Corsair Capital was launched in 1992. It had been the first fund of its size to invest in the financial services industry. It believes that “industry-specific expertise is essential to understanding the intricate regulatory frameworks, risk management, and complex accounting practices that are specific to the financial services industry.” To this end, the company has been able to work with companies “through periods of growth and stress,” gaining insight into what causes a financial company to succeed, and what can cause one to fail.
Amy Soeda is the Chief Financial Officer. She joined Corsair in 2001. Prior to then, Soeda “was an Associate in the financial department of J.P. Morgan’s private equity division, where she worked closely with Corsair in connection with J.P. Morgan’s role as sponsor of Corsair I and Corsair II.” Corsair uses a value-driven investment strategy focused on building relationships. This is the same strategy it uses for each of its three funds.
According to Corsair Capital’s most recent 13F filing, these are the positions it held at the end of September. Together, these positions have lost just over -0.5% since the end of the third quarter, compared to the market’s return of 11.59% for the same period.
NewStar Financial Inc (NEWS) was Corsair’s largest position at the beginning of the fourth quarter. It has returned 9.10% since the end of the third quarter. NEWS has a forward P/E ratio of 20.85. Analysts estimate the stock will grow 25% per annum over the next five years compared to 12.14% for its industry. The company recently reported third quarter net income of $3.6 million, or 7 cents per diluted share, down from $5.46 million in the same quarter last year, or 11 cents a share. NEWS is popular with Tom Brown’s Second Curve Capital.
Corsair Capital’s second largest position at the end of September was United Community Banks (UCBI). The company has fallen -14.61% since the end of September. It has a forward P/E ratio of 12.66. Analysts estimate the company’s earnings will grow 13.13% over the next five years compared to expectations of 9.14% for the industry. UCBI reported a net loss of $6.2 million, or 16 cents per share, for the third quarter of 2011. UCBI is a favorite pick of James Dinan’s York Capital Management and Robert Pohly’s Samlyn Capital.
First American Financial Corp (FAF) was Corsair’s third largest position at the end of the third quarter. The company has lost -9.14% since the start of the fourth quarter. It has a forward P/E of 9.91. Analysts estimate the company will grow 5% over the next five years compared to estimates of 9.65% for the industry at large. It recently reported revenue of $964.97 million for the third quarter 2011, up from $927.34 million the previous quarter. John W. Rogers’ Ariel Investments and Mariko Grodon’s Daruma Asset Management are fans of the company.
CoreLogic Inc (CLGX) was Corsair’s fourth largest position at the start of October. It also had the most impressive returns of any of its holdings, bringing in 32.80% since the end of September. It has a forward P/E of 16.81. Analysts expect the company to grow 7% over the next five years compared to 9.65% for the industry. It recently reported third quarter revenue of $348.45M versus $484.3M the same quarter last year. Jonathon Jacobson’s Highfields Capital Management had more than $136 million in the company at the end of the second quarter.