Higher premiums typically mean higher expectations, and those expectations aren’t always just about pure growth. First Republic’s (FRC)
third quarter growth wasn’t amazing (PPOP up about 6% yoy), but the
extent to which the bank’s management did much better than expected in
offsetting spread pressure is noteworthy to me and makes me feel better
about paying more for these shares.
When I last wrote about First Republic,
I thought there would be an opportunity to buy shares at a better
price, and the stock did drop below $90 (briefly) about a month later.
Even with the better performance shown this quarter, I’m not that
comfortable paying more than $100/share for First Republic, and I’d
prefer to wait in the hopes of getting another chance below $95, though I
fully accept the risk that I might not get that chance.
Read more here:
First Republic's Strong Execution Shows Its Premium Is Not Just About Growth
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