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Thursday, July 27, 2006

Why I Like Keeke Bruyette & Woods (NTBK)

Yesterday was a controversial call on Internet banking pure-play stock NetBank (NTBK). Our article noted that the stock was only down almost 6% on what was really bad news and that the stock should go much lower. The NTBK stock must have gotten lost in the shuffle since it was in a filing and with 500 companies reporting earnings each day. The stock closed down just over 11%, obviously worse than when we pointed it out. NetBank is down an additional 8% at $5.23 today (and had been down at $5.00) after Keefe Bruyette & Woods downgraded the stock to a Market Perform from a Market Perform rating.

Honestly, if it was my money I would probably at least cover some of this if I was short. Covering all of it probably isn't merited here. The fundamentals are just too poor and there is likely not any acquirer that could even come close to winning shareholder approval yet. That will change through time as more and more shareholders become owners around the lower prices.

Yesterday's article can be linked to HERE

Keefe Bruyette & Woods isn't just great because they had the same viewpoint as us, that isn't the point at all. As a matter of fact we intentionally seek out differing views so that the rest of the picture can be more evident when appropriate. They are great because they have some key insight on the financial sector, and they do not shy away from covering smaller banks or financial institutions that would otherwise be completely unnoticed from the investment community.

Speaking of "KBW" as they are referred to in our "Analyst Calls" article, the company is currently waiting to come public via an IPO. Hopefully the last two brokerage IPO's didn't put a hex on the IPO of the company. KBW is a great niche firm. They have rebuilt their personal infrastructure after tragically losing so many talented employees in the 9/11 terrorist attacks and they are strong. If this gets a poor reception if and when it is able to come public, it should be worth really looking into. This obviously depends on the financials and who ends up with all the purse strings, but on the surface they are just in a great spot of the investment banking community.

Jon C. Ogg
July 27, 2006

Jon Ogg does not own securities in companies that he writes about and he can be reached by email at jonogg@gmail.com
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