Bank of America (BAC)

(A Top Pick October 30/12. Up 54.12%.) These stocks are cheap. Trading below BV. Doesn’t have a big yield but it is buying back stock. Well-capitalized.

Reached a peak at the end of 2010 and another one just recently. It is still in an uptrend. US financials are probably not as strong as Canadian financials. If you are a long-term investor, he would stay with it until it stops going up.

Great play, but all US banks are probably going to have not as good of a Q3 in Q4. Mortgage refinancing activity fell a lot since bond yields went up. Loan origination fell a lot. He took down his 2013 numbers for this by 18%, but left his 2014 numbers intact for a play on housing.

(A Top Pick August 16/12. Up 77.79%.) Thinks this could go to the mid-$30’s. Have to deal with a lot of different lawsuits. Company is profitable and the capitalization ratio is good. At some time he thinks they will increase the dividend but they have to get regulatory approval first. Getting kicked out of the Dow, which means the stock price could come down a bit more, but longer-term it should go up.

This still has balance sheet issues. Stock keeps drifting higher as time goes on with the market hoping that those balance sheet issues are slowly getting behind it. It needs time to heal. Thinks it can drift higher from here.

Cutting back on some jobs in their mortgage area. Mortgage interest rates have increased over the past year, which has resulted in higher mortgage rates. This has resulted in a decline in mortgage activity. She is cautiously optimistic that as the economy slowly improves, return is not going to shoot up sharply in the next year, but will rise slowly.

Has a fair number of non-bank financials, but right now he doesn’t own any banks. However, he thinks the banking Outlook is fairly favourable. US banking sector is definitely in the recovery. If he were going into the US banking sector, he would be looking at Wells Fargo (WFC-N) or J.P. Morgan (JPM-N). On this bank he still has some concerns about stuff on their balance sheets such as the takeovers they made around 2008. There’s potentially hidden stuff on this that could cause problems.

One of the multinational banks and he would rather own the regional banks. A lot of their earnings are from capital markets and he would rather not be in this.

(A Top Pick September 12/12. Up 59.17%.) Trading at around 0.7X BV and at around 10X earnings. He feels that things are much more positive down the road. Loan losses are coming down. He feels the stock should trade at either BV or 1.5X BV.

A major global bank. Multiples have gone up as the stock has done reasonably well. A beneficiary of falling US unemployment, a rising US GDP and the same thing in Europe. Trading at a 30% discount to Book right now.

Likes the US banks but doesn’t own them mainly because the dividend yields are basically lower than Canadian banks and are penalized at a higher tax rate.

Has gone through difficult periods. In the next 3-5 years, the Euro will have trouble. When that happens the banks will come under pressure. Thinks there is another shoe to drop in the global growth story.

Has done very, very well. He would be inclined to say there are better places to put your money in the US financial services sector.

There is more upside. Dividend will finally get restored. Another favourite of the hedge fund community on the long side.

New CEO seems to be more focused on the long-term, which is what he likes. He is keen to have the lawsuits go away. They are looking to build a longer-term retail franchise as a bank. There will be lumpiness in the short term, but long-term you could hold it for a little while.