The early 1990s were a rough time for Citicorp, but for former shareholder Kevin Pilot those years brought nothing but profits.

According to Richard B. Miller's book, "Citicorp, the Story of a Bank in Crisis," 2,000 of Citicorp's investors dumped their stock in 1990 and 1991, when the bank's earnings and share price were plummeting to record lows.

Indeed, the institution, once described by Walter Wriston, the former Citicorp chief executive, as "having chips in every game in town," seemed ready to fold its hand.

But for Mr. Pilot (pronounced "pea low") the game was just beginning.

In 1991, he staked out a small position when Citicorp's share price had fallen to $10. Even when the price continued to slide, Mr. Pilot stood his ground. Eighteen months later he was selling his position at roughly $30 a share.

"It was great," said Mr. Pilot, who was a retail broker for Merrill Lynch at the time. Few research firms had "buy" ratings on the bank, "and I think there were actually some 'sells,'" Mr. Pilot said. "Everybody was selling, but I said, 'Hey, wait a minute, this is kind of interesting.' I doubted that a company that big would go down."

Mr. Pilot, 31, has made a career of "vulture investing," or buying stock in temporarily distressed companies through his investment advisory firm, Phoenix Capital Management, in Carlsbad, Calif.

The company's $65 million in investments is up 61.45% since the beginning of 1995, he said.

He has become well known for Vulture Letter, a no-holds-barred newsletter that brought him notoriety last summer when he lambasted the investment portfolio of the Beardstown Ladies, a popular investment club of elderly women.

He became the center of controversy again last month when he advised investors to buy Valujet stock shortly after one of its planes crashed with no survivors.

Although his investing style has drawn criticism, Mr. Pilot says he's merely following the adage "Buy when there's blood in the streets."

That's what he did to make a 120% gain in Argentinean banks two years ago when the peso dropped. Since that time, Mr. Pilot, who includes a dozen financial institutions in his portfolio, has modified his strategy.

"It is harder to find banks that are in trouble," he said. "In the banking industry most of these guys have cleaned up their act. So I look for hidden assets in those that nobody knows about or are too lazy to do research on."

Mr. Pilot said that he invested in American Express in December 1994 because he was searching for companies that were not managing their assets efficiently but had a catalyst in place that would bring about change.

"That catalyst," said Mr. Pilot, "is Harvey Golub, the new chief executive." In 1994, Mr. Pilot bought shares at $28; they were trading Monday at $23.625.

Last November, Mr. Pilot bought a stake in Bank of Commerce, a $23 million-asset institution in San Diego.

Although the bank is small, Mr. Pilot said it has a profitable niche as one of the country's biggest players in Small Business Administration lending. He pointed out that because most of the loans in the bank's portfolio are guaranteed, Bank of Commerce is able to make a 5% spread with "zero risk."

After talking to the company's chief financial officer, Mr. Pilot began buying the shares at $13 to $14 late last year. On Monday, Bank of Commerce's shares were trading at tktk.

"Here is an example of how a small bank can make a go of it by sticking to its knitting," said Mr. Pilot. Bank of Commerce found a market that didn't interest the big banks, Mr. Pilot said.

Because the California economy is recovering, Mr. Pilot said, he is especially bullish on the state's banks and thrifts.

City National Corp., Los Angeles, had difficulties in the California real estate recession, but Mr. Pilot said the company has a potentially profitable line in entertainment banking.

He bought City National in January at $12 to $13 a share. On Monday, it was trading at tktk. "I always said that America's best export is entertainment," Mr. Pilot said.

Mr. Pilot also said he sees opportunity as thrifts begin to "walk and talk more like banks." His picks have included Great Western Financial in Chatsworth, Calif., H.F. Ahmanson & Co., Irvindale, and Glendale Federal Bank.

In the case of Glendale, Mr. Pilot's vulture investing philosophy has already paid off. Several years ago, when California thrifts brought a class action against the government, Mr. Pilot immediately began developing a stake. He cashed in his investment when the thrifts won an appeal and the price rose 50%.

Mr. Pilot admitted that there has been little movement in Great Western since he bought the stock in 1993. At the time shares were tktk. On Monday, Great Western shares were trading at tktktk.

He said, however, that it is just a matter of time before the company's cost-cutting and commercial lending initiatives produce returns.

Mr. Pilot said that his greatest concern about the banking industry is that it owes much of its profits and earnings to cost-cutting efforts. "What will some of the smaller banks do for an encore after they cut everything down to the bone?"

He concedes that even he has not gotten vulture investing down to science. "I tend to get out too early." he said. "That's what happened with Citicorp."

He advises investors to look at the market as a pendulum between greed and fear. "If you play off the pendulum when it is moving toward fear, that is when you can really shine."

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