We believe that an investor has the potential to achieve superior risk-adjusted returns over the long-term by selective investing in an equity market sub-sector that has regularly outperformed the broader market over the past thirty years: small and mid-cap banking and financial services companies. 

There are approximately 9,500 banks in the U.S. Around 8,800 of these are banking companies, with the remainder being savings and loan institutions. Of this total universe, only around 700 banks are publicly traded. The majority of these are small and mid-cap in size.

RASARA believes that the greatest investment opportunities in the banking sector are among these small and mid-cap sized bank stocks, which, as a result of their size, do not receive much coverage from Wall Street research departments. Most of the bank stocks in which we invest generally have a low institutional following. This has provided us with the opportunity to identify and take positions in stocks that we believe to be undervalued.

Further, as a result of ongoing industry consolidation, each year approximately 200-300 bank institutions are involved in mergers or acquisitions. Publicly traded bank stocks on either side of such transactions can offer further opportunity to the savvy investor.

These are among the reasons that RASARA believes that bank stocks should be a part of any broad pension fund strategy.