Stock price when the opinion was issued
Owns several US banks. The yield curve is steepening and the regulatory backdrop is now more favourable to the banks. The post-2008 safeguards have built huge capital in these banks and is starting to be released. Citi trades at a 24% discount to tangible book value which will compress and catch up to peers.
(Analysts’ price target is $90.30)Financial sector offers great promise, though it's reacted to current markets by pricing in a potential recession. Slower economic growth would not be good for banks. Absent a recession, with consumer confidence returning and unleashing M&A, the sector provides a good opportunity.
A less expensive choice further down the food chain from the likes of JPM.
Likes the valuation of 8x PE, and growing ~24%. Tailwinds from Trump administration with bank de-regulation. Benefiting from years of cleanup and cost cuts. Earnings up 21% in last quarter. Fixed income was up 8%, equities were up 23%.
Yes, the tape can toss you around if we go into a bear market. And yes, this name would sell off along with all the other banks. But at this price, with this level of growth, it's a really good bet on risk/reward. Yield is 3%.
BAC vs. Citigroup if a recession happens He owns both, but he prefers Citigroup, because it has a lower valuation, trading below tangible book value and pays a higher dividend. Citi is viewed as an international bank, whereas BAC is viewed as American. The upside is better at Citi in the coming years.