After the events of the past few years, many investors have concluded that investing in banks is ultimately a speculative exercise. After all, a great deal of management discretion is involved in estimating loan loss reserves and the opportunities for “creative” accounting are far greater in banking than in many other industries. As a result, investors have come to believe that banks are “black boxes” when it comes to asset quality and reserves and are not analyzable. However, in the midst of the wreckage, well regarded investors such as Bruce Berkowitz, Bill Ackman, and John Paulson have been finding value in the sector. Read this article for more details.