John Burke Bank of New York Mellon BK-N BUY Aug 22, 2016

This is more of a specialty bank. Have a big business in custody services. Have avoided the issues that many of the larger global banks have run into. Good, long-term play over the next few years.

2.3% Dividend. US banks have been well capitalized. In Europe that is not the case. In recovering US you are seeing housing stability and job creation. Europe will benefit from these dynamics. You have to decide if you want mortgage exposure or what. All US banks are okay but you want to pick those that are not very affected by regulatory change. Prefers others.

Done a fantastic job outside the main stream in banking. Well run company but like so many, they have had a big run over the last year and recovered. He doesn’t see enough upside after this run. They will benefit from the rising US economy.

Big custodial bank in the US. On multiples on earnings, these custodian banks used to trade at 17-19 times earnings and were considered very safe businesses and had growing earnings. After the financial crisis in 2008 there was a lot of pressure. No one knew what was where and there was a lot more uncertainty than people came to believe. Has been suffering with very low interest rates. Cut some costs and increased investments in a variety of platforms and have been growing earnings. 80% of their revenues just come from fees, not margins. Trading at only 12.5X earnings. Multiple expansion, earnings growth and dividend growth would likely give a good return over the next 3-5 years. Yield of 1.98%.

(A Top Pick May 22/14. Up 14.05%.) This is like a bankers’ bank. It has a big asset service theme. Costs were always running a little bit higher, and there was a bit of a lawsuit with regards to their FX a few years ago. Those things have been settled. Earnings were up about 24% year-over-year in the last quarter, mainly on slight revenue gains, but more importantly on cost cuts. Good leverage to an improving environment. Reasonable dividend of 1.5%, and over time will probably increase this 7%-10% on a total return basis.

Very interested in US banks, especially at these levels. Headwinds right now. Raising rates so quickly makes waves, which impact large financial institutions. A custodian bank. Got caught up in March's regional fiasco, and hasn't bounced back yet. Trading at depths of March 2020 valuations.