Switch to:

GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 4/10

vs
industry
vs
history
Cash to Debt 5.75
BK's Cash to Debt is ranked higher than
53% of the 1397 Companies
in the Global Asset Management industry.

( Industry Median: 10000.00 vs. BK: 5.75 )
BK' s 10-Year Cash to Debt Range
Min: 0.54   Max: 7.18
Current: 5.75

0.54
7.18
Equity to Asset 0.10
BK's Equity to Asset is ranked lower than
68% of the 1543 Companies
in the Global Asset Management industry.

( Industry Median: 0.82 vs. BK: 0.10 )
BK' s 10-Year Equity to Asset Range
Min: 0.07   Max: 0.16
Current: 0.1

0.07
0.16
Interest Coverage 10.82
BK's Interest Coverage is ranked lower than
59% of the 1292 Companies
in the Global Asset Management industry.

( Industry Median: 2003.83 vs. BK: 10.82 )
BK' s 10-Year Interest Coverage Range
Min: 0.73   Max: 10.82
Current: 10.82

0.73
10.82
F-Score: 5
Z-Score: 0.22
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 8/10

vs
industry
vs
history
Operating margin (%) 27.11
BK's Operating margin (%) is ranked higher than
55% of the 1592 Companies
in the Global Asset Management industry.

( Industry Median: 52.03 vs. BK: 27.11 )
BK' s 10-Year Operating margin (%) Range
Min: -28.85   Max: 56.83
Current: 27.11

-28.85
56.83
Net-margin (%) 18.23
BK's Net-margin (%) is ranked higher than
53% of the 1594 Companies
in the Global Asset Management industry.

( Industry Median: 46.75 vs. BK: 18.23 )
BK' s 10-Year Net-margin (%) Range
Min: -14.16   Max: 44.14
Current: 18.23

-14.16
44.14
ROE (%) 7.59
BK's ROE (%) is ranked higher than
65% of the 1622 Companies
in the Global Asset Management industry.

( Industry Median: 7.95 vs. BK: 7.59 )
BK' s 10-Year ROE (%) Range
Min: -3.8   Max: 32.84
Current: 7.59

-3.8
32.84
ROA (%) 0.76
BK's ROA (%) is ranked lower than
51% of the 1642 Companies
in the Global Asset Management industry.

( Industry Median: 4.48 vs. BK: 0.76 )
BK' s 10-Year ROA (%) Range
Min: -0.48   Max: 2.93
Current: 0.76

-0.48
2.93
ROC (Joel Greenblatt) (%) 274.69
BK's ROC (Joel Greenblatt) (%) is ranked higher than
77% of the 1071 Companies
in the Global Asset Management industry.

( Industry Median: 82.78 vs. BK: 274.69 )
BK' s 10-Year ROC (Joel Greenblatt) (%) Range
Min: -134.31   Max: 337.56
Current: 274.69

-134.31
337.56
Revenue Growth (3Y)(%) 4.40
BK's Revenue Growth (3Y)(%) is ranked higher than
72% of the 1009 Companies
in the Global Asset Management industry.

( Industry Median: 1.10 vs. BK: 4.40 )
BK' s 10-Year Revenue Growth (3Y)(%) Range
Min: -11.7   Max: 23.9
Current: 4.4

-11.7
23.9
EBITDA Growth (3Y)(%) 7.60
BK's EBITDA Growth (3Y)(%) is ranked higher than
74% of the 869 Companies
in the Global Asset Management industry.

( Industry Median: 1.40 vs. BK: 7.60 )
BK' s 10-Year EBITDA Growth (3Y)(%) Range
Min: -18.9   Max: 22.5
Current: 7.6

-18.9
22.5
EPS Growth (3Y)(%) -5.70
BK's EPS Growth (3Y)(%) is ranked higher than
63% of the 883 Companies
in the Global Asset Management industry.

( Industry Median: 3.20 vs. BK: -5.70 )
BK' s 10-Year EPS Growth (3Y)(%) Range
Min: -24.4   Max: 23.7
Current: -5.7

-24.4
23.7
» BK's 10-Y Financials

Financials


Revenue & Net Income
Equity & Asset
Oprt. Cash Flow & Free Cash Flow

» Details

Guru Trades

Q4 2013

BK Guru Trades in Q4 2013

Diamond Hill Capital 5,869 sh (New)
Robert Olstein 105,000 sh (New)
NWQ Managers 158,200 sh (+3.26%)
Murray Stahl 37,917 sh (+1.07%)
Mario Gabelli 6,239,819 sh (+1.02%)
Jean-Marie Eveillard 25,443,943 sh (+0.26%)
First Pacific Advisors 3,927,900 sh (+0.25%)
Chuck Royce 1,360 sh (unchged)
Ken Fisher 9,507 sh (unchged)
Warren Buffett 24,652,836 sh (unchged)
Steven Romick 3,718,200 sh (unchged)
Yacktman Fund 4,200,000 sh (unchged)
Bill Nygren 5,260,000 sh (unchged)
Brian Rogers 200,000 sh (unchged)
Jeff Auxier 355,754 sh (unchged)
Yacktman Focused Fund 2,250,000 sh (unchged)
John Hussman Sold Out
Jim Simons Sold Out
Donald Yacktman 7,754,105 sh (-0.09%)
John Rogers 113,230 sh (-0.26%)
John Buckingham 159,144 sh (-0.56%)
Dodge & Cox 57,967,724 sh (-1.19%)
HOTCHKIS & WILEY 4,929,638 sh (-2.88%)
Mason Hawkins 39,369,655 sh (-2.96%)
Chris Davis 83,323,238 sh (-3.68%)
Third Avenue Management 7,117,407 sh (-6.56%)
Tweedy Browne 4,226,245 sh (-8.12%)
Charles Brandes 4,134,409 sh (-9.23%)
Jeremy Grantham 277,330 sh (-12.95%)
Paul Tudor Jones 13,900 sh (-32.52%)
David Dreman 52,232 sh (-38.98%)
Tom Gayner 111,603 sh (-57.34%)
Martin Whitman 3,929,350 sh (-4.5%)
» More
Q1 2014

BK Guru Trades in Q1 2014

James Barrow 1,046,500 sh (New)
Louis Moore Bacon 500,000 sh (New)
Steven Cohen 13,346 sh (New)
Robert Olstein 213,000 sh (+102.86%)
David Dreman 77,843 sh (+49.03%)
HOTCHKIS & WILEY 6,272,936 sh (+27.25%)
Ken Fisher 11,025 sh (+15.97%)
Dodge & Cox 62,794,463 sh (+8.33%)
Jean-Marie Eveillard 27,018,445 sh (+6.19%)
Bill Nygren 5,560,000 sh (+5.7%)
John Buckingham 163,357 sh (+2.65%)
Mario Gabelli 6,387,482 sh (+2.37%)
NWQ Managers 158,500 sh (+0.19%)
Diamond Hill Capital 5,874 sh (+0.09%)
Louis Moore Bacon 750,000 sh (unchged)
Brian Rogers 200,000 sh (unchged)
Warren Buffett 24,652,836 sh (unchged)
Chuck Royce 1,360 sh (unchged)
Yacktman Fund 4,200,000 sh (unchged)
Murray Stahl 38,417 sh (unchged)
Jeff Auxier 355,754 sh (unchged)
Yacktman Focused Fund 2,250,000 sh (unchged)
Tom Gayner Sold Out
Murray Stahl Sold Out
Tweedy Browne 4,218,175 sh (-0.19%)
Charles Brandes 4,122,590 sh (-0.29%)
John Rogers 112,860 sh (-0.33%)
Donald Yacktman 7,724,703 sh (-0.38%)
Mason Hawkins 36,567,504 sh (-7.12%)
Jeremy Grantham 250,000 sh (-9.85%)
First Pacific Advisors 3,403,300 sh (-13.36%)
Steven Romick 3,205,000 sh (-13.8%)
Chris Davis 71,031,905 sh (-14.75%)
Third Avenue Management 5,296,072 sh (-25.59%)
Paul Tudor Jones 9,500 sh (-31.65%)
Martin Whitman 3,279,350 sh (-16.54%)
» More
Q2 2014

BK Guru Trades in Q2 2014

Murray Stahl 38,417 sh (New)
NWQ Managers 187,050 sh (+18.01%)
Paul Tudor Jones 11,100 sh (+16.84%)
James Barrow 1,221,600 sh (+16.73%)
Bill Nygren 6,320,000 sh (+13.67%)
Dodge & Cox 67,624,874 sh (+7.69%)
John Buckingham 164,435 sh (+0.66%)
Jean-Marie Eveillard 27,171,251 sh (+0.57%)
Donald Yacktman 7,760,010 sh (+0.46%)
First Pacific Advisors 3,414,400 sh (+0.33%)
Mario Gabelli 6,389,513 sh (+0.03%)
Robert Olstein 213,000 sh (unchged)
Chuck Royce 1,360 sh (unchged)
Yacktman Fund 4,200,000 sh (unchged)
Warren Buffett 24,652,836 sh (unchged)
Steven Romick 3,205,000 sh (unchged)
Brian Rogers 200,000 sh (unchged)
Yacktman Focused Fund 2,250,000 sh (unchged)
Louis Moore Bacon Sold Out
John Rogers 112,815 sh (-0.04%)
Diamond Hill Capital 5,858 sh (-0.27%)
Jeff Auxier 353,154 sh (-0.73%)
Tweedy Browne 4,182,948 sh (-0.84%)
HOTCHKIS & WILEY 6,174,049 sh (-1.58%)
Ken Fisher 10,637 sh (-3.52%)
Charles Brandes 3,965,278 sh (-3.82%)
Third Avenue Management 5,028,544 sh (-5.05%)
Mason Hawkins 34,546,139 sh (-5.53%)
Chris Davis 66,434,305 sh (-6.47%)
Jeremy Grantham 226,400 sh (-9.44%)
David Dreman 54,328 sh (-30.21%)
Martin Whitman 3,179,350 sh (-3.05%)
» More
Q3 2014

BK Guru Trades in Q3 2014

Andreas Halvorsen 16,735,985 sh (New)
Caxton Associates 75,600 sh (New)
Pioneer Investments 18,528 sh (New)
Paul Tudor Jones 21,828 sh (+96.65%)
Jeremy Grantham 346,400 sh (+53%)
John Rogers 116,715 sh (+3.46%)
Bill Nygren 6,450,000 sh (+2.06%)
Jean-Marie Eveillard 27,718,354 sh (+2.01%)
Mario Gabelli 6,478,035 sh (+1.39%)
John Buckingham 164,590 sh (+0.09%)
Robert Olstein 213,000 sh (unchged)
Ken Fisher 10,637 sh (unchged)
NWQ Managers 187,050 sh (unchged)
Yacktman Fund 4,200,000 sh (unchged)
Brian Rogers 200,000 sh (unchged)
Yacktman Focused Fund 2,250,000 sh (unchged)
Chuck Royce 1,360 sh (unchged)
James Barrow Sold Out
Diamond Hill Capital Sold Out
Donald Yacktman 7,750,709 sh (-0.12%)
Jeff Auxier 352,454 sh (-0.2%)
Murray Stahl 38,317 sh (-0.26%)
Tweedy Browne 4,154,803 sh (-0.67%)
Dodge & Cox 67,150,764 sh (-0.7%)
David Dreman 52,480 sh (-3.4%)
Warren Buffett 23,377,603 sh (-5.17%)
Charles Brandes 3,730,171 sh (-5.93%)
Chris Davis 61,887,826 sh (-6.84%)
Third Avenue Management 4,491,797 sh (-10.67%)
HOTCHKIS & WILEY 5,244,262 sh (-15.06%)
Mason Hawkins 16,535,281 sh (-52.14%)
First Pacific Advisors 1,096,500 sh (-67.89%)
Steven Romick 1,021,000 sh (-68.14%)
Martin Whitman 3,034,813 sh (-4.55%)
» More
» Details

Insider Trades

Latest Guru Trades with BK

(List those with share number changes of more than 20%, or impact to portfolio more than 0.1%)

GuruDate Trades Impact to Portfolio Price Range * (?) Current Price Change from Average Current Shares
Mason Hawkins 2014-09-30 Reduce -52.14%3.6%$37.6 - $40.26 $ 41.296%16535281
Andreas Halvorsen 2014-09-30 New Buy2.6%$37.6 - $40.26 $ 41.296%16735985
Chris Davis 2014-09-30 Reduce -6.84%0.51%$37.6 - $40.26 $ 41.296%61887826
Third Avenue Management 2014-09-30 Reduce -10.67%0.38%$37.6 - $40.26 $ 41.296%4491797
HOTCHKIS & WILEY 2014-09-30 Reduce -15.06%0.12%$37.6 - $40.26 $ 41.296%5244262
Charles Brandes 2014-09-30 Reduce -5.93%0.11%$37.6 - $40.26 $ 41.296%3730171
James Barrow 2014-09-30 Sold Out 0.06%$37.6 - $40.26 $ 41.296%0
Martin Whitman 2014-07-31 Reduce -4.55%0.23%$33.6 - $39.82 $ 41.2914%3034813
Chris Davis 2014-06-30 Reduce -6.47%0.45%$33.12 - $36.24 $ 41.2920%66434305
Mason Hawkins 2014-06-30 Reduce -5.53%0.39%$33.12 - $36.24 $ 41.2920%34546139
Bill Nygren 2014-06-30 Add 13.67%0.2%$33.12 - $36.24 $ 41.2920%6320000
Third Avenue Management 2014-06-30 Reduce -5.05%0.18%$33.12 - $36.24 $ 41.2920%5028544
Dodge & Cox 2014-06-30 Add 7.69%0.17%$33.12 - $36.24 $ 41.2920%67624874
David Dreman 2014-06-30 Reduce -30.21%0.06%$33.12 - $36.24 $ 41.2920%54328
Martin Whitman 2014-04-30 Reduce -3.05%0.15%$30.91 - $35.58 $ 41.2925%3179350
Third Avenue Management 2014-03-31 Reduce -25.59%1.18%$30.91 - $35.58 $ 41.2925%5296072
Chris Davis 2014-03-31 Reduce -14.75%1.05%$30.91 - $35.58 $ 41.2925%71031905
Robert Olstein 2014-03-31 Add 102.86%0.51%$30.91 - $35.58 $ 41.2925%213000
Mason Hawkins 2014-03-31 Reduce -7.12%0.48%$30.91 - $35.58 $ 41.2925%36567504
Dodge & Cox 2014-03-31 Add 8.33%0.18%$30.91 - $35.58 $ 41.2925%62794463
HOTCHKIS & WILEY 2014-03-31 Add 27.25%0.18%$30.91 - $35.58 $ 41.2925%6272936
Jean-Marie Eveillard 2014-03-31 Add 6.19%0.15%$30.91 - $35.58 $ 41.2925%27018445
Tom Gayner 2014-03-31 Sold Out 0.12%$30.91 - $35.58 $ 41.2925%0
David Dreman 2014-03-31 Add 49.03%0.07%$30.91 - $35.58 $ 41.2925%77843
James Barrow 2014-03-31 New Buy0.05%$30.91 - $35.58 $ 41.2925%1046500
Martin Whitman 2014-01-31 Reduce -16.54%0.91%$31.73 - $34.96 $ 41.2923%3279350
John Hussman 2013-12-31 Sold Out 0.83%$29.57 - $34.56 $ 41.2927%0
Robert Olstein 2013-12-31 New Buy0.53%$29.57 - $34.56 $ 41.2927%105000
Third Avenue Management 2013-12-31 Reduce -6.56%0.29%$29.57 - $34.56 $ 41.2927%7117407
Tweedy Browne 2013-12-31 Reduce -8.12%0.27%$29.57 - $34.56 $ 41.2927%4226245
Chris Davis 2013-12-31 Reduce -3.68%0.25%$29.57 - $34.56 $ 41.2927%83323238
Mason Hawkins 2013-12-31 Reduce -2.96%0.18%$29.57 - $34.56 $ 41.2927%39369655
Charles Brandes 2013-12-31 Reduce -9.23%0.17%$29.57 - $34.56 $ 41.2927%4134409
Tom Gayner 2013-12-31 Reduce -57.34%0.15%$29.57 - $34.56 $ 41.2927%111603
David Dreman 2013-12-31 Reduce -38.98%0.09%$29.57 - $34.56 $ 41.2927%52232
Premium More recent guru trades are included for Premium Members only!!
Premium More recent guru trades are included for USA Subscribe Members only!!
» Interactive Charts

Peter Lynch Chart ( What is Peter Lynch Charts )

Preferred stocks of Bank of New York Mellon Corp

SymbolPriceYieldDescription
BKNML950.005.20
BKPRC0.005.74Deposit Shs Repr 1/4000 5.2 % Non Cum Pfd Shs Series -C- PDF

Guru Investment Theses on Bank of New York Mellon Corp

Mason Hawkins Comments on Bank of New York Mellon - Oct 17, 2014

Bank of New York Mellon (BK) gained 4% in the quarter and 12% YTD. Expense controls helped results, although low market volatility and low rates this year have hampered revenue growth in asset services. The asset management business grew steadily along with the markets. The company emphasized the substantial earnings power that modest interest rate increases will create as money market fee waivers will end and net interest margins will expand. During the quarter BK repurchased almost 1% of outstanding shares, approximately one-third of the total buyback approved by the Federal Reserve.

From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Q3 2014 Management Discussion.

Check out Mason Hawkins latest stock trades

Chris Davis Comments on Bank of New York Mellon - Sep 08, 2014

Bank of New York Mellon (BK) is a third example of the type of financial services businesses that Davis Advisors finds attractive. This company is a behind-the-scenes giant in the mundane yet durable businesses of trust services, asset custody, transaction processing, and asset management. While less widely understood than its traditional banking peers, Bank of New York Mellon is at the forefront of its industry in size and depth, operating in 35 countries with a leading $27.9 trillion under custody and/or administration. Although not in a glamorous industry, we believe its business lines are profitable, scalable, less risky, and less capital intensive than traditional banking with good long-term growth potential worldwide.

From Chris Davis (Trades, Portfolio)’ Davis Financial Fund Semi-Annual Review 2014.



Check out Chris Davis latest stock trades

Mario Gabelli Comments on Bank of New York Mellon Corp - Jul 25, 2014

The Bank of New York Mellon Corp. (BK) (1.3% of net assets as of June 30, 2014) (BK - $37.48 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of December 31, 2013, the firm had $27.6 trillion in assets under custody and $1.6 trillion in assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions.

From Mario Gabelli (Trades, Portfolio)’s The Gabelli Equity Income Fund Second Quarter 2014 Shareholder Commentary.

Check out Mario Gabelli latest stock trades

Third Avenue Management Comments on Bank of New York Mellon - Jul 23, 2014

BNY Mellon (BK) ("BK") participates in two businesses –asset management and investment servicing. The company had $1.6 trillion in assets under management and $27.9 trillion of asset under custody and/or administration, as of March 31, 2014. The businesses seem separable and more valuable on a sum-of-the-parts basis. The asset management business with its iconic Dreyfus Funds and stable of boutique managers could certainly be a stand- alone entity or would seem to attract interest from strategic or financial buyers. BK has been in the news recently given more shareholder scrutiny of its operating efficiency. Recently, there have been news reports that BK could be looking to sell its Corporate Trust unit, which has been a detractor due to the run-off of high-margin securitizations.

From Martin Whitman (Trades, Portfolio)'s 2Q 2014 Shareholder Letters.

Check out Martin Whitman latest stock trades

Third Avenue Management Comments on BNY Mellon - Jun 06, 2014

BNY Mellon (BK)("BK") participates in two businesses –asset management and investment servicing. The company had $1.6 trillion in assets under management and $27.9 trillion of asset under custody and/or administration, as of March 31, 2014. The businesses seem separable and more valuable on a sum-of-the-parts basis. The asset management business with its iconic Dreyfus Funds and stable of boutique managers could certainly be a stand- alone entity or would seem to attract interest from strategic or financial buyers. BK has been in the news recently given more shareholder scrutiny of its operating efficiency. recently, there have been news reports that BK could be looking to sell its Corporate Trust unit, which has been a detractor due to the run-off of high-margin securitizations.



From Third Avenue Management (Trades, Portfolio)'s second quarter 2014 shareholder letter.

Check out Third Avenue Management latest stock trades

Gabelli Asset Management Comments on The Bank of New York Mellon - May 13, 2014

The Bank of New York Mellon Corp. (1.0%) (BK)(BK - $35.29 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of December 31, 2013, the firm had $27.6 trillion in assets under custody and $1.6 trillion in assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions.

From Mario Gabelli (Trades, Portfolio)'s Value 25 Fund first quarter 2014 shareholder commentary.

Check out Mario Gabelli latest stock trades

Lountzis Asset Management Comments on Bank of New York Mellon - Mar 21, 2014

BANK OF NEW YORK MELLON (BK) is a leading trust bank with assets under custody and management exceeding $27 trillion. They are a global leader in several segments in which it operates. Few competitors have their global reach and scale. Approximately 80% of its revenues are reoccurring and fee-based focused on institutional services with less reliance on the higher credit risk from lending.



In 2013, BK generated operating revenue of $14.9 billion and pre-tax income of $3.7 billion. The bank’s results were helped by their continued efficiency initiatives which generated over $650 million in annual savings. Low interest rates continue to negatively impact results as they have over the past few years. The bank continues to work diligently on its initiatives to cut expenses and selectively raise prices on many of its products. We believe the bank can earn $2.45 in 2014 representing a multiple of just over 13x earnings, while paying a 3% dividend yield.



From Lountzis Asset Management 2013 Annual Letter



Check out latest stock trades

Mario Gabelli Comments on Bank of New York Mellon - Feb 19, 2014

The Bank of New York Mellon Corp. (0.5% of net assets as of December 31, 2013) (BK)($34.94 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of September 30, 2013, the firm had $27.4 trillion in assets under custody and $1.5 trillion of assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions.



From the Gabelli Value 25 Fund fourth quarter 2013 commentary.



Check out Mario Gabelli latest stock trades

Chris Davis Comments on Bank of New York Mellon - Oct 03, 2013

Our largest position is Bank of New York Mellon (BK). Starting with the business, despite having the word “bank” in its name, Bank of New York Mellon is not a bank in the traditional sense but instead primarily provides a range of processing, custody and investment management services to corporations, governments and financial institutions. While absolutely essential, these services are not easily understood by the layman. To use an analogy, if the financial markets are like a thriving city, then Bank of New York Mellon would be the local electric utility, a necessary but unglamorous element of the city’s infrastructure. The two largest segments (comprising approximately 55% of total company earnings) are asset custody (where it holds $26 trillion in assets on behalf of customers) and issuer services (where it acts as trustee for approximately $11 trillion of debt securities and more than 1,300 depository receipt programs). To put these numbers in perspective, the market capitalization of the entire S&P 500® Index is about $15 trillion and the total government debt outstanding (federal, state and local) in the United States is about $20 trillion. Each of these businesses is an oligopoly in which Bank of New York has a leading position with durable competitive advantages derived from economies of scale, the costs of switching and customer loyalty.

In addition to the base fee income earned in its investment services business, the bank generates ancillary revenue from foreign exchange trading, securities lending and the interest rate spread on approximately $220 billion of low cost deposits on which the bank currently pays an average interest rate of less than 0.1%. The “moat” around the investment services businesses is evidenced by the high returns on tangible equity that Bank of New York earns—currently in the mid-20’s and historically in the mid-30’s.

Bank of New York also has a more traditional investment management business that represents approximately 30% of total company’s earnings. This business is made up of a diverse collection of equity, fixed income, alternative asset, and money market management services with an aggregate of $1.4 trillion of assets under management. The investment management business also offers an inherently high return on capital, though the moats surrounding it tend to be lower than for the investment services business. Bank of New York’s diversity of asset classes offers some protection from the ebbs and flows of investor sentiment.

In general, each of the bank’s major businesses should grow in conjunction with the continued increase in the amount and value of debt and equity outstanding globally, with only modest incremental capital needed to support that growth.

In terms of people, CEO Gerald Hassell has held that position since 2011, and prior to that had been president since 1998. Since assuming the role of CEO, he has focused the company on improving operational efficiencies and on the disciplined allocation of capital. Having built up its regulatory capital levels over the last few years to comply with Basel 3 rules (voluntary global regulatory standards developed in response to the global financial crisis of the late 2000’s), Bank of New York is today allocating approximately 70% of earnings to share repurchases and dividends (after already returning some $3 billion to shareholders in the last two years), with the balance retained to support largely organic growth at high incremental rates of return. Given the utility nature of this business, the bank does not need a visionary leader but rather a disciplined one, a description that seems to fit Mr. Hassell. Past leaders have pursued expensive acquisitions and poorly thought-out strategic expansions. Current management seems to understand this well and has wisely set their attention on execution and cost discipline.

As for price, Bank of New York Mellon is valued today at about 13 times this year’s earnings or nearly a 7.5% earning yield. As mentioned above, the majority of these earnings are distributable to shareholders as the company is extremely well capitalized (or will be by the end of this year, depending on some clarification of regulatory standards) and can grow with relatively small amounts of retained capital. Further, we consider these earnings somewhat understated because today’s low interest rates have forced the bank to waive money market fees and have depressed interest margins. We estimate an increase of 100 basis points in interest rates could increase earnings by about 15% and reduce the valuation multiple to only 11 times earnings.

Finally, we must consider the risks. When presenting the rationale for an investment, it is common to hear all the reasons the investment will be successful. As a central part of our investment process, we want to examine all the reasons an investment could fail. With acknowledgement to the wonderful behavioral economist Daniel Kahneman, we refer to this exercise as a “pre-mortem.” For any company, the most dire risks might be called “existential risks.” These are the risks of some event or series of events entirely wiping out existing stockholder value. In recent years, existential risks have tended to be caused by either leverage or obsolescence (usually resulting from technological innovation). Although Bank of New York Mellon is certainly leveraged in that assets significantly exceed equity, these assets are predominately government securities and deposits rather than loans or securities subject to credit risk. In fact, in the draconian stress test laid out by regulators, which assumes a 5% decline in GDP over two years, an unemployment rate of 12%, a stock market decline of 50%, and residential and commercial real estate declines of 20%, Bank of New York Mellon would actually make more than $5 billion before taxes. As for technological obsolescence, the very fact the bank is well into its third century of existence would seem to indicate a relative low risk of obsolescence, which is true. As with an electric utility, the services provided by the bank are essential and irreplaceable.

Although such existential risk is low at Bank of New York Mellon, there are other important risks that could hurt our investment. The largest of these may well be a matter of national security. Although the bank maintains outstanding computer systems and other safeguards, a significant disruption, most likely in the form of a cyber-attack, of the bank’s computer operations could result in substantial losses given the sheer number of transactions processed every hour. At a less esoteric level, the bank is regulated as one of the world’s most significant financial institutions. As such, missteps with the regulators or inappropriate conduct toward customers (as happened several years ago when the bank was accused of pricing foreign exchange trades in a misleading manner) could result in significant fines, legal liability or higher capital requirements. Although the bank operates in an oligopoly in most of its businesses, another risk is that participants in an oligopoly do not always behave rationally. Certainly, in recent years a tendency toward undisciplined pricing has permeated this industry, though we hope this trend is diminishing. Finally, we must consider the possibility of the bank making a large, dilutive acquisition. Despite overwhelming data indicating that such acquisitions rarely create value, we are continually surprised by how often companies are tempted by the siren song of investment bankers. Fortunately, we consider this risk a remote one under current management.

From Chris Davis' David Funds fall 2013 manager commentary.

Check out Chris Davis latest stock trades

Top Ranked Articles about Bank of New York Mellon Corp

Andreas Halvorsen Joins Other Gurus in Investing in Alibaba
A look at the portfolio of Norwegian-born entrepreneur Andreas Halvorsen (Trades, Portfolio), founder and CIO of Viking Global Investors LP, confirms his preference for healthcare stocks – such holdings account for nearly 30% of his portfolio – but, in the third quarter, he – like many of the gurus we follow at GuruFocus – couldn’t resist the temptation to invest in Alibaba (BABA) when the Chinese ecommerce company had its historic IPO in September. Read more...
Mason Hawkins Comments on Bank of New York Mellon
Bank of New York Mellon (BK) gained 4% in the quarter and 12% YTD. Expense controls helped results, although low market volatility and low rates this year have hampered revenue growth in asset services. The asset management business grew steadily along with the markets. The company emphasized the substantial earnings power that modest interest rate increases will create as money market fee waivers will end and net interest margins will expand. During the quarter BK repurchased almost 1% of outstanding shares, approximately one-third of the total buyback approved by the Federal Reserve. Read more...
Chris Davis Comments on Bank of New York Mellon
Bank of New York Mellon (BK) is a third example of the type of financial services businesses that Davis Advisors finds attractive. This company is a behind-the-scenes giant in the mundane yet durable businesses of trust services, asset custody, transaction processing, and asset management. While less widely understood than its traditional banking peers, Bank of New York Mellon is at the forefront of its industry in size and depth, operating in 35 countries with a leading $27.9 trillion under custody and/or administration. Although not in a glamorous industry, we believe its business lines are profitable, scalable, less risky, and less capital intensive than traditional banking with good long-term growth potential worldwide. Read more...
Mario Gabelli Comments on Bank of New York Mellon Corp
The Bank of New York Mellon Corp. (BK) (1.3% of net assets as of June 30, 2014) (BK - $37.48 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of December 31, 2013, the firm had $27.6 trillion in assets under custody and $1.6 trillion in assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions. Read more...
Third Avenue Management Comments on Bank of New York Mellon
BNY Mellon (BK) ("BK") participates in two businesses –asset management and investment servicing. The company had $1.6 trillion in assets under management and $27.9 trillion of asset under custody and/or administration, as of March 31, 2014. The businesses seem separable and more valuable on a sum-of-the-parts basis. The asset management business with its iconic Dreyfus Funds and stable of boutique managers could certainly be a stand- alone entity or would seem to attract interest from strategic or financial buyers. BK has been in the news recently given more shareholder scrutiny of its operating efficiency. Recently, there have been news reports that BK could be looking to sell its Corporate Trust unit, which has been a detractor due to the run-off of high-margin securitizations. Read more...
Gabelli Asset Management Comments on The Bank of New York Mellon
The Bank of New York Mellon Corp. (1.0%) (BK)(BK - $35.29 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of December 31, 2013, the firm had $27.6 trillion in assets under custody and $1.6 trillion in assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions. Read more...
Lountzis Asset Management Comments on Bank of New York Mellon
BANK OF NEW YORK MELLON (BK) is a leading trust bank with assets under custody and management exceeding $27 trillion. They are a global leader in several segments in which it operates. Few competitors have their global reach and scale. Approximately 80% of its revenues are reoccurring and fee-based focused on institutional services with less reliance on the higher credit risk from lending. Read more...
Mario Gabelli Comments on Bank of New York Mellon
The Bank of New York Mellon Corp. (0.5% of net assets as of December 31, 2013) (BK)($34.94 - NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in over one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of September 30, 2013, the firm had $27.4 trillion in assets under custody and $1.5 trillion of assets under management. Going forward, we expect BNY Mellon to benefit from rising global incomes and the cross border movement of financial transactions. Read more...

Ratios

vs
industry
vs
history
P/E(ttm) 17.10
BK's P/E(ttm) is ranked higher than
70% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 21.70 vs. BK: 17.10 )
BK' s 10-Year P/E(ttm) Range
Min: 8.11   Max: 42.45
Current: 17.1

8.11
42.45
P/B 1.27
BK's P/B is ranked higher than
59% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 1.07 vs. BK: 1.27 )
BK' s 10-Year P/B Range
Min: 0.64   Max: 4.44
Current: 1.27

0.64
4.44
P/S 2.99
BK's P/S is ranked higher than
86% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 8.99 vs. BK: 2.99 )
BK' s 10-Year P/S Range
Min: 1.46   Max: 6.02
Current: 2.99

1.46
6.02
PFCF 17.35
BK's PFCF is ranked higher than
92% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 9999.00 vs. BK: 17.35 )
BK' s 10-Year PFCF Range
Min: 3.51   Max: 47
Current: 17.35

3.51
47
EV-to-EBIT -13.50
BK's EV-to-EBIT is ranked lower than
67% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 23.00 vs. BK: -13.50 )
BK' s 10-Year EV-to-EBIT Range
Min: -26.8   Max: 20.3
Current: -13.5

-26.8
20.3
Shiller P/E 27.56
BK's Shiller P/E is ranked higher than
79% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 9999.00 vs. BK: 27.56 )
BK' s 10-Year Shiller P/E Range
Min: 8   Max: 28.16
Current: 27.56

8
28.16

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield 1.60
BK's Dividend Yield is ranked lower than
78% of the 1254 Companies
in the Global Asset Management industry.

( Industry Median: 3.56 vs. BK: 1.60 )
BK' s 10-Year Dividend Yield Range
Min: 1.11   Max: 5.26
Current: 1.6

1.11
5.26
Dividend Payout 0.26
BK's Dividend Payout is ranked higher than
86% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 3.27 vs. BK: 0.26 )
BK' s 10-Year Dividend Payout Range
Min: 0.09   Max: 10
Current: 0.26

0.09
10
Dividend growth (3y) 17.20
BK's Dividend growth (3y) is ranked higher than
83% of the 573 Companies
in the Global Asset Management industry.

( Industry Median: 8.80 vs. BK: 17.20 )
BK' s 10-Year Dividend growth (3y) Range
Min: -26.9   Max: 21.4
Current: 17.2

-26.9
21.4
Yield on cost (5-Year) 2.19
BK's Yield on cost (5-Year) is ranked lower than
71% of the 1268 Companies
in the Global Asset Management industry.

( Industry Median: 4.15 vs. BK: 2.19 )
BK' s 10-Year Yield on cost (5-Year) Range
Min: 1.52   Max: 7.21
Current: 2.19

1.52
7.21
Share Buyback Rate 1.70
BK's Share Buyback Rate is ranked higher than
84% of the 1039 Companies
in the Global Asset Management industry.

( Industry Median: -0.70 vs. BK: 1.70 )
BK' s 10-Year Share Buyback Rate Range
Min: 3.1   Max: -17.7
Current: 1.7

Valuation & Return

vs
industry
vs
history
Price/Tangible Book 3.19
BK's Price/Tangible Book is ranked higher than
57% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 1.27 vs. BK: 3.19 )
BK' s 10-Year Price/Tangible Book Range
Min: 1.37   Max: 11.2
Current: 3.19

1.37
11.2
Price/DCF (Projected) 0.90
BK's Price/DCF (Projected) is ranked higher than
90% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 9999.00 vs. BK: 0.90 )
BK' s 10-Year Price/DCF (Projected) Range
Min: 0.42   Max: 10.99
Current: 0.9

0.42
10.99
Price/Median PS Value 1.01
BK's Price/Median PS Value is ranked higher than
85% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 1.49 vs. BK: 1.01 )
BK' s 10-Year Price/Median PS Value Range
Min: 0.51   Max: 5.78
Current: 1.01

0.51
5.78
Price/Graham Number 1.42
BK's Price/Graham Number is ranked higher than
71% of the 1818 Companies
in the Global Asset Management industry.

( Industry Median: 2.25 vs. BK: 1.42 )
BK' s 10-Year Price/Graham Number Range
Min: 0.89   Max: 3.55
Current: 1.42

0.89
3.55
Earnings Yield (Greenblatt) -7.40
BK's Earnings Yield (Greenblatt) is ranked lower than
62% of the 1577 Companies
in the Global Asset Management industry.

( Industry Median: 5.30 vs. BK: -7.40 )
BK' s 10-Year Earnings Yield (Greenblatt) Range
Min: 4.9   Max: 28.5
Current: -7.4

4.9
28.5
Forward Rate of Return (Yacktman) -0.55
BK's Forward Rate of Return (Yacktman) is ranked higher than
63% of the 634 Companies
in the Global Asset Management industry.

( Industry Median: 7.25 vs. BK: -0.55 )
BK' s 10-Year Forward Rate of Return (Yacktman) Range
Min: 1.3   Max: 23.2
Current: -0.55

1.3
23.2

Business Description

Industry: Asset Management » Asset Management
Compare:AMP, AMG, BEN, BLK, TTS » details
Traded in other countries:BN9.Germany, BKNML.USA,
Bank of New York Mellon Corporation was formed as a bank holding company The Company is in business since 1784. It is a global investments company. businesses into two principal segments, Investment Management and Investment Services. The Company has an other segment, which includes credit-related services, the leasing portfolio, corporate treasury activities, its equity investment in Wing Hang Bank Limited, its equity interest in ConvergEx Group, business exits and corporate overhead. Its two principal banks are: The Bank of New York Mellon, a New York state chartered bank, which houses its Investment Services businesses, including Asset Servicing, Issuer Services, Treasury Services, Broker-Dealer and Advisor Services as well as the bank-advised business of Asset Management. BNY Mellon, National Association (BNY Mellon, N.A.), a nationally-chartered bank, which houses its Wealth Management business. The Company's two principal U.S. banks engage in trust and custody activities, investment management services, banking services and various securities-related activities. They have four other U.S. bank and/or trust companies concentrating on trust products and services across the United States: The Bank of New York Mellon Trust Company, National Association, BNY Mellon Trust of Delaware, BNY Mellon Investment Servicing Trust Company and BNY Mellon Trust Company of Illinois. Its asset management businesses, along with its Pershing businesses, are direct or indirect non-bank subsidiaries of BNY Mellon. The Company's Investment Management business competes with asset management firms, hedge funds, investment banking companies and other financial services companies, including trust banks, brokerage firms, and insurance companies. Its Investment Services business competes with domestic and foreign financial services firms that offer custody services, corporate trust services, clearing services, collateral services, credit services. The Company's branches and subsidiaries outside the United States are subject to regulation by non-U.S. regulatory authorities in addition to the Board of Governors of the Federal Reserve System.
» More Articles for BK

Headlines

Articles On GuruFocus.com
Canadian Banc Corp. Declares Monthly Dividend for Class A Share and Preferred Share Dec 18 2014 
Andreas Halvorsen Joins Other Gurus in Investing in Alibaba Dec 03 2014 
Franklin Resources is Another Good Bet Nov 20 2014 
Quantitative Reasons to Invest in State Street Nov 20 2014 
Canadian Banc Corp.: Declares Monthly Dividend for Class A Share and Preferred Share Nov 19 2014 
Third Avenue's Top Stocks as of Q3 Nov 16 2014 
Mario Gabelli’s Equity Income Fund Q3 2014 Commentary Oct 29 2014 
State Street: A Good Business Model Oct 23 2014 
Chris Davis New York Venture Fund Fall Review 2014 Oct 22 2014 
Canadian Banc Corp.: Dividend Rate Increases Over 100% During Past Year for Class A Share Oct 20 2014 

More From Other Websites
U.S. court narrows mortgage lawsuit against Bank of NY Mellon Dec 23 2014
Bank Leumi to pay $400M in tax evasion cases Dec 22 2014
BNY Mellon Contributes More Than $11 Million and 20,000 Hours of Volunteer Service to New York-area... Dec 22 2014
BNY Mellon Contributes More Than $11 Million and 20,000 Hours of Volunteer Service to New York-area... Dec 22 2014
BNY Mellon Contributes More Than $3 Million and 7,000 Hours of Volunteer Service to Boston-area... Dec 22 2014
BNY Mellon Contributes More Than $8 Million and 20,000 Hours of Volunteer Service to Pittsburgh-area... Dec 22 2014
BNY Mellon Contributes More Than $3 Million and 7,000 Hours of Volunteer Service to Boston-area... Dec 22 2014
BNY Mellon Contributes More Than $8 Million and 20,000 Hours of Volunteer Service to Pittsburgh-area... Dec 22 2014
Offshore tax probe seeks data from Panama firm Dec 19 2014
MOVES-BNY Mellon Wealth hires Vivian Chan as wealth director in HK Dec 18 2014
Form 8.3 - Synergy Health Plc Dec 17 2014
The Spaulding Group Launches Custodian Guidelines for Transparency in Benchmark Cost Dec 16 2014
CDL Unveils Unique S$1.5 Billion Investment Platform Dec 15 2014
MOVES- Capital One, U.S. Bank, Lincoln Private, Davy Private Dec 15 2014
Factory output eclipses pre-recession high Dec 15 2014
MOVES-Andrew Crofton joins BNY Mellon's wealth management group Dec 15 2014
BNY Mellon to Host Fourth-Quarter 2014 Earnings Conference Call on Friday, January 23 Dec 15 2014
BNY Mellon to Host Fourth-Quarter 2014 Earnings Conference Call on Friday, January 23 Dec 15 2014
Depositary Receipt Capital Raising More Than Triples in 2014 to Highest Level since Financial Crisis Dec 15 2014
BNY Mellon appointed delegate and paying agent for DIFC Investments Sukuk Dec 15 2014

Personalized Checklist

Checklist has been moved to "Checklist" tab.

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