Citigroup Inc. (C)

Timing is always an issue. His choice has been to keep his powder dry in general for now. He would not argue with buying this one and there will soon be a time for these banks over the next three years.

(A Top Pick Nov 7/13. Up 11.42%.) Loves this name. Has been disappointing for the 1^st part of the year. Money center banks have been viewed as the perpetrators of the 2008-2009 financial collapse. Now the litigation risk is behind them they are starting to pay down debt and are raising capital. Also starting to return money to shareholders. Can see 100% of cash flow coming back to shareholders starting next March. Sees $65 in 12 months.

Trading at a pretty good discount to its tangible BV. This has grown every single quarter since the beginning of 2010. Have done a very good job of taking the problem assets down and selling them out of Citi holdings. ROE will likely trend higher.

(Top Pick Aug 19/13, Up 0.24%) Ultimately they will re-apply their capital plan to the Fed and it will bring more money to the shareholders. Over the next year it can generate $6.50 to $7 a share. It is very profitable with 50% of earnings coming from emerging markets. We are just waiting for this capital return story to emerge.

Has been cautiously reviewing this. Cheap on a price-to-book value basis. Have had a number of problems over the past number of years, but have stabilized. They were cited by the Federal Reserve as being deficient in a number of areas which is an example of poor risk control. This causes him to question the management team and what they have been doing.

A lot cheaper than the other US banks. Trading at a discount to its tangible Book Value. Also, it is way overcapitalized, so its ROE looks quite low. The government hasn’t let it return that capital, but when they do, probably next year, there is room for substantial dividend as well as a big buyback.

(A Top Pick July 29/13. Down 4.47%.) Had thought this would be a dividend stock by now, but they weren’t allowed to return capital and have been criticized as too big to manage. Q2 was better-than-expected. Credit quality is improving. Still trading well below its tangible estimated Book Value. Tier 1 capital is really high. Still levered to an improving planet and US. Patience should get rewarded on this.

Large cap US banks have been disappointing. He would prefer Canadian banks, asset management companies, and insurance companies. Both of the later two should be focused in wealth management. C-N is having a hard job getting revenue growth going. There are better places too focus.

Analysts seem to be generally positive after the earnings announcement. They have been lagging because of not passing the stress test. This stock has not recovered nearly as well as many of the others. He just took an initial position of ZUB-T. As we correct over the next number of months he will accumulate.

(Top Pick Jul 15/13, Down 6.71%) Trading below EBV -3. The market does not believe the balance sheet. He needs to see the line go above EBV -3 for him to take notice of it again. They are still struggling.

These big banks are trading at extreme discounts. 0.7 price to book, so there is definitely a valuation discount. Likes it longer term, although there is some headwinds short term. As economy improves and loan losses move down he thinks the large banks will do well.

US banks are very highly correlated to the US 10 year yield. We have seen bond rates come down year to date, so bank stocks have come down. On top of that, this is a pretty big investment bank as well, and volatility levels are very low. Investment banks make money when volatility is very high. This will likely improve over the next several years which will improve profitability. Increased rates will also benefit. Feels the banks all screen very cheaply, and will be good performers over the next couple of years. (See Top Picks.)

(A Top Pick May 31/13. Down 9.04%.) Sold his holdings in January.

Had a big write-down. A lot of this was non-cash. Can’t raise the dividend and can’t buy back stock. The better guys stocks are doing nothing so the whole sector has been tossed into the bargain basement. Mortgage and loan growth is weaker than expected and trading revenues are nonexistent.

Thinks there is more upside than JP-N. There are lots of easy ways to fix up the earnings. Failed a Fed test this morning so can’t institute a dividend or do share buy backs for a while, but that creates opportunities. They could dispose of assets that aren’t doing anything.