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The most well-known banking-focused hedge fund manager Tom Brown weighs in on the subject:
- Brown has been adding to shares in large banks.
- Did not buy Bank of America for a rally from $5 to $8; he bought for a rally from $5 to $20.
- He wonders if Paulson caved to the pressure of holding a stock (BAC) that has underperformed for a long time.
- He thinks pessimism about banks' ability to grow earnings is at an all-time high.
- Upcoming stress test results could trigger a return of capital (share repurchases and dividend increases) from banks subsequent to this.
- Thinks this could be one of his best years ever.
- Recovering regional banks are still his largest holdings but has added to Bank of America, Citigroup and Zions.
- He thinks the stress test results will result in all banks passing and that it will be a market-moving event on the upside. These stress tests have to take place before March 15.
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