Hi @Jako,
Don't get me wrong; I don't have a loathing of bank stocks (to prove it, I own shares in CBA); I am just wary of their wafer-thin levels of capitalisation.
(When you lend $20 to a whole lot of Pauls, supported by the $1 you borrowed from Peter, there is not much margin for those Pauls to be unable to repay you when it comes to you, yourself, having to repay Peter... if you'll pardon the clunky analogy.)
Banks are the most financially-leveraged securities going.
Of course, when you are on the right side of that leverage, for example, when loan books are growing, then its all beer and skittles. But when the growth in loans stalls then the picture is less rosy. (And, heaven forbid, if lending contracts or too many loans go sour, then you quickly wipe out the equity base of shareholders.)
With Banking One-oh-One now done, let's consider the CBA situation: what's happening here sure makes for catchy and dramatic media headlines. But I don't think it means much at all in terms of a change in the intrinsic value of the enterprise, nor to its very valuable brand.
This situation feels to me almost identical to the one in which IFL found it self around two years ago when the media (well, one journalist, really) was running near-daily, full-page articles about IFL's assortment of corporate malfeasance and other wrong-doings, under such colourful headings as "FINANCIAL SERVICES SCANDAL!!"
Those media reports even resulted in a Senate inquiry (chaired by none other than that well-known supporter of corporate Australia, Senator Sam Dastyari).
However, if one fast-forwards two years from the time of those histrionics, IFL is still chugging away doing exactly what it has always done for a living, having grown its business, profits and dividends in the interim
So with that sort of precedent (and many more like it), in terms of what's happening CBA - a bit like you, it appears - my eyes have become a bit more beady and my tail a bit more bushy.
While CBA's share price has clearly reacted all the negative "newsflow", the problem is that it has still not reached to point where I would be buying the stock.
At the current share price, the stock is trading on a P/E of 13.5x.
Which is not stratospheric. But it is also not the stuff of bargain basements.
There's not too much science to it, but where I start to get a warm fuzzy instinctive feeling in my tummy is when CBA's P/E is 12x. I have held the stock for many years, and that's the "magic" multiple at which I have learnt it becomes profitable to add to my holdings.
It hasn't been at that sort of multiple for some time, though: I just checked, the last time I bought CBA shares was almost 15 months ago.
Of course, the dust may die down, and the stock price might drift up again, but I don't know how to predict those sorts of outcomes; all try to know is when the downside is virtually limited, and I let the upside take care of itself.
As for SLC, I had heard of Big Air and I have followed the Michael Malone success story. But I haven't made a study of SLC's business model, and I don't believe I will. Because, as you correctly say, I am skeptical (for plenty of reasons; not just a few) about the industry's ability to generate wealth for the owners of companies that participate in that space.
Even telco "infrastructure" assets don't appeal much to me: because I think the phrase "infrastructure assets" gets bandied about with too little discretion. In terms of generating investment returns, not all infrastructure is equal, I have found.
Because it is not automatic that the owners of infrastructure assets all enjoy pricing power. I haven't made the effort to find out, but I'll wager SLC doesn't. Or am I mistaken?
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