Bank of America (BAC)

Sold it in October after many years. Merill Lynch is their crown jewel, but can't exploit it like MS can milk their wealth management business.

Likes the money centre banks. Will do well with a normalized yield curve, as it enhances net interest margins. Fed signalling interest rates coming down should depress the short end of the curve, with the long end maintaining itself somewhat.

The group is trading at about a 30% discount to normalized valuations of around 13.5x earnings. That carries through to book value, trading at discounts to historical norms. He owns JPM, BAC, and MS, and that's where he'd put money.

Focused on retail banking, which is the most conservative. Good source of deposit funding. Bonds on balance sheet impair capital, but this is short term and doesn't imperil fundamental operations. Positive. CEO is solid.

They see consumer spending growth petering out, but still 4% higher YOY, but this is a return to normalcy.

Still owns it. BAC earnings beat recently. Fixed income and capital markets are still growing. Is trading below book value and pays a 3.5% dividend yield. During Covid, they invested in mortgage-backed securities, and they're now under water by $130 billion because rates are going up. That's an overhang that will continue until rates stabilize. But this isn't a risky regional bank, but diversified with strong segments.

Reporting top- and bottom-line beats today

He had sold the banks (MS, BAC, but is long JPM) to buy QQQs, and he stands by that rotation. If any banks decline, it would be the regionals, which he's avoided since the spring crisis. His outlook on the banks is limited, given regulations restricting hoarding capital on the balance sheet, which will impede loan growth. Plus, the economy will start to contract. MS and BAC are good companies, but he'd rather buy the debt of these stocks, because their balance sheets will be fortified.

A good bank. Never hurts to take profits. If you sell this, don't buy a Canadian bank, but another American bank to avoid the 30-day waiting rule.

All banks were tainted with the US regional bank meltdown. Rising rates aren't helping. Normally, higher rates are better for banks but that may not be happening this time since some US mortgage rates are locked in for 30 years. We need to see rates stabilize before the banks bounce back. Take your losses now before tax-loss selling happens in December.

Very interested in US banks, especially at these levels. Pulled back from $30s. Headwinds right now. Raising rates so quickly makes waves, which impact large financial institutions. Less than 0.9x book value. Capturing regional deposits. Executing well. A reasonable holding, not in as bad shape as Canadian banks.

Banks have had troubles. Trading below book value, at 8x earnings. Early cycle vehicles, and we'll get there fairly soon. We'll either go through a recession, or have one declared null and void. Has $100B of underwater bonds, and the market's nervous. It's only a problem if they're forced to sell, as they'll earn less. Don't write it off just yet.

Holds about 10% of deposits in US. 9x earnings, almost 1x book, not expensive. Balance sheet has a lot of longer term debt, and people worry about this with higher rates. Diversified. Reducing costs and implementing AI. Must grow organically, not by acquisition. As economy does well, so well they. Loan losses are not a big issue. Good yield of 3.08%.

Best-in-class assets and management. Strong balance sheet. Retail focus, which is very stable. Banking turmoil in the US, but the biggest and the best continue to do well. Quality will prevail because it provides certainty. Great quarterly results. Yield is 3.08%. 

U.S. banks are fairly priced and well capitalized. He bought BAC in the last cycle. Canadian banks are better performers so look there.

It's been broke twice in his career. US banks are cyclical; you can make, and lose, a lot of money. Right now, we're going up, so hold on, but remember to sell when you get to the top.

Lots of capital. Trading at book value. Stock's worth around $50. Banking issues in US were at the regional level. Big banks were hardly affected, continue to grab market share. Underlying businesses doing well. Yield is 3.3%.