Citigroup Inc. (C)

Bank of America (BAC-N) or Citigroup (C-N)? The real driver is what interest rates are going to do. Stock had been performing pretty decently on expectation that the Fed would continue raising rates, but the Fed started reversing course. There were also fears of debt problems. She still prefers to own banks at a fraction of their BV, even if that comes off a little. A pretty good cushion here with trading at a fraction of BV. If one does well, the other will do well also.

Looking at the long-term chart, this has been flat lining since 2009. However, prefers it over Bank of America (BAC-N). Not something you need to own, but also not something that scares him. Where the financials go, the market goes, but it hasn’t been that way lately. If financials are not moving, he is very concerned about the market.

(A Top Pick Feb 25/15. Down 23.33%.) A great opportunity. Trading at 60% of tangible book value, which is something he has not seen in his career, and at about 7X earnings. With any increase in rates, they are going to put a lot of earnings on the P&L. Dividend yield of 0.50%.

Has been adding this along with some other banks because of the weakness in the last couple of days. Trading at a substantial discount to Book. Valuations have come down and he is happy with this.

Historically US banks start to show positive performance around this time of year, and move higher right through until approximately the beginning of May. Seasonality is clicking in, but technically the stock is in a downward trend and has yet to show signs of even trying to form a bottom. Has been underperforming the market and is trading below its 20 day moving average. Short-term momentum indicators are negative. Not a good one to buy. Wait until there are signs of it bottoming.

Really likes this company because it has a really high Book Value and has lots and lots of upside potential. Everything seems to be going for it, and the market doesn’t care. At some point, he expects that the US banks are going to respond to the value, so it is not the type of thing you need to rush out and Sell.

On banks that will do well even if rates don’t rise, this one really fits the bill. Doing a great job of turning around the assets. They are trying to accrete more value to tangible Book Value, and that will really re-rate the multiple. Dividend yield of 0.39%.

(A Top Pick Dec 3/14. Down 2.72%.) The Fed may hike rates next week. Financials do well in a rising rate environment. His model prices $59.52, a 10% upside. Still a buy.

Fairly undervalued. Trades at about 90% of tangible book value. The average US bank trades at 163%. This indicates there is still a cloud over this bank. Trading at about 10X earnings compared to the average US bank at 13X. Loan growth at 2% is decent, but not great. Higher interest rates are going to be the real catalyst for all the banks.

(A Top Pick Nov 3/14. Up 0.98%.) Along with everybody else, he is waiting for the catalyst, which will come from a steeper yield curve, which will be led by the Fed raising rates. Really a valuation story. They are trading at about 90% of tangible book, while the average bank is about 160%.

Money center banks will move with the economy. The yield curve should steepen and that will benefit banks. About 10 times earnings vs. 13 for the average bank.

53% of their revenue comes from outside the US from many countries. It is a retail focused company with a cheap valuation. It has gone through the stress test okay. There has been a lot of pressure on these names but the litigation has been settled. Get it for under $50.

This is tough for him. It is just on the line and goes back and forth on this line. When they thought the interest rates would go up, it was a negative for the stock. The market just can’t make up its mind on this group. There is easier money that can be made in the market.

Sell Citigroup (C-N) and buy Wells Fargo (WFC-N)? If you understand the differences between the 2 banks and make considered decisions, then you could. He owns both. This one is a valuation play trading at about 70% of tangible Book and the average is at around 160%. Trades at about 10X earnings, while the average bank is around 13X. It just depends on what you are looking for in a bank. They are going to move roughly together, but with a positive economic background, this one might recover more quickly because of the valuation spread.

Chart shows a little upward trend. $52’s a pretty decent support level. A lot of stuff is just starting to roll over though. If it holds $52, this is probably a pretty good deal.