Bank of America (BAC)

Thinks you are past the worse with this one. With the $70 billion settlement they have had now, they have taken the hit on the Countrywide Financial. Feels the US bank valuations are still relatively attractive. There is a lot of earnings leverage, and he expects another move out of the housing sector.

Pretty good earnings and strong quarter. Prefers JPM-N and GS-N in preference to this one as there are skeletons in this closet.

He likes the US financials in general and he likes this bank. Has been focusing more closely on some of the US regional banks such as Wells Fargo (WFC-N). He doesn’t know if he has a favourite, but you might want to start watching out for some of the multinational names because of the US$ advancing so much.

This is probably a play on the US economy. Thinks there are better large-cap names to own. They have somewhat recovered from the financial mess of 2008-2009. Dividend yield is quite low at just over 1%. There are other banks with better quality and better credit culture that will give you a better dividend yield.

One of the better positioned banks. Has more of a retail focus which is really the conservative way to play the banking sector. If interest rates go up, the banks that are focused on retail should do better than others. A few months ago, they were capital constrained and restrained on what they could do in turning money over to shareholders. They have just recently been able to provide that. Doesn’t think there will be huge dividend increases out of the stock, but it is encouraging that they have actually started.

Thinks we are closer to the fed getting back into a rising rate environment and this will be very constructive for the banks. This is an indicator that the economy is strong and so loan growth should improve at some point and banks will get out of the penalty box with the government. He has not made a move yet, but has talked about it for while.

He is much more positive on US banks than Canadian. It is a fine bank, but has a securities division and he is not big on those. The SEC is looking into a possible misstatement of the amount of capital that they have.

Owned for a long time. He is a big fan. It is not expensive, trading below book value. The litigation issues are out of the way so you can judge them by their earnings. One of the largest retail banks, brokerages businesses and institutional brokerages in the US. They really cut back on non-core assets.

When the Fed taper comes off and the lawsuits stop, this has the ability to make a lot of money. Targets on the street are quite a bit higher than its current price. Yield of 1.17%.

This one just came out of the blue (his strategy) last week. His model price is $19.17, a 15% upside. The market is saying that they finally believe in its balance sheet. They have $2 trillion in assets, so it is very important that the market gives it’s A-OK.

The jury is still out. Ultimately the too-big-fail-banks will have challenges. There will be big run ups and then pullbacks. You want to buy them on pullbacks. It will be with more volatility than in the past couple of years.

Generally speaking he likes the US financials. Prefers Citigroup (C-N) and J P Morgan (JPM-N) as well as Wells Fargo (WFC-N). They are all trading at discounts to where they should be. This one is trading below Book Value, which is pretty cheap, compared to where it should be. There is a lot of regulatory noise around larger banks. Once we get past those stages, the banks should continue to do well.

The banking sector in general historically has always been a pretty good place to make some money, but after the 08-09 downturn the one big thing that has changed is the amount of underlying equity capital required to support these businesses. Because of that, the return on equity is going to be much lower than it has been historically. Feels the recovery out of some of these banks is not going to be as good as some people expect. The government is going to let this bank start increasing dividends, but he prefers something like an Element Financial (EFN-T) that has a much more established and aggressive growth path in front of them. It is also cheaper and better valued.

Very cheap, but the key is paying all their debt from the financial crisis. We don’t know if they have done this as a fact. However, most of the financial burden is behind them and they can move on now. Feels there is reasonable upside to this company. However, they are not the best operator. He looks at this as a middle-of-the-road company but one that you can play.

Trading at 85% of tangible BV. Seem to be doing a better job and things are improving. The big litigation seems to be out of the way. A good sector to be in and this one should do well over the next few years.