Wells Fargo (WFC)

(A Top Pick Nov 30/16. Up 4%.) Bought this just prior to the Trump bump, but after they made the first announcement with respect to the deposit issue. He got a good price and a good dividend. The dividend will continue to grow. Trading at 1.2X Book, which is really, really cheap.

This is a little more sensitive to yield. Between J.P. Morgan (JPM-N) and this one, this is interesting, but there is hair on it from investment selling practices. Any time you come out from a “cease-and-desist”, it always takes a little while to get back to the former glory. The balance sheet is super sweet and clean so he wouldn’t worry about it if you are there.

Probably one of the more expensive banking retail stocks in the US. Good dividend yield. He likes this bank. There are some issues with the regulatory environment, simply because of what happened to them with some of their employees selling wrong products to clients. They have one of the best franchises coast-to-coast. Management has been very successful at creating shareholder value over long periods of time. They are going to take $2 billion in cost cutting by 2018, and another $2 billion in 2019. Cutting their branch networks by 450 branches.

(Market Call Minute.) There is an interesting revival happening here. He is still doing a lot of homework on this. There is a lot of technology risk here.

This has had troubles with all of its “fake” accounts and now, more recently, it looks like they are having some problems with insurance contracts. Seasonality for US financials is not in the summer. Chart is showing lower tops happening, which is a negative bearish pattern. It could break down to about $45.

This company is doing all the right things of cutting back on areas that look like potential problems, such as auto loans and student loans. Thinks you will make a 10%-12% return over a 5-year time frame. Dividend yield of 2.8%. (Analysts’ price target is $60.)

In the whole of financials, if you want something that has got some balance sheet and spread income, he would go with the money centred bank, not a regional. There is more capital market exposure and an annuity revenue stream. However, he wouldn’t do it with this bank. Prefers J.P. Morgan (JPM-N).

If you look at this against other banks and do a peer group analysis, what worries him are the management issues and what they have done in the past year or so. It surprises him that this bank hasn’t suffered more than it has. He does not want his clients to be involved with this, and would encourage people to move away from this and go to Citigroup (C-N) or Bank of America (BAC-N).

This got hurt by its predatory sales practices. They are in the penalty box. The whole sector has been hit because interest rates have kind of retraced. Thinks the US banking sector is cheap. This one is generally the best of the whole asset class. It is only trading at 1.3X BV and 11X earnings. Its ROI is probably around 13%. A premier bank with great assets.

Sell or Hold? This has been an under performer. It has a massive franchise in the US, which is not going anywhere. He would be more inclined to look at something like this, that has underperformed, rather than buying something that has already performed well.

Owned this at the time of their fiasco, and sold his holdings. It was not a situation he wanted his clients to be a part of. The risk profile of that bank increased dramatically in comparison to its peers.

He likes US banking as a general rule and this is a great company. They beat the street a little. The bigger issue is that they were targeting between 52% and 58% efficiency ratio, and came in with 62% because of the legal issues they had to face. Trading at 1.4X Book with a 3% dividend yield and it has lots of capital. a credible franchise all through the US, and thinks they can grab market share over the next little while. Their client servicing problems will still get passed out over the next several quarters, and then you will be able to see the company really start to grow again. This is a company that is going to grow more organically than through acquisitions. He really likes the company. (See Top Picks.)

This is a long-term Buy. It is a 1^st rate bank. They are not the 1^st bank that has gotten into some difficulty. The time to buy good banks is when they stumble.

Just reported and beat estimates. A great company and well run. Trading at 1.6X Book with a small dividend yield of 2.7%. Trading at 13X earnings. Net interest income, the biggest thing in this company because it is primarily a retail bank, is about 2.87%, a couple of basis points lower than expected. However, expenses went up. Costs are impacting them because of the issues they face with their employees, sales tactics, etc. That will affect them over the next couple of quarters, and earnings will be slightly depressed. As a franchise, this company is pretty incredible. If you get a nice pullback, he would buy it.

(A Top Pick March 10/16. Up 13%.) This pulled back quite a bit when the scandal 1^st came out. Prior to that event, it was always regarded is a very well-run bank, and got a premium valuation in the group. Pays a very nice dividend yield versus some of its peers. Higher interest rates will be beneficial to all banks. Still trading at a reasonable multiple of about 13X forward earnings with a yield of just under 3%.