Citigroup Inc. (C)

Just reported block buster earnings that were up about 45% from the same quarter last year. Improving credit, good capital market and most of its revenues come from outside of the US. Has over 10% tier 1 equity over Basil3. All the bad assets that were associated with the bad bank in the housing crisis and were stuck in holdings, have been slowly depleted from $540 billion-$130 billion today.

Broke out above EBV -3 so it is part of his "coming out of the blue" strategy. The market is telling us they are starting to believe the balance sheet. US banks look pretty cheap here.

This bank took very large reversals for bad loans a few years back. US house prices are up 12% year over year. If you are a mortgage lender and have a lot of real estate that you have mortgages on, with some of it worth less than the mortgage, and if that real estate goes up 12% in value, some of those underwater mortgages are going to be above water now. Feels that the inventory of foreclosed homes is reducing quarter by quarter and the resale of homes, on normal commercial terms, is increasing.

Coming out of the blue strategy. Had a nice pullback after a breakout. Model suggests 19% upside. He is waiting for the stress test and then they can buy back stock or initiate a dividend like the others.

Has basically come out of the blue in the last week. If this was trading at the same valuation as Toronto Dominion Bank (TD-T) you’d be $86 but actually closed at $53.27. Has any percent upside to his calculated model price. Dividend yield of 0.08%.

This is the industry that lead us into the 07/08 crisis. Now the company is transitioned into a retail machine and 65% of earnings come from outside US. Deferred tax asset. It is low risk.

Trading at a reasonable multiple, 80% of tangible book value. She sees stable margins and loan growth. It is slowing down a bit but the margins are still there. They have been able to come out of the crisis over the last few years. There is still a fair amount of upside here.

Came out last week with very, very good earnings. Trading below tangible book value. They have improving ROE. They keep selling off problem assets and now they are releasing reserves from holdings.

Hasn’t been a fan of this company, its management and its business model for quite some time. He is favourable towards US banks and financials, but more the regional banks than the big multinational players. (See Top Picks.)

Financials in the last couple of weeks have started to roll over. Hopefully, we are about to come into some support. It looks like it will visit $40.

When looking at the earnings going forward, it should get a 10 multiple and north of $5 in earnings. This should trade through $50. Thinks it is part of the recovery in the US banking sector and the housing sector as well. Still trading at a discount to Book Value.

They have just made a couple of major changes. They changed their CEO and they also started a very large rationalization of their workforce, announcing a layoff of 11,000 employees. They are carving costs out of the P&L so their profits grow quickly even if their revenues grow slowly.

(Market Call Minute.) New CEO. Has a nice emerging market retail franchise.

US banks are great opportunities in general. Holds BAC-N, but C-N is very oriented to New York and BAC-N is more global. Housing market is improving rapidly in the US and housing prices are going up and this is health for the US consumer. Thinks the US will start to re-finance again. Loan losses are going down, reserves are going down. It is a great time to own these stocks. Dividends will increase in the next couple of years.

New CEO. He is not in love with this one like many on the street are. It is well capitalized. Doesn’t expect huge amounts of growth. Would prefer JP Morgan or Bank or America.