With share prices of many American financial institutions in the dumper and Bruce Berkowitz and to some extent Buffett interested in the sector, I’m intrigued.
However, I’m also scared of leveraged entities and suspicious of my ability to understand the balance sheets of these companies. So I’m reading and thinking. But not investing yet.
One well-known bank analyst seems to think the sector is ridiculously cheap. You have likely seen Dick Bove on the various financial networks. Some of his recent comments are below:
Richard X. Bove entered the securities industry at the end of 1965. Since that time, he has held positions as a salesperson, analyst and director of research with firms such as Wertheim & Co., Shearson and Dean Witter. For most of this period, his focus has been on companies in the bank and financial sector, but he has also covered building and business services companies.
He has appeared on the major business news channels over 400 times in the past few years. He is quoted regularly in the financial press, including The Wall Street Journal and The New York Times. At one time, he wrote a regular column for the American Banker.
Mr. Bove is a currently an analyst with Rochdale Securities LLC. At Rochdale, Mr. Bove analyzes the banking and brokerage industries. His approach to stock selection and timing is heavily influenced by macro developments. He believes that these forces influence stock prices more than earnings over the intermediate term. Mr. Bove received a B.A. from Columbia University in 1962.
TWST: Who do you like best in the money center category and why?
Mr. Bove: The money center banks are not providing the type of operating earnings improvements that investors want. They want to see operating earnings, exclusive of loan loss reductions, improving. This is not likely for these companies near term. What is evident is that these banks are selling below their liquidation values in many cases.
Citigroup (C) just screams at you, and it is my favorite stock by far. I cannot see why a bank should sell at a discount to its net cash value, because as I say its tangible book and its stated book value is 100% cash. If a bank is selling at a discount to its net cash value, it strikes me that ultimately it's going to get up to its net cash value if nothing else.
Link for the remainder of the article: http://finance.yahoo.com/news/US-Banks-Capital-Positions-twst-2678541851.html?x=0&.v=1
However, I’m also scared of leveraged entities and suspicious of my ability to understand the balance sheets of these companies. So I’m reading and thinking. But not investing yet.
One well-known bank analyst seems to think the sector is ridiculously cheap. You have likely seen Dick Bove on the various financial networks. Some of his recent comments are below:
Richard X. Bove entered the securities industry at the end of 1965. Since that time, he has held positions as a salesperson, analyst and director of research with firms such as Wertheim & Co., Shearson and Dean Witter. For most of this period, his focus has been on companies in the bank and financial sector, but he has also covered building and business services companies.
He has appeared on the major business news channels over 400 times in the past few years. He is quoted regularly in the financial press, including The Wall Street Journal and The New York Times. At one time, he wrote a regular column for the American Banker.
Mr. Bove is a currently an analyst with Rochdale Securities LLC. At Rochdale, Mr. Bove analyzes the banking and brokerage industries. His approach to stock selection and timing is heavily influenced by macro developments. He believes that these forces influence stock prices more than earnings over the intermediate term. Mr. Bove received a B.A. from Columbia University in 1962.
TWST: Who do you like best in the money center category and why?
Mr. Bove: The money center banks are not providing the type of operating earnings improvements that investors want. They want to see operating earnings, exclusive of loan loss reductions, improving. This is not likely for these companies near term. What is evident is that these banks are selling below their liquidation values in many cases.
Citigroup (C) just screams at you, and it is my favorite stock by far. I cannot see why a bank should sell at a discount to its net cash value, because as I say its tangible book and its stated book value is 100% cash. If a bank is selling at a discount to its net cash value, it strikes me that ultimately it's going to get up to its net cash value if nothing else.
Link for the remainder of the article: http://finance.yahoo.com/news/US-Banks-Capital-Positions-twst-2678541851.html?x=0&.v=1
