GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

8 Guru-Held Financials Near 52 Week Lows



The 52 week low list is a great place to fish around for research ideas. GuruFocus allows you to couple that list with stocks that are held by gurus themselves by using this screen. Obviously this is no reason to blindly jump into a stock, but if John Paulson or Bruce Berkowitz owns a stock trading at 52 week lows, I think it's worthwhile to look a little deeper into the company.

Financials have been beaten up since the begining of the year. While the S&P 500 is up nearly 6% on the year, the XLF, which is an ETF that tracks financials, is down nearly 10%. Most of the big banks have been hurt by increased regulations, litigation and settlement expenses, and increased uncertainty. In my opinion, once these pressures subside, investors will realize that fears have been overblown. Each of the stocks below have substantial guru ownership and are trading near 52 week lows. I expect them to trade significantly higher by year end.

Bank of America (BAC): Bank of America hit multi-year lows yesterday and even went below $10. It's more than 35% off its highs. 39 gurus have a stake in the company, led by Bruce Berkowitz and John Paulson. Bank of America's P/B is a ridiculous 0.5.

Goldman Sachs (GS): 34 Gurus own Goldman Sachs, which apparantly has been appointed as the chief bogeyman by politicans and the press. Lloyd Blankfein has been under fire for quite some time and there has been speculation about him retiring. Shares are 26% off their highs. Berkowitz is also a big holder here, and the stock also makes up more than 5% of Mohnish Pabrai's portfolio. Shares trade at a P/B of 1, which, except for late 2008 and early 2009, is a historically low valuation. It should be closer to 2.

Morgan Stanley (MS): 3.7% of Eric Mindich's portfolio is made up of Morgan Stanley Stock. Berkowitz is the biggest owner, and Richard Pzena also has a significant stake. Morgan Stanley trades at a P/B of 0.6 and shares are off of their highs by about 32%. 16 gurus own shares.

Genworth Financial (GNW): Genworth Financial has fared the worst. Shares are nearly 39% off their highs. 14 gurus count themselves as owners, led by NWQ Managers, Hotchkis & Wiley, and Dodge & Cox. Their P/B is a mere 0.3. Genworth is an insurer and wealth management specialist that has been crushed by a recent New York probe.

Northern Trust (NTRS): Northern Trust also has 14 guru owners and is trading 21% off their highs. Northern Trust is a strong player and made it through the crisis scathed considerably less than the others listed here. They trade at a P/B of 1.6, while their typical non-crisis ratio would be above 3. Northern Trust's largest guru holders are Pioneer Investments and Manning & Napier Advisors.

Comerica (CMA): Comerica is a regional bank based out of Dallas. Shares are trading about 25% off their highs and are held by 7 gurus. Pioneer Investments owns more than 2% of the company. The P/B is 1. It's typically been around 2 over the past decade. Most recently, Comerica is acquiring Sterling Bancshares for about $1 billion in order to substantially increase the number of branches in Texas.

Banco Santander Brazil (BSBR): 7 gurus own Banco Santander, which is trading 35% off its highs. Shares are down 13% since late June and trades at a P/B of 0.5. The stock makes up 2% of John Griffin's portfolio. It has an attractive dividend.

Barclays (BCS): Barclay's is trading 33% off its highs and is held by 5 gurus, although all are very small positions. Barclay's passed the recent EU stress test administered to banks in the region. They currently trade at a deceptive 0.3 times book. Shares yield 2.4%.

Disclosure: Long BAC

About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

Visit Steven Kiel's Website


Rating: 3.1/5 (7 votes)

Comments

taxeshurtme
Taxeshurtme - 3 years ago


Financials , especially Wall Street firms, may be showing that the investors do not trust them anymore. They have been responsible for bankrupting Iceland, destabalizing Greece, Portugal, Spain, Italy, and giving advice to the USA. I would suspect that the Wall Street firms advised the USA to use off-balance sheet financing - a scary prospect that may sink the USA.

The fact that the USA Government is now an investment bank, run by one of the guiltiest of the Wall Street firms in almost all of the financial crisis of the last decade - what a horrifying thought. Well -educated financial engineers, and lawyers have created a mess and have led the USA into a decline of financial, social, and political values.

The reason that financials are down, is if there is a screwing with the debt ceiling, the dirivative financial products will go haywire, and this may kill investment banks and the insureres who never really had the ability to cover the products that they claimed to insure - they just sold premium and profited - just like they did for mortgage backed securities -

The real sad truth is that it is all smoke and morrors, and the only solution to prevent a major crash is to allow Wall Street to get a political solution, otherwise they have ruined the financial system.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK