Benj Gallander Bank of America BAC-N BUY Aug 02, 2018

Stock's fallen a fair bit, which was unexpected given the numbers reported last week. Lots of capital; lots of room to increase dividend and buy back shares. Environment is tough with potential recession. Trading at 1x book, 10x PE. Some of the best businesses in the world -- asset management, financial services, capital markets (one of the top 4 players globally), retail, credit cards. Yield is 2.74%.

High quality. Globalization is starting to move in a different direction, so this option provides a more domestic focus.

The US banks are cheap in valuation, and benefit from an M&A cycle that will come.

Keep a full weighting in the financial sector, which is primed for doing well in the next leg of the market. The sector is not expensive and has policy tailwinds. Banks are best capitalized in their history. It's a red herring--don't be scared off by Trump's Big, Beautiful Bill (and the fear of higher taxes).

Trades at 1.25x book value and almost a 3% dividend yield. Are growing revenues and increasing market share. Will benefit from IPOs and M&A. Wealth management generates recurring revenues. They keep costs low.

It reports Wednesday. Trades at only 13x PE, cheap because of the relentless selling by Berkshire Hathaway. But when that selling stops, the PE will be much higher. He expects a good quarter.

Is not effected by tariffs, unless tariffs impact the broader economy strongly. BAC reports tomorrow and he expects good numbers. (Bank earnings today sees improving net interest income, which bodes well for BAC.)

The only big bank that missed on the top line, due to a net interest income line miss. They maintained their full-year net interest income forecast. Falling short were markets and banking segments. Shares fell today.

They sounded reasonably positive in the recent quarter and he is positive on the space. Rate cuts should be supportive for net interest margins in the banking industry.

In the middle tier you have money-centre banks like BAC. It's not as inexpensive as Citi, and doesn't have quite the pedigree of JPM, but positioned well to do very good things on earnings with a steepening of the yield curve. He's overweight the banks.