Wells Fargo (WFC)

An incredible company. Trades at a premium to all the rest of the US banks, but you are paying for a great company. Good dividend yield of 3%. Trading at 1.4X Book and 11X earnings. Have done a very good job of growing their product line.

Another name that is having a real difficult time in the recent market turmoil. We need these financials to start going, because it has been frustrating to see this continual decline. What they have going for them is that 100% of their revenue is US. 3.1% dividend yield.

A play on the housing recovery. Loan growth and credit quality are both up. As interest rates rise, these banks will make a lot more money than the market is anticipating.

(A Top Pick Jan 13/15. Up 0.35%.) One of the highest quality banks to own for US domestic exposure. Very well-run. Even during the financial crisis, they never got to the problems that the other big institutions did. Attractive yield and are continuing to increase the dividend.

(Top Pick Jun 25/15, Down 9.58%) It outperformed the market last year. He is not worried that they were down in the last 6 months. This is for buy and hold for a long time.

He likes it on a valuation basis. They don’t have a big risk profile. They took a lot of hits already. They will take advantage of the rising rates in the US. He owns C-N, but any of the big money center banks are okay with BAC-N being the most risky.

Would have thought that money centred banks would have performed a lot better than they had this year. He likes this bank and thinks it is a good, long term play. It is very exposed to mortgages, but mortgage losses are not occurring anytime soon.

The largest lending institution in the US. Lending is growing rapidly in the US.

This represents an opportunity to participate in the housing recovery. In terms of mortgage origination, they are the largest in the US. Loan originations are growing reasonably well. We have really only seen a tepid growth in the housing market, and when that really starts to move this bank is going to do quite well.

(There was no discussion on this.)

There are probably some better growth prospects with isolated regional names in certain specific states, but among the national players this would probably be his favourite. They are zoned in to the retail banking side of things. The overall economic recovery in the US, housing and jobs recovery, should benefit this bank more than other national players.

He just owns regionals. If he had to choose a national bank it would be this one because they are heavy in the retail banking. They are aggressive at selling you their banking products. Most banks have 3 products with a customer, but WFC-N has 6.

He likes the US banks. This is the one that people tend to think of as the blue-chip bank. Well-run and well capitalized. Didn’t have a lot of issues during the financial crisis, like a lot of the other banks. Tends to get a bit of a premium valuation. Has a lot of exposure to the mortgage business, and will benefit when the US housing market improves. Nice dividend yield.

Sell Citigroup (C-N) and buy Wells Fargo (WFC-N)? If you understand the differences between the 2 banks and make considered decisions, then you could. He owns both. This is more of a housing play, the largest originator of mortgages. It is more expensive and more predictable. It just depends on what you are looking for in a bank. They are going to move roughly together, but with a positive economic background, Citigroup might recover more quickly because of the valuation spread.

Wells Fargo is as good of a bank that you will get in the US. They are better at balance sheet management than anybody in the business. Through multiple cycles, manages interest rate risk better than anybody in the industry. They have a well diversified balance sheet. They manage credit well. They manage interest rate risk well. He thinks it is a great place to be even with a consolidated role.