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Tim McElvaine & Greek Banks


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Apparently according to Tim's March update he picked up a Greek bank.  An interesting pick for a deep value guy.  The biggest one, NBG, has operation through the region including Turkey and the Balkans.  If Greece does not drop out of the Euro, then this may be a good time to pick a bank that has regional exposure to emerging markets like Turkey. 

 

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Apparently according to Tim's March update he picked up a Greek bank.  An interesting pick for a deep value guy.  The biggest one, NBG, has operation through the region including Turkey and the Balkans.  If Greece does not drop out of the Euro, then this may be a good time to pick a bank that has regional exposure to emerging markets like Turkey. 

 

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I'm sorry to say, but if Tim McElvaine honestly thinks that this is value investing, then he has lost his mind.

 

I wrote a post about banking and Greece on these very forums awhile back.

 

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2307" data-ipsquote-contentclass="forums_Topic" 19041#msg19041

 

Unless you're Greek, or well versed in Greek property and lending standards then I would stay the hell away from any Greek banks. Remember that Warren Buffett lost $240 million on Irish banks in 2008. From his annual report.

 

I made some other already-recognizable errors as well. They were smaller, but unfortunately not that small. During 2008, I spent $244 million for shares of two Irish banks that appeared cheap to me. At yearend we wrote these holdings down to market: $27 million, for an 89% loss. Since then, the two stocks have declined even further. The tennis crowd would call my mistakes "unforced errors".

 

Basically, Irish banks lied through their teeth about the quality of their loan books. The Irish Financial Regulator and the Irish Stock Exchange were complicit in condoning, and even covering up in this deception. Buffett obviously only read financial statements and wasn't aware of the political and regulatory shenanigans that were going on behind the scenes until it was too late.

 

Maybe NBG is fine, I'm just saying you would really want to know your stuff before you went anywhere near it.

Greece's sovereign credit rating has been cut to junk status, even by the credit rating agencies. If sovereign debt is junk, then they're going to have to invent an all-new, sub-junk rating status for Greek banks. Also, knowing that the Greek government lied to their European partners about the extent of their debt crisis, I shudder to think what skeletons could by lying in the closets of the Greek banks.
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