I noted this morning that I sold my Enterprise Financial (EFSC) 5% perpetual yesterday afternoon–I got lucky as I sold right at or near the high of the day on a limit order. I recognized about a total of 15% gain which included a couple of dividends.
Why did I sell it? Honestly, while the small bankers have been reporting fairly good earnings, someone is holding the bag on some bad loans. Of course I don’t know who may be holding bad, undisclosed, loans it only makes sense that someone is kicking the can down the road–of course this is just my feeling–maybe I am all wet–but in the end the longer we go without a disclosed ‘disaster’ in the loan book the more skeptical I get. In the end when I begin to worry about these things I am better to simply book a nice profit and move on.
I am sure we have some bankers–or ex-bankers on the site, but we all know that marginal loans can be renegotiated etc–even when there is little to no hope that they will ever be good loans. It is hard to imagine that many commercial real estate loans can be serviced when interest rates move as they moved in the last 2 years. We’ll just have to wait and see if my ‘gut feel’ comes to fruition.