JP Morgan Chase & Co (JPM)

Record earnings, yet paying out all these fines. The issue has been litigation over the last couple of years. The money was already set aside to pay the fines. The market was already expecting them, so that’s why the stock can go up when the fine is announced. The fines are in the past. He looks at the future. He wants exposure to an improving economy, e.g. through their loans, investment banking and asset management. About 9 times earnings is too cheap in his opinion.

Cream of the crop in the US. Coming off of the financial crisis, he feels this one will do well. They did the best job of anyone getting through the crisis. They sold assets early.

Has been in the news, but not in a great way over the past several months. Anybody with any weight in terms of legal action, are taking a shot at them. Because of this, he would stay clear.

(A Top Pick Nov 1/12. Up 38.18%.) There have been higher bank valuations, strong credit growth, a recovery in the US housing market and they have strong management. Feels US banks still have upside to them on an earnings growth basis. Expects they will start to pay some dividends soon too. There is no reason not to own these money centered banks right now.

(A Top Pick Dec 3/12. Up 44.78%.) Valuation is still cheap. Thinks they will earn about $6 a share next year, so it is trading at less than 10X earnings. Feels the dividend is going to go higher. He is still Buying. He can see $72-$75 over the next 12 months.

Looked closely during the recession but chose others. Went up well after the recession so is not of interest to him now.

(Top Pick Oct 23/12, 29.12%) Still a core position. Lots of news on their litigation issues. They are benefiting from an improving housing market and economy in the US. People are optimistic about their earnings growth potential.

He has HSBC, Barkleys, which are cheap banks. For JPM he thinks loan loss provisions will move down. They have lots of room to move up the dividend.

It seems that everybody is out to get this company these days. This is unfortunate, because it is a great franchise. He typically moves on from things that have flies on them. He likes US banks and would suggest that you look at an equal weight U.S. Bank ETF.

They have had so much bad stuff. You would think coming out of the financial crisis the Fed would have found out if there were any more surprises.

Will still benefit from a recovering housing market. They are one of the larger, leading type of names which he continues to like. Their businesses look pretty solid. Investment banking is coming back. As the economy recovers, there will be lower loan losses. Trades at a pretty significant discount to its global and North American peers. 2.9% yield will grow.

This or a regional bank? Trading at around 9X earnings. Great management. One of the few companies that was able to survive through 2008 without requiring a bailout, but took it because they had to. Regarding regional banks, they are subjected to specific areas in the US and you can own both. Thinks they will both do very, very well. If you want less volatility and earnings, you should buy the regional banks. (See Top Picks.)

(A Top Pick March 26/13. Up 5.58%.) Still feels strongly about this. Under a little bit of pressure because of some regulatory issues on past sins in the mortgage business as well as issues with a London trader last year. Still likes.

Very similar to a lot of the banks whereby the results of late have increased and have done quite well but there is still a lot of headwinds. Growth in banks could be more positive but the headwinds need to go away first. Prefers other banks over this one.

Longer term you will do very well. Right now they have a big bulls-eye on them. Full of turmoil. They are a senior bank and quite safe. When economy gets legs under it they will do well. Between now and then he is not sure how volatile they will be. Hold it in balance but pare back if you have too much.