Bank of America (BAC)

US banks have a lot of potential. If he had his choice, he would probably go with CitiGroup (C-N) over this. Citi has really quietly reorganized. Have brought a lot of their international exposure back domestically.

(A Top Pick Dec 27/12. Up 36.98%.) He can see the same performance repeated in 2014. Trading at only 8.8X book. They are so over capitalized, that they are going to be buying back shares and increasing dividends for the next 2-3 years.

Probably won’t rocket higher until they announce purchase of stock. Prefers to have a dividend, but you can’t go wrong with any of the group. He is buying US financials.

(A Top Pick Jan 30/13. Up 20.1%.) This was to Buy the Jan 2015 $15 Calls at US$1.79. His strategy on this was that he thought this bank would be significantly higher than it was in July. There have been some positive gains, and he would just continue to Hold. Thinks this will be well above $20 next year.

Trend is up and was recently tested and so far looks so good.

(Top Pick Jan 30/13, Up 34.58%) Easy money. Only one cent dividend but buying back 4% of stock. Trading at a discount.

Fresh management teams since the downturn and there has been time for healing their balance sheets. Not perfect, but certainly better and really cheap. Trading at less than BV. The steep yield curve and the housing market are a great way to play a recovery in the US economy and in the housing market.

Doesn’t own any banks because he has found better opportunities elsewhere. He is neutral on banks. Looking at the yield curve and the spreads, it is a tough environment right now. Doesn’t see a lot of fundamentals for strong profit growth. There will be a pickup in lending, which is good for banks. Feels there are better places elsewhere.

Feels there is going to be a time for the banks, but doesn’t think it is yet. Wait for a better entry point, when they are actually growing in a natural way.

(Market Call Minute.) Prefers J.P. Morgan (JPM-N) but would be a Buy if you don’t own a US financial.

(Market call minute.) Thinks you can buy this one.

(Market Call Minute) Prefers BKU-N (regional banks).

Still thinks there is some upside. Just broken out again this week. A lot of the US banks have been consolidating. Could move into the upper teens without too much difficulty. A lot of the US financials have government money in them, so they have that bridge to cross at some point.

Stumbled in Q3 like all the banks, due to the yield spike. In spite of that it still executed very strongly with loan growth up 6.8%. Sees EPS for 2014 over 2013 of 47% and the year after 16%. This is achieved through cost cutting, credit improvements and significant leverage to housing. This is a name that has a strong buyback right now. Will probably be a boost in a dividend also. (See Top Picks.)

Has a possibility of going higher, but over the cycle, he is not a big fan of banks right now. They are making any gains right now on cost-cutting. Loan growth is anaemic. Deposits have been fairly robust, which leads to the fact that they have a fair amount of capital on the books and, guess where they put it, they put it in the bond market in a rising interest rate environment. That is not great.