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How to Use a "Charter" to Build a Fortune TodayBy
Monday, June 29, 2009
Gerald Ford first used a "charter" in 1975. He used it to generate an $80 million profit.
Then, in the 1980s, he used it again... to turn $300 million into $1 billion. And in the 1990s, he used another charter to make $5.2 billion. The charter Gerald Ford uses to build fortunes is one of the greatest vehicles for creating wealth in world history. Today, I'm going to show you how to get in on Gerald Ford's newest charter opportunity... (By the way, Gerald R. Ford was the 38th president. Today's essay is about Gerald J. Ford, a banker.) A "charter" is a license to operate a bank. The Office of the Comptroller of the Currency grants them. You cannot operate a bank in the U.S. without one... In the 1980s, the savings and loan industry collapsed. Gerald Ford bought a portfolio of more than 30 failed S&Ls. Using huge government tax breaks, he generated $1 billion in profits in five years. In the 1990s, Ford built the largest bank of his career – Golden State Bancorp – from five California thrifts. In 2002, he sold it to Citigroup for $5.2 billion... Today, with a fortune of $1.3 billion, Gerald Ford is No. 559 on the Forbes list of the world's richest people. He has a football stadium named after him, the Gerald J. Ford stadium in Highland Park, Texas. And he races thoroughbred horses. He won the Breeders' Cup in 2003 and the Dubai World Cup in 2004. In 2008, 25 banks went out of business. In 2009, another 45 have collapsed. We saw a credit crunch in September and October. If not for massive government intervention, there probably would have been a run on the entire banking system. In short, the banking industry hasn't seen a worse year since the height of the Great Depression in 1932. Ford is eager to profit from this dislocation again... "I have been in the business for a long period of time, and I would say it is more troublesome than I have ever seen it," he said in a recent interview. "But that begets some opportunities." The FDIC insures bank deposits. When a bank fails, the FDIC auctions off the remaining assets to other banks. Ford plans to buy seized banking assets from the government... the exact strategy he used in the 1980s. Last year, Ford Group Bank, the name of Gerald Ford's new bank, received a charter from the federal Office of the Comptroller to begin this strategy... Ford has $1.4 billion to seed Ford Group Bank. This money comes from two sources: 50% comes from his private equity fund, Flexpoint. The other half comes from Ford's publicly traded company, Hilltop Holdings (HTH). My interest is in Hilltop Holdings. Right now, Hilltop Holdings is a $786 million pile of cash attached to a small insurance business. By buying shares in Hilltop Holdings, you are claiming your piece of Ford's new banking charter. Hilltop Holdings pays a 4% dividend and trades right at book value. Gerald Ford is one of the most experienced bank and thrift investors in America, and he's going to be making investments on the tails of the worst banking crisis in 80 years. A monkey throwing darts couldn't lose money in this situation. But with a guy like Gerald Ford? It's a virtual certainty he'll make a fortune from the crisis if he can find the right assets to buy. If you're interested in investing in distressed banks by standing on the coattails of one of the most successful distressed bank investors in history, I suggest you take a look at Hilltop Holdings. Gerald Ford will use this new charter to build his forth fortune. Make sure you're on board with him... Good investing, Tom P.S. I recommended Hilltop Holdings to readers of my 12% Letter last month... except I found a way to play it that's far better than buying the stock. I'm expecting readers will make one of the safest 20% annual gains in the history of finance. If you'd like to access to this recommendation, I encourage you to take a free trial subscription to the 12% Letter. Click here to get started.
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