Magazine article American Banker

A New Value Fund Is Betting on Banks, 'Banks in Disguise'

Magazine article American Banker

A New Value Fund Is Betting on Banks, 'Banks in Disguise'

Article excerpt


Signaling that interest in bank stocks may have life yet, American Data Services last week launched a mutual fund to invest in banks-and what its managers call "banks in disguise" - that they say are undervalued.

The Imperial Bank Fund is one of several mutual funds administered by American Data Services, a shareholder services company in Hauppauge, N.Y. David Allaire and Michael Laliberte of Retirement Planning Co., Providence, R.I., will advise the new fund.

Mutual funds that focus on financial institutions have flourished in the last few years. According to Lipper Analytical Services Inc., there were 59 financial mutual funds with $23.27 billion of assets at the end of 1998. That's up from 38 with $16.83 billion at the end of 1997.

And some predict that more such funds will be on the way as more investors are drawn to the sector by consolidation, attractive stock prices, and favorable market conditions.

That's what Mr. Allaire, 33, and Mr. Laliberte, 34, are banking on. And they cite the classic reason for bank stock investment.

"Bank stocks do offer considerable value," Mr. Allaire said. "Consolidation and low valuations make the sector too compelling to ignore."

Though consolidation in the industry has slowed, Mr. Allaire said he has no doubt that it will pick up. "Smaller banks will have to merge with larger banks in order to compete," he said. "It's one of the best ways for banks to increase their earnings and cut costs."

Because of this, 65% of the Imperial Bank fund will be invested in bank stocks. The other 35% will be invested in "banks in disguise," Mr. Allaire said.

Banks in disguise are companies with strong bank-like features that have strong business operations and takeover appeal. Merrill Lynch & Co. is commonly known as a brokerage company, but they do investment banking, credit cards, and insurance, said Mr. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.