Citigroup Inc. (C)

(Past Top Pick, June 29, 2017, Up 0.4%) The U.S. financials have slipped since the January peak, but he'll continue to hold this. Trading at 0.9x price to book, one of the cheapest among its peers. Last week, they passed their stress test, and said they will raise their dividends. Also, they will continue to buy back shares. But if the tide changes with a U.S. slowdown, this will get hurt. But it's good for now.

(A Top Pick August 4, 2017. Down 4%). This rose to $80 in January and is down to 65.52 now. It is struggling at EBB-2, well below his model price ($73.97). The US stress tests will come out this week. He expects dividend increases, which is essential for this stock to move higher. The company pays only about 20% of its profits, compared to 40% at Royal Bank. So he expects a pop soon. However, he thinks that what is happening in Europe will affect American bank stock prices. The European banks are at multi-year lows. However, the large American banks are very well capitalized and in much better shape than the Europeans.

(A Top Pick May 29/2017, Up 10%) Still likes it, though it’s underperformed YTD. Â On the narrower spreads, bit of a misplaced concern, since banks are still able to lend at more attractive rates. The banks are benefiting from a strong global economy, financial deregulation. Don’t think yield will completely flatten. Rising rates and strong US housing starts will benefit US banks in general.

Earnings have gone up significantly, trades at less than book value, stock buybacks, increased dividend with more to come he thinks. Will continue to benefit from rising interest rates, deregulation, strong US economy and housing market. Earnings growth expectations significant over next years. Good way to play rising rates, cheapest of big US banks. Has been out of favour, but doing a good job in capital allocation and growth. (Analyst’s price target is $82.89.)

Comments on US banks are fairly consistent. Had big runs last year. Short term results have been a little disappointing. Are good long term buys.

He decided his firm's best bet was to position themselves in the area that had the most damage in '08/'09 so their multiples were a lot less than the senior players. Over time he felt there would be a journey of forgiveness – they would earn it from the markets. This is exactly what has happened. It is still trading below book value.

Last year, there was a lot of optimism for U.S. banks. The market got ahead of itself with the deregulation promised by Trump. Currently, Citibank is trading at decent levels and this is a good time to get in. Mortgages may soften, so that
may be a headwind.

U.S. financials have moved sideways, so there's room for them to move higher. Citigroup has enjoyed higher earnigns and share buybacks, but he prefers Bank of America--they have more operating leverage and have done well cutting costs. Nothing against Citigroup, but he prefers Bank of America.

This is a diversified financial. It has good emerging market exposure. He likes owning financials now, but thinks the valuations are getting too expensive. He would prefer Bank of America with a more US focus and the e-brokers.

He has also been selling many bank holdings in Canada. The momentum is weakening and you are getting lower highs and lower lows. You would probably bring buyers back in about $56-$60. Pay attention to stocks rolling over.

He likes them because the valuation is very reasonable. It has a great global network, giving exposure to global economic growth. They may look to unlock value by slowly selling off assets that do not create shareholder value. He is in it for the long haul.

He likes all the US banks. Regulations are coming easy for them as opposed to more difficult. Reasonable investment bank arm. He likes other US banks better at the moment though.

(A Top Pick July 11/17 Up 4%) He still loves the big US financials, especially those too big to fail. They are doing all the right things including stock buy backs. He thinks they should be increasing their dividend. As interest rates go up they will increase margins.

The U.S. banks are attractive, though he prefers others to Citi. Citi is more international with operations in Mexico for example, so they don't benefit as much from U.S. tax reform.

(A Top Pick April 6/17 - Up 20.4%) Still like it. Trading at one times book value. One pf the cheapest in the group. Lighter regulatory environment will benefit them. They have a strong global presence (50% of their revenues).