Bank of America (BAC)

When anything becomes political, it can become close to un-investable. Right now, large cap banks are in an impossible operating environment as a result of overregulation and politics. This chart has not been good and capital market volumes have been pretty atrocious. There are better places to be in the market.

Most American banks are still quite unpopular. He would rate this one as probably his 4^th most favourite US bank, so he is not a buyer. If you are going to buy a US bank, it should probably be Wells Fargo (WFC-N). If you want some investment banking mixed in, J.P. Morgan (JPM-N) or Goldman Sachs (GS-N).

Bank of America (BAC-N) or Citigroup (C-N)? This has not done well lately. There is a good chance they will raise the dividend. Prefers this over Citi. Feels it could triple from where it is now.

It took a lot of work to get out from underneath the fines and the cost cutting. At this stage they are more or less free of the past and are ready for the economy to rock ‘n roll, which unfortunately has not happened. The foundation has been laid. The real issue is that the general economy has not picked up much. Not expensive.

Of all US banks, this has a projected total return of 44% in price, 1.6% dividend and a forward ratio of 4.3%. The cheapest of the US banks. He prefers Wells Fargo (WFC-N).

Bank of America (BAC-N) or Citigroup (C-N)? The real driver is what interest rates are going to do. Stock had been performing pretty decently on expectation that the Fed would continue raising rates, but the Fed started reversing course. There were also fears of debt problems. She still prefers to own banks at a fraction of their BV, even if that comes off a little. A pretty good cushion here with trading at a fraction of BV. If one does well, the other will do well also.

Not one of his favourite banks. If he was trading this, it would be for a very, very short period of time. This is mired at this kind of range for him.

(A Top Pick Jan 29/15. Down 26.79%.) A cheap stock, and they own 10% of the deposits in the US. Great retail franchise. In the top 3 globally in investment banking. Also, have a great credit card business and wealth management business. Trading below tangible BV. Dividend yield of 1.79%.

The banking sector is struggling with credit concerns that are emanating partially out of Europe, and that problem is not going away in the short term. Secondly, the US banks along with Canadian banks, are struggling with their exposure to energy loans.

Price to BV is quite low. US banks have come through 2008-2009, but the ROE on these names is quite low compared to Canadian banks that are in the high teens. She owns Wells Fargo (WFC-N) which has an ROE of about 14%-15%. Usually the higher the ROE, the more you are going to pay in terms of valuation. The yield on this is nominal at 1.64%, and every year they have to go to the Fed to apply for any increase.

Thinks banks are going to have a tough time. They ran up in anticipation of higher interest rates, but that has now been put in doubt. $15.40 is the point of resistance, and currently we are in no man’s land until we get there. Banks would not be the first place he would look.

This is one of the toughest spaces. The market is having trouble with three things. The third is that the world financial banks are under huge pressure in terms of price. He prefers DB-N. BAC-N has been pounded into the blue since the beginning of this year. It means the market does not believe the balance sheet.

Has no interest in owning this bank. A money centred bank, so they are not banks, but are also major investment firms. That part is all depressed and down and hurting them. Have been hoping and waiting for the interest rate spread to make their money. Bond yields coming down is hurting them. Sovereign wealth funds are liquidating their stocks. Doesn’t see any reason to own this.

Chart shows a base of $15, and he was trying to trade between $15 and $18, and then there was a breakdown. Banks make a little bit more money when rates go up, and there was an outlook for that to happen, but it now may or may not happen. Thinks it will get a return to $15 on an oversold bounce, and he doesn’t like a big long base break down like this.

US Banks. If you made it 5% of you position, then don’t average down and buy more. It is a bad idea to buy more. If you hold less than a position then you could buy it. It will be in a trading range for the next couple of years.