Bank of America (BAC)

Prefers this over other US banks because in a relative sense, of the large multinationals, this has the largest exposure to a housing recovery. To be fair, there is probably a write-off coming so it is currently right around tangible Book. Even still, that makes it roughly half of a Canadian bank on a price to book ratio basis.

They won’t be able to increase dividend in the next little while. But their numbers look better than other larger banks in the US. He took his weighting down and is moving money from US to Canadian banks. He is comfortable with the valuations in this one, however. Cheap compared to book value and loan growth is picking up.

Given the pullback in the housing in June for the US and the relatively high unemployment, are US financials overvalued? Not sure we should put full faith in one month’s numbers. A lot of the shortfall came off multi-residential housing, not single residential. Banks in general are doing well on the banks of cost-cutting right now. That is fine, but it is finite. They have to get their loan growth up which means there has to be an economy that is strong enough that wants the loan and the banks have to want to lend. In both cases, there is some reluctance. Also, yield curve has to normalize so it actually pays to borrow Short and lend Long.

Thinks the US banking system is coming back into favour. Most of the big banks were trading below BV at the start of 2013. Some still are but they are gradually recovering. This one is not his favourite. He prefers Goldman Sachs (GS-N) and J.P. Morgan (JPM-N). But this is not a bad bet and could easily find itself up another 10% or so a year from now.

(Market Call Minute.) There may be a slowdown in mortgage refinancing which could be a small hiccup but he likes this.

(Market Call Minute.) Hold for the improving US economy.

US banks have been in great shape. Chart shows an upward trend of higher highs and higher lows. There will be a little bit of noise coming in at around the $15.50 level, which is a couple of dollars away from now. Just bouncing off the trend line now so he wouldn’t have any trouble buying it.

Likes US financials. Recovery phase of US housing market. .7 times book values vs. Canadian 2 times. Will probably increase dividend. Settled most of claims against them. Trades cheap.

Could see this getting to $30 and change but they are going to constantly have difficulties. Likes management. One of the next catalysts will be if they are allowed to raise their dividend.

(A Top Pick June 18/12. Up 67.88%.) Still likes it. A cheap stock. If you own, you’ll continue to do well. Feels it will double from here over the next 3-5 years.

This is a play on the US housing recovery. There is improving US loan growth, lower litigation risks, accretive share repurchases and the balance sheets are strengthening. Dividend yield of 0.3%.

Doesn’t see any reason not to hold as long as the slump is a market slump and doesn’t spill over into the economy. The problem with a lot of the US banks is that they are still not out of the woods by a long shot, as far as the quality of their balance sheet is concerned. ROE’s are still poor.

A relatively cheap American bank. He likes US banks right now as he feels there is opportunity for long-term growth. As the housing market and small medium industry loans recover and, most importantly, as the interest rates normalize. This wouldn’t be his 1^st choice. He prefers the higher quality such as J.P. Morgan (JPM-N), Northern Trust (NTRS-Q) and Morgan Stanley (MS-N).(See Top Picks.)

This is definitely the high torque play in the sector. Thinks there is a lot of upside as the housing market recovers. There is probably more earnings upside as well. If you can handle the volatility, he would continue to own.

(A Top Pick May 15/12. Up 90.72%.) He is continuing to buy this. Banking industry in the US is cheap. The BV of this company is $20 and he thinks at some time in the cycle it will trade at $20.