM
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THE EVOLUTION OF FINANCIAL INTELLIGENCE
E.A. Horwitz LLC is featured in Worth 2016 Leading Wealth Advisors , a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed
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