Lloyds TSB Group PLC (LYG)

There is probably more uptick, but if there is, the British government will probably be selling more shares. It is now breaking out of that 2009-2010 trading range and the British government will be very happy to sell you some shares. While it has an excellent operational track record and has done very well over the last year, there might be some overhead supply. You’ll probably end up making reasonable money and you might even get a dividend, but watch out for that overhead supply from the British government.

The banking sector globally is going to benefit from higher interest rates. US is at the point where economy is starting to improve, interest rates are going to start to move higher. UK will probably be next in line for higher interest rates. This doesn’t pay a dividend right now but is going to introduce one at some point. This is a higher risk alternatives but you are going to get the lift in UK banking assets like we are seeing in the US. He would prefer HSBC (HBC-N) as a better alternative as it did not blow up but won’t have as much upside. This will offer you a ton of (?) if it works but is still a risky trade.

He is going away from banks that got assistance money from the government. This one is about 32% owned by the government. This has been a good performer in the last year.

Prefers HBC-N. LYG is starting to see a turn. Real estate and banks are linked.

A great, simple story. The British government owned 43% and sold a little bit to reduce their holdings. This is becoming a retail bank in the UK. Selling off non-core assets in different countries and really concentrating on what they originally did, a retail commercial bank in the UK.

A lot of people are looking at the US banking sector and seeing the run they have had and are making a direct analogy that what has happened in the US will happen in the UK. This bank is owned substantially by the UK government. They don’t have a dividend. Expectation is that it will rise over time. You could probably put a little bit of money into this one. (See Top Picks.)

(Market Call Minute.) Thinks the 39% that the government owns is going to be sold.

UK-based and predominantly a UK bank. This area will benefit over the next few years from a recovery in the UK housing market. Housing had got into bubble valuation levels and then got into trouble when people couldn’t arrange financing. A lot of that has now changed. Today it has generated a lot of capital and its capital problems are basically over with. Over the next couple of years as the housing market improves, mortgage volumes will increase and dividends should increase significantly.

8% bond maturing June 15/20. Mark Carney has taken over as the Bank of England governor and has just instituted some forward great guidance which, should, over time, cap long-term yields in the UK. This should support the UK housing market. This bank is the most exposed with roughly 25% market share in mortgage origination in UK. Just turned a profit in 2013. This is an older bond that has a conversion into equity if capital drops below 5%. Current capital of the bank is about 13.7%, giving a large buffer.

Still on his Watch List even though it has gone up an awful lot. Has looked at it very closely over the past few years. He would like to have some European banking exposure. He can see this one going a long way from here.

From a general point of view, he is probably more interested now in the British banks that he has been for a long, long time. There is a view that the British banks are going to take the path that the American banks have done but feels they are a couple of years behind. This one is primarily a domestic focused bank. Has no dividend. Big government ownership. Will be similar to the problems that Citibank (C-N) has had.

Thinks this has a good chance of going up. This has been on his Stock Watch list for a long time. Seem to be definitely in a recovery mode. It is highly risky as you have to deal with the government in England and they can change the rules on a dime.

About 43%-44% is still owned by the British government. Stock has had a good run like a lot of banks in the last little while. Very good management. Have sold off a lot of non-core assets and are really thinking about coming back to be a retail bank. Trading well below book value.

Has done really well. The UK government owns about 40% of it. It is thought that the government will sell their holdings, which means there will be a lot of supply coming on. No yield.

A really well-run bank that is getting rid of a lot of its non-core assets and should continue to do well. Part of it is owned by the British government which he expects they will sell over the next little while.