Why I'm Doubling Down on MidWest One

Today, we're seeing a solid bank for a reasonable price.

Jun 26, 2014 at 4:24PM

Almost three months ago, I bought shares of MidWest One Financial Group (NASDAQ:MOFG) in the real-money portfolio I run for the Motley Fool.


Here are some of the reasons I was bullish on the small Iowa-based bank:

  • The reasonable conservatism of its commercial-centric loan portfolio.
  • Its improved and currently low efficiency ratio, which indicates well-run operations.
  • A decent net interest margin leading to decent returns on assets and equity, and a nice little dividend.
  • All of the above for a pretty low relative and absolute cost.

Checking back in, I'm seeing no reason to change my opinion. With shares down about 7% since my original write-up, I'm slightly more bullish. We're getting this solid bank for just 10% above book value, and 11 times earnings. As such, I'll be doubling down on my original buy.

If you're an individual investor interested in banking, I've got two cautions for you:

  1. At a market cap of around $200 million, MidWest One is a small-cap stock with limited trading activity. Be sure to set a limit order if you ultimately end up buying shares after doing your research.
  2. I buy these types of smaller banks as part of a portfolio. By buying a bunch of them, diversification allows me to largely ignore factors such as the state of the local economy (Iowa in this case), and some aspects of the loan portfolio (e.g. MidWest One's reliance on commercial loans).

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Anand Chokkavelu, CFA owns shares of MidWest One Financial Group. The Motley Fool owns shares of MidWest One Financial Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information