The Acquirers Podcast
Derek Pilecki on Long/Short Financials Investing, Regional Banks, Non-Banks and Insurance | S08 E08
The Acquirers Podcast
•March 5, 2026•1h
0
The Acquirers Podcast•Mar 5, 2026
Why It Matters
Understanding the valuation dynamics of regional banks is crucial for investors seeking high‑conviction, low‑multiple opportunities in a sector often overlooked after recent crises. Pilecki’s insights on consolidation, organic growth, and the evolving competitive landscape provide timely guidance for navigating a market where traditional banking models are being reshaped by technology and regulatory changes.
Key Takeaways
- •Small‑cap banks trade 8‑9× PE, below 10‑14 range.
- •U.S. banks consolidated from 13k to ~4k, further reduction expected.
- •Deep‑value strategy seeks stocks doubling in three years via growth.
- •Post‑Dodd‑Frank banks hold more capital, reducing systemic crisis risk.
- •AI and fintech lower switching costs, raising competitive intensity.
Pulse Analysis
The episode opens with a clear valuation gap: small‑cap regional banks are trading at roughly eight to nine times earnings, well beneath the historic 10‑14× PE band. This discount reflects lingering fallout from the Silicon Valley and First Republic debacles, but also a broader consolidation wave that has trimmed the U.S. banking landscape from about 13,000 institutions a generation ago to roughly 4,000 today. Analysts see the trend continuing toward a few hundred core players, a shift that reshapes market dynamics, pricing power, and the potential for merger‑driven upside.
Derek Pilecki outlines a deep‑value framework focused exclusively on financial services. He screens for stocks that can double in three years through modest earnings growth and a modest multiple re‑rating, often targeting six‑times‑PE banks that can lift to ten‑times. His portfolio runs a 130% long and 80% short overlay, with roughly 40 names averaging 3% exposure, scaling up to 10% for out‑performers. The strategy avoids dilutive acquisitions, favors organic loan‑growth engines, and shorts sectors like mortgage insurers that face headwinds from housing volatility and high rates. This disciplined leverage aims to amplify long‑side returns while dampening volatility.
On risk, Pilecki stresses that post‑Dodd‑Frank capital buffers and tighter liquidity standards have markedly lowered systemic vulnerability. While AI‑driven fintech tools are eroding traditional switching costs and intensifying competition, the core banking model remains resilient, especially for midsize firms reliant on sticky credit relationships. Private‑credit expansion has shifted some risk off balance sheets, but regulators’ rapid loan‑file reviews keep exposure in check. For investors, the confluence of cheap valuations, ongoing consolidation, and a stable regulatory environment creates a compelling, albeit nuanced, entry point into the financial services sector.
Episode Description
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor.
Soldier of Fortune: Warren Buffett, Sun Tzu and the Ancient Art of Risk-Taking (Kindle)
We are live every Tuesday at 1.30pm E / 10.30am P.
See our latest episodes at https://acquirersmultiple.com/podcast
About Jake
Jake's Twitter: https://twitter.com/farnamjake1
Jake's book: The Rebel Allocator https://amzn.to/2sgip3l
ABOUT THE PODCAST
Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
SEE LATEST EPISODES
https://acquirersmultiple.com/podcast/
SEE OUR FREE DEEP VALUE STOCK SCREENER https://acquirersmultiple.com/screener/
FOLLOW TOBIAS
Website: https://acquirersmultiple.com/
Firm: https://acquirersfunds.com/
Twitter: ttps://twitter.com/Greenbackd
LinkedIn: https://www.linkedin.com/in/tobycarlisle
Facebook: https://www.facebook.com/tobiascarlisle
Instagram: https://www.instagram.com/tobias_carlisle
ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®. He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam. He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
Show Notes
0
Comments
Want to join the conversation?
Loading comments...