Insurance and technology are among some of the best investment opportunities available in the Bermuda market at the moment, according to a top analyst with LOM.

eremy Dyck, an investment adviser with LOM Securities (Bahamas) Ltd., officially launched fourth annual The Blue Book of the Bermuda Stock Exchange's (BSX) domestic issuers at a presentation to investors at LOM yesterday.

Mr. Dyck recommended BF&M Ltd. and KeyTech Ltd. as attractive buying propositions, with the former's stock carrying a yield of approximately 5.9 percent, the likelihood of a future dividend increase to be much higher than a cut in the dividend and the share price expected to reach $16.50 within one year.

Similarly KeyTech's yield is approaching 10 percent, the stock is continuing to trade at a discount to book value above 35 percent and the price target is $8.50.

He also said that Butterfield Bank and Bermuda Commercial<\p>Bank Ltd. (BCB)<\p>were good choices for those who took a more long-term view following recent recapitalisation and takeover activity respectively.

"Obviously it has been a tough year for the BSX over the past year," he said. "A lot of that has to do with the BSX weighting on Butterfield Bank, which accounted for 53.5 percent of the Index.

"Over five years the Index was down 61 percent and Butterfield Bank, I would estimate, was about 45 to 50 percent of that decline on its own."

Mr. Dyck said that LOM's earnings estimates for Butterfield in 2010 and 2011 were $5 million (one cent per share) and $25 million (four and a half cents per share) respectively. As the economic situation continued to improve the bank should see a gradual improvement in asset management, trust services, foreign exchange and fee-based revenues.

But he added that a significant rise in profits would not be possible until interest rates moved appreciably higher, which was not forecast until late 2011 at the earliest and, with a pick-up in earnings over the next two to three years, the bank was likely to reinstitute a dividend policy. "The 'new' Butterfield has a long road ahead, both in restoring investor confidence and towards building shareholder value," he said.

"In the absence of significant normalised earnings during the next two years, we base our price target of $1.40 on our one-year estimate of book value.

He rated the shares as a "hold".

Mr. Dyck said that following three years of engaging potential suitors, the outlook for BCB had changed considerably with the recent majority takeover announcement, with LOM maintaining its rating on shares as a "hold" and raising its price target from $8.50 to $11, based on a five percent premium to its tangible book value per share estimate of $10.45.

"We assume that most minority shareholders will view this offer as an opportunity to exit their investment at a reasonable price," he said. "For those investors who decline the $9.88 tender bid, there is adequate potential for greater gains down the road whether it be a turnaround sale, merger, or an organic recovery in BCB's banking operations.

"However, there are also inherent risks primarily, a lack of share liquidity and no dividend yield."

He said the most value was offered by BF&M, whose shares he rated as a "buy", with strong business fundamentals despite a two-year decline in net earnings and the ability to have earned $2.90 percent per share last year or 8.6 percent more than in fiscal 2008 had it decided not to conservatively amortise $4.6 million in expenses related to new accounting systems.

Similarly, Mr. Dyck viewed KeyTech as a "buy", having ramped up its capital spending across multiple divisions over the past few years, including the Challenger submarine cable project, and now seemed set to reap its rewards.

However, he added that there were still a number of significant challenges in the ever competitive local wireless market, the transition from fixed wireline telephony to lower-margin data and VOIP services at BTC, and the ongoing loss burden related to the Cayman-based WestTel division. The telecommunications provider also had scope with its share price falling to a current value of $7 per share from a trading range of $12 to $14 during early 2007 to late 2008.

Other issuers included Argus Group Holdings Ltd., which LOM rated as a "hold", stating that it would like to see further organic growth and gains in the investment portfolio before declaring the company 'out of the woods", and the Ascendant Group Ltd., which also given a "hold" rating, with the stock presently trading at a significant 57 percent discount to book value and possibly representing value for long-term income-orientated investors.

For a copy of the Blue Book contact LOM at 292-500, email info[AT]lom.com or visit the website at www.lom.com