JP Morgan Chase & Co (JPM)

Have finished acquiring the joint venture of City, which should close pretty soon and will be tied with Merrill Lynch for the largest wealth management brokerage business. They could triple their profits. They are going to add $57 billion in deposits over the next 3 years because of that. As interest rates rise, the spread rises and you could add $800 million in profits. That would be 15%-20% of their current profit, just from the deposit base alone.

Up 65% over the last year. We are now at a stage where you might want to think of taking some profits on US banks and looking at Canadian banks, especially with the set of results we have had. 2.5% yield.

This is the best of breed, large cap financial institution in the world today. Solid, diversified stream of earnings.

Is the bank he likes to own.

Has one of the best bank CEO’s in the US. Pays a nice dividend. Benefit, like other US financials from a recovering mortgage market and a generally stronger economy. Trades at a pretty reasonable valuation multiple.

You can buy this today at around 8.8X this year’s earnings. On a price to book basis it’s below 0.9 times still. Very attractive multiples. Below book because it’s ROE is only about 10%. In this industry, you are likely see ROE’s increase over the next few years, which will mean increases in price to book. Dividend yield of 3.14%. Great way to play a recovery in the US market and you get interest-rate sensitivity as well.

Likes this, but they have been in a mess with the whale (?) trade and there are other things going on. Wouldn’t buy it here but would wait for a pullback.

Buying back shares and raising their dividends per quarter is positive. Banks have had a huge run so far. With the housing recovery and the general economic recovery, US banks will do well.

Thinks there is a catalyst over the next couple of years to see increased dividend payouts. This one is paying out about 23% of its earnings and he thinks there is going to be a steady progression of growing the percentage. Increasing market share in the sector that people care about. Yield of 2.39%.

US plays are cheaper. Have done very well in the last year. Some of the risk has been taken out. 8.5 times earnings, just under book.

About one year away from completely rebuilding their balance sheet. Taking mortgage market share. Holding up net interest margins. Likely going to get go ahead to buy back more shares this spring and raise dividends.

If you are going into a US financial, especially large in the diversified markets, this would be the one. Good management. Stock had a great run but if the US recovery plays out, you will get improved capital markets activity and this name will get more upside. Dividend increase is quite likely if their earnings continue to grow.

Probably the more senior of the banks and is priced as such. Worked its way back to trading at around Book. Came through the 2008 situation a little more intact because he thinks it was better managed with less exposure to some of the problem areas. Banks normally make their money on net interest spreads and with a flat yield curve, although it is starting to steepen a touch, they just can’t make a lot of money borrowing short and lending long.

$58.45 Model price, 24% upside. This is the first positive sign of this market. 2.3 Trillion of assets so if it can’t move, then the US economy can’t move.

He is taking advantage of the higher Canadian $. US housing market is just recovering whereas the Canadian market has peaked. Big dividend increase expected in 2013 and a big share buyback.