A Great Set Up in The Caribbean Sunshine

After nearly 20 years in the financial trenches, I've seen it all. I've weathered storms that would make even Lieutenant Dan shudder (personally and professionally). And while my portfolio spans the spectrum - from stocks across all sectors to bonds & commodities - it's the financial sector that's made its largest mark on me. I manage my own money and while I love learning about new companies or sectors, I typically find myself with a large percentage of my balance sheet in financials. Afterall, I “grew up” learning financials and so I’ve accumulated a decent amount of “wisdom” reading financials numbers, valuing their cash flows, and reading between the lines. Read “wisdom” as: I’ve experienced quite a few non-lethal doses of failure investing in them and live to fight another day.

Look at just the past 12 months and I can name off more than a few “failures”:

1. VLY Preferreds: Purchased a small position VLY Preferreds early in ‘24 around $22 and shook myself out of it in the spring for a small loss. They’re now at $25 and change.

2. VBNK: Built a small VBNK position in the spring around $10.50 and got impatient selling for a small gain, it’s now at $13.20.

3. NMIH: Medium sized position built in the mortgage insurer in very early ‘24 around $30 and got impatient selling for a small gain, it’s now at $40.

4. FHN: Bought a large position in FHN during the regional bank crisis when their TD deal fell out of bed in the high $9s. Sold with a high $12 handle too soon. It’s now at $15 and change.

5. WAL: Failure to launch/buy during the crisis at $20, again at $30, and again at $40.

And these are just some of the more notable ones, this year. Point being I’m far from perfect, but it’s from these “failures” that you learn. And that is a big part of why I started writing, to document, self-reflect, and grow as an investor.

But it hasn't all been red ink and regret. I’ve also had some winners this year:

1. C: For a minute I thought I was going to bottom tick it but built a medium position in the high $30s/low $40s in the fall of ‘23 and then kept adding building a large position as it ran up 40% and sits around 30% now.

2. WAL: A few of you made some money on this one with me. It was highlighted in April of ‘24 in the mid-$50s (after all those failures to launch) and now sits in the low $80s. Crushing the KRE index over the same time period.

3. NWG & BCS: I don’t know how or why I found UK banks but added a small position in Q1 of ‘24 and now sit up about 35% on the UK bank positions combined.

4. FIS: Before I had Victaurs this was a fun one. A complete disaster with a turnaround story and broken dreams that I bought in the low $60s. Turnaround story happened and recently exited at $79.

5. NU: And who could forget NU. From an unknown Brazilian “bank” to a powerhouse. Entered at $8.35, added all the way into the mid to high $9s building a large position, now trading at $14.50.

I write this just to say, I know financials, but I am human. I am constantly learning, constantly trying to improve, and constantly seeking feedback from the market on my hypotheses. As the Buddhist investors might say, the journey is the destination.

And recently I’ve come across what I believe to be a great set up in the Carribean sun. A bank with 20% plus EPS growth coming, a low-risk balance sheet, and big plans for delivering capital to shareholders. Where you ask?

For that, let’s ask Bad Bunny. Bad who?

Bad Bunny?

Most of you reading know that Puerto Rico has delivered famous people like Ricky Martin, Benicio Del Toro, Joaquin Phoenix, and Roberto Clemente. Some even claim J Lo but Jenny from the block was born in the Bronx. And if you’re like me you probably didn’t know who Bad Bunny was. But he is like mega huge in the pop world now. As you can see below, you are not likely to see him investing in banks nor are you likely to see this outfit at sell side conferences.

Source: Google

Bad Bunny, born Benito Antonio Martínez Ocasio, is not only a global music sensation but also a passionate advocate for Puerto Rico. He frequently uses his platform to highlight issues affecting his homeland, from political corruption to natural disasters. Bad Bunny’s love for Puerto Rico is evident in his words: “Puerto Rico’s relationship with music is everything. It’s an island full of talent and if you grow up there, you grow up living and breathing music.” He also emphasizes the importance of representing his culture globally, saying, “Going out there and giving it my all, not just for myself, but always to represent.” His commitment to his roots and his people is a testament to his deep connection with Puerto Rico. This includes a level of awareness on the issues in Puerto Rico, mainly around the frequent power outages, shoddy grid, and general malaise.

And if Bad Bunny is Puerto Rico’s #1 star & advocate right now (46 million followers on IG and 46 million on YT), this blog is meant to show you that becoming a Puerto Rican bank’s #1 advocate right now could be profitable. That Puerto Rican bank is Popular, Inc or BPOP.

Note: Bad Bunny’s financial advisor, if you’re seeing this check out BPOP. There is no better way to support your country than to invest in & support your local banks.