The Man Who Makes Bankers Quake, and Sometimes Causes Them to Sue

NYT's Louise Story has the story:

Lutz, Fla., is on no one’s list of world financial capitals. But from his home there on Tiffany Lane, 1,100 miles from Wall Street, Richard X. Bove can rattle the mighty of American banking...

After a big bank in California collapsed in mid-July, Mr. Bove (pronounced Bo-VAY) rushed out a report with a provocative title: “Who’s Next?” What followed was a list of 107 banks, ranked according to two measures of their financial strength. The share prices of some of the banks promptly collapsed.

But No. 10 on the first list, BankAtlantic Bancorp of Fort Lauderdale, fired back. The bank said Mr. Bove’s numbers were wrong — and sued him...

But controversy is nothing new for Mr. Bove, 67, who has analyzed banking stocks for 26 years and become a familiar face on business news television. He has been fired twice during his career, once, from Dean Witter Reynolds, for advising investors to buy every bank stock they could (he was right — after he was fired, bank stocks soared)...

Since 2005, however, Mr. Bove has gained a certain reputation as one of the few bank analysts to predict the blow-up in the housing market and subsequent problems at many banks. He is also one of the few whose advice, if heeded, would have made money for investors over the past year.

Mr. Bove often berates bank executives — “egomaniacs,” he calls many of them — and the regulators who oversee them...

Fans of Mr. Bove are stunned by the uproar over his list.

“I’m pretty shocked, actually,” said Doug Kass, president of Seabreeze Partners Management, a hedge fund based in Palm Beach, Fla. “He is amongst the best pure security analysts, quite frankly, that I’ve ever met. He does not mince words, but his comments are founded on strong analysis.”

Mr. Bove, for his part, says it is not his job to worry whether banks like his reports.

“I don’t give a damn about what the company thinks,” he said by phone from his home office in Lutz. “It’s my job to think about: is this a good stock to buy or not? It’s the bank’s job to worry about their business.”...

Clearly Mr. Bove is not afraid of making enemies. Back in 2005, when he came out with his initial negative outlook on the housing market, a television anchor warned him that he might not have a job much longer. Soon afterward, Mr. Bove began downgrading the banks he covered, eventually putting a sell on 60 percent of them, even as others dismissed his prediction that “this powder keg is going to blow.”...

Mr. Bove remains negative on the prospects for investment banks like Goldman Sachs and Merrill Lynch. But he has upgraded several commercial banks this year. He thinks banks are healthier because of the new capital they have raised and because investors have pushed their stocks too low. But, once again, he is pushing against the grain — and he has yet to be proved right.

“Again, I’m early, and I’m fighting against the trends,” he says. “But the fact is that banks are too cheap.”