Small Cap Financials

Discussion in 'Stock picks and trading strategies' started by xpiratesxcorex, Jan 6, 2008.

  1. xpiratesxcorex

    xpiratesxcorex Member weekly contest winner

    So here we go again.. indulging in the possibilities of the financials. I've come to the conclusion the pain could climax by mid this year the latest for financials. Being a fairly greedy individual I want to make some dough. I've come to the conclusion the best money from financials will be in the the small/mid cap range. Companies such as Citi really won't provide the upside I'm looking for. I've begun some screens/research but I'm yet to come to anything I would recommend.

    So here's my question....

    Does anyone know of any sound small/mid cap financials that are worth monitoring? Thanks. =-)
     
  2. Chubby Khabob

    Chubby Khabob Member

    financials

    mfi
    prs
    fcfc
    gfn
    cown
    nite

    banking

    qcc
    asrv
    bbx
    samb
    lbbb
    afsi
    ifc
     
  3. xpiratesxcorex

    xpiratesxcorex Member weekly contest winner

    In my research I came across WHI. If any of you are looking for a quick trade... they're going to be trading on the NYSE again... a probe by the sec ended... and they're trading with a p/e of about 3x. My DD is just beginning but this is looking pretty interesting from the get-go.
     
  4. netwrangler

    netwrangler Well-Known Member

    Ran a screen with these criteria:
    • Price above but within 2% of SMA15 [trying for a recent cross]
    • Sector = Financials [covers a lot more than banks, of course]
    • Price >= $5 [No penny stocks]
    • Mkt Cap <= $50B [I know, not exactly small/mid cap]
    • 3-month avg volume >= 100K [no thinly traded stocks]
    Came up with
    NLY which is a REIT

    RE & ACGL insurance/reinsurance firms in the small/mid area

    NBG (National Bank of Greece) with a $32B mkt cap
    and

    CIM which is a start up and is totally unproven. An AP report states, "According to Chimera's prospectus, it intends to initially focus on purchasing residential mortgage loans that have been originated by select, high-quality originators, including leading commercial banks."​

    The screen also yielded thrifts BKMU & IMB.
    They didn't look as interesting to me.
    Probably means they will be the ones that take off. :rolleyes:
     
  5. netwrangler

    netwrangler Well-Known Member

    Small Cap Financials: ACGL

    ACGL gapped up at the open today, filled in almost immediately, and then spent most of the day in the green, closing ~1% higher than yesterday's close.

    ACGL070107wedge.jpg

    I'd like to believe this is a falling wedge giving a bullish reversal signal.
    The lower line of the 'wedge' seems a little fuzzy.
    Maybe a 'double bottom' would be a better description.
    In any event, this looks like one to watch.

    Comments welcome.
     
    Last edited by a moderator: Mar 22, 2014
  6. Chubby Khabob

    Chubby Khabob Member

    Re: Small Cap Financials: ACGL


    Looks to me like a descending triangle with support around the 67 mark. And the average volume increasing too. Today's candle show buyers regaining intra-day control. No real divergences. Next support from a break of 67 is likely the 64 range. That's a good 3 dollar move.

    Chubby of Love.
     
  7. netwrangler

    netwrangler Well-Known Member

    Re: Small Cap Financials: ACGL

    Yup, I see the 67 & 64 support.
    I'm looking for a break in the other direction, but I figure it could go either way with this pattern.
    Would need to break 71 or so to break out on the up side.

    BTW: Thanks for your feedback.
     
  8. Chubby Khabob

    Chubby Khabob Member

    Re: Small Cap Financials: ACGL

    I wonder how KTHOMLLC would handle this as an options play?
     
  9. aiki14

    aiki14 Well-Known Member won april/06 simulator won weekly contest 13x won feb/07 simulator won jan/07 simulator won nov/06 simulator won mar/07 simulator

    I agree with chubby that it has the appearance of a descending triangle, and the supports are there at 64 and 67. I do like the fact that the close today was above yesterdays HOD, in a choppy market. It did come back $.11 after hours but if the market starts up you may see the breakout your looking for. It traded in close correlation to the indices until 3:45 but was trending up into close when the dow sold off a little in the last few minutes, I'd say that's a good sign as well.
     
  10. aiki14

    aiki14 Well-Known Member won april/06 simulator won weekly contest 13x won feb/07 simulator won jan/07 simulator won nov/06 simulator won mar/07 simulator

    Re: Small Cap Financials: ACGL

    I'd be interested in that as well. There's not a lot of open interest except at the money and above the money on the call side. I would only play the put side against a long position in the stock, right now you could limit your downside to around 5% with mar 70 puts. If you get your upside break you'd need 73.40 to break even.
    I don't think this stock has the beta to warrant an options play.
     
  11. netwrangler

    netwrangler Well-Known Member

    Re: Small Cap Financials: ACGL

    • Given the low open interest (500 ATM calls, 62 ATM puts, no open interest more than 1 strike away)
    • Given a total option volume of 3 today (1 call and 2 puts)
    • and Given ATM volatility in the 27-29 range,
    I don't think options are the preferred vehicle here.

    Historic volatility is in the 23-25 range, so selling options is slightly preferred over buying them in theory. That said, the historic and implied volatilities are close enough to be covered by the spread. Going long or short the stock looks like the better plan - especially since option prices tend to get really sticky in a thin market.

    All of that is IMO, of course.
     

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