Morgan Stanley (MS)

Loves the company, but he classifies it as having gotten beaten up rather badly. It is the one that did the best fundamentally.

Prefers Goldman Sachs (GS-N). The environment is still very, very solid, and we still haven’t seen a huge M&A environment, which will be a huge money maker for investments banks over the next couple of years.

There was a lot of regulation coming out of the recession. MS-N is moving rapidly towards asset management (55% of revenue). It is a stable business where they deal with a very high end client. Thinks their dividend could go up 100-150% over the next year. Believes investors will be prepared to pay a higher multiple as they recognize that risk levels have come down due to new regulations.

Has no idea where they are going short term. The US banking segment is currently on sale because interest rates are at such low levels. Over the longer term, higher interest rates will benefit them. It is a story of debt trading through to equity trading.

Very well run company and very well-positioned to take advantage of the M&A theme and increasing IPO activity. Being an investment bank, as opposed to a more full service bank, it is really well-positioned. Not expensive at 12.5X earnings. He can see more upside. A good one to hold.

This is still one of his top names in his growth fund. With their wealth management business, they have a great opportunity. Shift to a fee-based model should lead to more predictable earnings. Yield of 1.27%.

P/E ratio and PEG seem pretty compelling at this particular time. Sometimes with these companies, you can get thrown a little bit of a curve because of using a metric that may not be the best. In terms of banks and M&A type companies, looking at it from an earnings standpoint may not be the best bet. Looking at BV and discounted premium to BV may work a little bit better. Trades at a discount to BV, which is attractive, but has a bigger bond exposure than some of the others.

Investment bank is doing fine. They have restructured operations. Feels US financials are undervalued. Have a lot of earnings upside potential.

Trading at a discount to book value. She owns C-N, which has many of the same drivers. You are seeing ROEs coming up across the board.

Not as strong financially and more exposed to fixed income market and a higher exposure to Europe.

Owns C-N and JP-N. MS has rich valuation, 2.05 peg ratio (PE over growth).

He bought 5 companies in the US financial sector over the past few years. This one was on his watch list. A perfect example of a company that has done well since the recession. Stock price has gone up so he has taken it off his list. He can see this one going far higher.

You are in the sweet spot of financials. This one has not passed by EBC -3, but as it does he would be a buyer. It tells him that the market is starting to believe the balance sheet of the company. Leave it alone for a year or two and you will be very, very happy.

Remains the cheapest of the Wall Street banks. They are now the largest advisory firm. They are already seeing a bump in earnings. The dividend will move to more normalized dividend levels next year. It is the penalty box for what happened in financial crisis.

Trading a little below book value. Strength in stock markets helps. Should continue to do well.