Opinions
David Driscoll
Morgan Stanley
MS-N
COMMENT
Jan 11, 2018
Stock price when the opinion was issued
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The question was on his preference of this group of wealth management companies. He owns all three for different reasons. The possible lack of regulation under the new administration has already boosted them. They are in excellent financial shape and have good dividend growth. It is not an expensive sector.
Money centre + wealth management (about 50% of total revenue). Accumulated companies over the years. New CEO comes from within. Traded off to a compelling valuation versus its history. Well positioned once we come out of all this. Yield is 3.72%.
(Analysts’ price target is $130.90)The capital markets banks are all performing really well. That tells you something about the rest of the market; if investors are focusing on these banks, then they must have a view that lots of deals will be done and that capital markets provide a good opportunity. This name is more investment management than trading, but still very attractive.
If you look at all the US banks' total returns, they are almost identical. The reason is because of ETF's. It’s pretty much a 26%-27% total return over the last 12 months for almost all the big money centred banks. Interest rates are rising, so it’s a good place to be. For access to American banking, he owns Toronto Dominion (TD-T) instead. On the dividend per share being paid out by US banks, they are just getting started. This bank would be deemed more as a money centred bank. A little slower growth than some of the others, because they have more of a global positioning with greater capital markets exposure.