My Trade of the Decade Is Very Much Alive

In the midst of all that has been going on in the markets, I have not talked much about small banks. Last night, an associate asked how that Trade of the Decade was developing and if I still believed in my thesis for the sector. The trade is going just fine, so far. We have been nibbling and picking at cheap small banks for some time and, overall, the portfolio is more than holding its own. The long-shot banks that were bought by private equity firms have been about as volatile as predicted, with a few huge wins and a few that have just been disasters. I have no intention of selling any of these semi-distressed gems, so I don't worry too much about the price gyrations. If little banks like Flagstar (FBC) and Hampton Roads Bankshares (HMPR) work over the next decade, they will make me a lot of money. If they go under, I will lose a relatively small amount.

My core holdings of small banks with lots of excess capital and low loan losses trading below tangible book value is doing just fine. If you look at the First Trust Nasdaq ABA Community Bank Index (QABA), you can pretty much tell what's going on in the sector. The little banks roared about 40% higher after the September bottom and have since pulled back a little over 10%. Investor caution towards the sector is growing, given the continued pressure of low-interest margins, higher regulation and the latest news that small banks would be subject to the Basel III capital requirements....344 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.