Published Fri, 28 Sep 2018 09:27:36 -0400 on Seeking Alpha
Purpose of this Post The purpose is this post is to describe why I recently began buying more shares in Cullen/Frost Bankers Inc. (CFR). The analysis is divided into five parts.
My CFR investment history Why CFR is considered a High Quality bank Business model and balance sheet review. Price-to-earning ratio overview Risks that threaten CFR Part 1: My CFR Investment History About five years ago I invested in a group of High Quality banks located in different geographies and of different sizes. Each had a distinguished history of Operational Excellence and returns on equity consistently greater than their cost of capital. CFR was one of those banks bought for this buy-and-hold bank portfolio.
In February 2016 I bought more shares in CFR a day after learning that CFR’s long-time CEO bought nearly $2 million shares at $48.93 a share. I wrote about this event in a September 29, 2016 Seeking Alpha post that compared the absence of insider buying at Wells Fargo (WFC) to the buying of shares by the CEOs/chairs at CFR, Citicorp (C), JPMorgan Chase (JPM), and KEY (KEY). Chart 1 below is a graphic from the September 2016 analysis. Data from www.openinsider.com.
Cullen/Frost's CEO’s purchase was especially compelling since he had already announced his retirement and owned a lot of CFR. He had little reason to accumulate more shares beyond a strong conviction that the bank's stock price was too cheap to ignore. He proved right. Chart 2 shows how... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|BANK OF AMERICA||28.99||10.8||2.69||0.60||2.04|
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