Bank of America (BAC)

Last fall, his team started to see the infrastructure transition to an end-user/earnings story. While they were trying to figure out which ones to buy, they just bought the XLF ETF. It did very well.

More recently, they got into BAC and JPM. These ones have actually embraced AI on the fraud side. Initially, AI was meant to do repetitive jobs faster and cheaper. But now with reasoning coming on, it can identify inefficiencies.

To his knowledge, 1 of every 2 households in the US has some sort of relationship or banking product with BAC. Amazing CEO. Great job increasing ROC and EPS. Underwriting is second to none. Domestic economy is really chugging along. Unless you believe the US economy is about to fall off a cliff or downgrade substantially, BAC will probably do well.

Valuation dichotomy between Canadian and US banks is not as wide as it was. He wouldn't say to sell BAC and buy Canadian, as they're different businesses. In a non-registered account, there's a currency issue and maybe a capital gains one as well. Probably more upside.

It just reported a solid quarter: 7% revenue growth, 18% earnings growth and 10% net interest income. It sold off 3.78% today, which is extreme. All business lines beat. They guided 5-7% net interest income growth this year.

It reports Wednesday. He doesn't think interest rates will come down dramatically. US banks don't own the mortgage assets but Canadian banks do. He thinks it is a good business but it is good to take profits on a stock and cut back its percentage of your portfolio.

It reports Wednesday. They are consistently good with few surprises and he expects it this time.

Stock's done well. Don't add at these levels but be patient. In US financials, she'd prefer names like JPM or BLK. But BAC still remains a core US banking franchise with broad exposure. Recent results show momentum across its business, with strength in both traditional lending and trading. Cost and capital discipline supported earnings, even as growth slowed.

Macro sensitivity, as results are exposed to interest rates and broader economic backdrop.

He's mentioned this name many times in the past. Trading at 1.89x book value. Banking de-regulation by the Trump administration will benefit the banks. This one may then be able to do an M&A purchase.

Some institutional investors are pulling out of banks but he doesn't really know why. Lower interest rates are good for the spread - borrowing short and lending long. The cycle this year in capital spending is much more robust. Trading at a lower multiple.

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.

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.

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.

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.)

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.

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.

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).