Best Long Opportunity for 2012Update on Ocean Shore Holding Co. (OSHC)
Monday, December 10, 2012
Our favorite long idea coming into 2012 was Ocean Shore Holding Co. (OSHC) whichhad last traded at exactly $10.00 per share. As we wrote at the time:
is a small bank that appears to be a promising acquisition candidate. We originally made a significant investment in this stable bank with solid credit quality by participating in the mutual conversion in which we paid $8 per share, representing 60% of book value.Despite a bad environment for banking, Ocean Shore has strong asset quality and steady growth. We anticipate that the bank will continue to grow book value while its market price will close some of the discount to that book value. By the end of 2012, they will be well-positioned to entertain any inbound interest from strategic buyers who may be interested in acquiring Ocean Shore for a significant premium to its market price. As of today, this is our largest investment.”
As we near the end of 2012, an update is in order. Year to date, the shares are up over40%, and it remains our largest investment and as well as our favorite long idea for theremainder of the year. Despite the appreciation in its stock price, we believe it is stillquite undervalued.In our view, a deal for OSHC has always been less a question of “if” then “when” and theanswer to when is “probably very soon”. While we waited, the bank has repurchased asignificant number of shares and will be allowed to entertain inbound interest fromstrategic acquirers within this month. Throughout this process, management hasappeared to be totally committed to maximizing value for shareholders and themselves.