[KerryJones]

In general I agree that banking sector is definitely not strongly in my circle of competence, but on my only long-term bank I'm in I've made 100+% ROI within a couple of years. That could certainly be luck. To give advise on what I should do investing seems a bit premature with no more information -- even on banking stocks.

I did make a mistake in previous comment and used the word assets instead of Total Equity. The same principle applies -- FDIC will sell their assets, likely at a discount.

Depending on the discount of those assets will determine how much total equity they have. Currently, their assets over liabilities is large, so there would have to be significant underselling of assets.

My original thesis made it clear I was talking about 40% discount on their equity, I didn't make it clear in the subsequent thread.

I.e. if bought at the last price ($40) their assets priced them in some range between $150-220/share (if they were sold off). So they would have to have a significant discount to their assets in the last 2 months since they reported to lose that much.

In my book and using Graham's term, I was valuing this as a cigar-butt company.

[bjacokes]

You keep referring to this 40% number and calling it a "significant discount", when in actuality it's only a 7-8% decrease in asset value that would be needed to wipe out shareholders ($211B assets vs $195B liabilities on their latest balance sheet). In your original comment you mention the bank selling assets at a 8.5% discount as a point _in favor_ of your thesis. You seem to not only be missing the contradiction there, but also making a vaguely optimistic case for investors getting money back in an asset firesale.

I don't mean to dunk here, I just get nervous seeing someone propose a super-high-variance trade that goes empirically wrong an hour later, and then quote Benjamin Graham. As the responder above said, given the size of the dodged bullet you should really be updating your priors on investing strategy, but you seem to barely even regard your thesis as mistaken.

[KerryJones]

The 40% number was the calculation I did off Total Equity.

I accidentally mentioned a discount to assets once, but that was it. I did mention the 7-8% off some of their assets. It is in favor of my thesis because the valuation included that and was still far below the value with the 8% included in it.

It didn't go empirically wrong an hour later -- that is factually false. What happened an hour late is the bank went under -- but that doesn't mean investors don't get their money back (and Benjamin Graham did exactly this, and I'm not trite about my research or reading a quote here and there). He did it with 100+ companies at once after the great depression, many of them didn't end up making him any money, some did, many were about net neutral or small declines after they "failed". Again, you seem to be missing that the outcome was incorporated in my original thesis, but the price dropped significantly lower.

"The size of the dodged bullet" -- is a terrible, exaggerated hyperbole. A bullet would be if I was recommending a trade that would make me blow up, or 100% of my trade. I didn't recommend a trade at all (for one), I mentioned that I was hoping to get into it, and with the portion size, even if it came out to nothing, would be nothing close to a bullet.

While I do think I've updated my priors, it's very unclear what you think I should be updating? Again -- the part that I was wrong about was accounted for in both directions in the investment thesis. I was okay with it surviving or going under, I thought it would survive. I was very wrong in that belief that it would survive, but I was okay with it not surviving.

I could be wrong about any money being returned to shareholders -- which is accounted for in the sizing of the bet I had hoped to place. In the long run, I think that the learning opportunity I would get for 1/60 of my current portfolio and being invested in a class action lawsuit to regain money from a bank in this scenario still outweighs the actual money if it did drop to 0.

[bjacokes]

Well this is one of the wilder comment threads I've been a part of. Good luck with your investing.