Earlier today, Oppenheimer put out a report discussing regional banks. They said that even with the stocks 40% below 2006 levels, the stocks might not reach those heights again.
The main reason? DILUTION.
Oppenheimer rightly points out that while there might be plenty of recovery ahead, the capital raises over he past 18months have caused an explosion in shares outstanding.
Oppenheimer discussed regional banks, so I'll show the "money-center" big guys:
Banks still have huge assets on their balance sheets, many of which yield pretty handsome returns. That doesn't help common stockholders, who now must split the pie among many new investors...
With all those new shares outstanding, the per share earnings power of these banks is handicapped forever...
Copyright 2010 AlphaNinja