Bruce Berkowitz Sells Entire CIT Group Inc. (CIT) Stake, You Should Too

ORIX Corporation (ADR) (NYSE:IX) engages in financing, leasing, and financial instrument selling. It also has a maintenance leasing segment that provides automobile leasing service, car renting, and equipment leasing.

However, the story is not all great for this Japanese rental and leasing company. According to the New York Times, ORIX Corporation (ADR) (NYSE:IX) has only managed to expand its operating margin by 7.95% over the last three years, compared to the sector average of 38.91%. The company has also witnessed earnings decline by an annualized 16% over the last five years.

Wintrust Financial provides banking services to customers located in the Chicago and in southeastern Wisconsin through its 15 wholly owned banking subsidiaries. Wintrust’s capital ratios at the end of 2012 were 13% for total risk-based capital, 12% for tier one risk-based capital, and 10.1% for leverage; all above the well capitalized guidelines, but not quite as robust as CIT.

Whereas major fund Fairholme was dumping CIT, there were not many hedge funds interested in Wintrust to begin with. Going into 2013, there were a total of 6 hedge funds long the stock, with little known fund Dreman Value Management having the largest position (see which other funds owned Wintrust).

Assessment

As you can see from above, the negative items for CIT Group Inc. (NYSE:CIT) far outweigh the positives for owning CIT stock. What’s more is that CIT trades relatively in line with some of the other major leasing companies, trading at book value, whereas ORIX Corporation (ADR) (NYSE:IX) trades at 0.97 times book value and Wintrust Financial at 0.81 times.

On Nov. 30, 2012, the Fairholme Fund owned 6,068,829 shares of CIT Group. Today, they own none. Worth noting is that there is at least one hedge fund holding on to hope that CIT can reward shareholders nicely. Centerbridge Partners owned 8.8 million shares at the end of 2012, which was almost 25% of its total public equity portfolio (check out all of Centerbridge’s stock picks).

John Thain was brought in to restructure the company and put it up for sale. That hasn’t happened and there are better values in the financial sector. I believe that Berkowtiz has realized the investment is dead money.

The article Bruce Berkowitz Sells Entire CIT Stake, You Should Too originally appeared on Fool.com and is written by Marshall Hargrave.

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