Citigroup Inc. (C)

(A Top Pick Dec 9/13. Up 4.44%.) This remains a top holding for him. Can see this ultimately as a $65 stock. They have applied to the Fed with a capital plan, which he thinks they get approved in March. That will be huge, because they can start returning the vast majority of their cash flow to investors, in the form of share buybacks, special dividends and dividends.

(A Top Pick Jan 14/14. Up 1.26%.) Coming out of his EBV -3 line in his strategy of “coming out of the blue”. Has $1.9 trillion of assets while Bank of America (BAC-N) has $2 trillion of assets. For the banks that were the most hit in the 2008 crisis, their balance sheets are starting to get to be okay. When they start to perform and use that capital, that tells you that the US is really coming along and getting out of the financial crisis. Yield of 0.07%.

(A Top Pick Nov 15/13. Up 7.34%.) For US financials, he thinks the best is yet to come. They are cheap. They are levered to an improving global economy. Have the whole housing cycle in front of them. You want to own US financials.

(A Top Pick Nov 7/13. Up to 12.43%.) Cheap. Trading at an 8.5X forward earnings multiple, versus the historical 55 year multiple of 15.5 times. Thinks they’re going to get their capital plan finally approved in March, which will allow for quite a bit of that cash flow to come back in the form of a dividend.

They don’t pay a large dividend. Six months ago when they did their capital tests, they had some internal control issues. So it trades at a bit of a discount or cheaper multiple so early next year when they are reviewed again they should be given permission to increase their dividend again. That could cause the valuation gap with others to close.

Just recently bought this. Government charges are starting to wane. Against its peers, this bank is very, very inexpensive. Trading at about 10X earnings, versus 13X for the 40 largest banks. Yield of 0.07%.

(A Top Pick Nov 7/13. Up 4.77%.) Still likes this. Money centered banks have not done as well as expected, but all the litigation issues are pretty much in the rear-view mirror, and that was the big overhang on the stock. They still don't have a dividend to speak of, and that is a big part of the story going forward.

Canadian banks are all trading at around 12-12.5 times earnings this year and around 11 in the quarter next year, with probably single digit earnings growth over the next year or 2. US banks are trading at 10 times. This one trades below Book Value, and the growth outlook over the next 3-4 years is 18%-20%. Thinks we are in for a very long upward cycle in US housing over the next few years.

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.