(GuruFocus, October 6, 2009) Just when some convinced you to think the stock market rally starting from March 2009 was based entirely on non-existent “Green Shoots” and sellers finally took the driver seat in the market declined two weeks in a row, Goldman Sachs (GS, Financial) came out and rocked the boat for the bears. This time, it upgraded some of the big banks including Wells Fargo (WFC, Financial), JPMorgan Chase (JPM, Financial), Bank of America (BAC, Financial), and Capital One Financial (COF, Financial). Goldman thinks the earning of the big banks will grow 39% compared to the same quarter in 2007 and their earning potentials are not reflected in the stock price. (see video at the end of the post)
Remember during the months and weeks that led up to the demise of Lehman Brothers, investment banks came out and downgrade each others in a hurry? Goldman Sachs’ move shows how much the sentiment has shifted to the positive. Cautious people like John Hussman and Nouriel Roubini must be watching in disbelief how in the world in an overvalued market, an upgrade from a bank on its peers can re-ignite the otherwise stalled market rally, at least for one day.
One can argue that in a moderately overvalued market, there is still pockets of value un-appreciated by the market and hence investment opportunities. These banks were once beaten down to ashes; some had near-death experience. Most of them are still so far away from the all-time highs, yet their earning capacity as measured by their asset have grown tremendously coming out the crisis. Among the stocks upgraded, Wells Fargo acquired Wachovia for next to nothing; JPMorgan Chase first took Bear Stern, and then Washington Mutual, both for pennies on a dollar; and then Bank of American had its own buying spree last year with Countrywide and Merrill Lynch, arguably at less favorable terms. Most of the high-profile acquisitions were marriages under the gun point and not dilutive to the acquirers’ shareholders. The values lost by the acquired companies have not been lost forever, they are simply wrapped as gifts for the acquirers’ shareholders. Sooner or later, the gift will be opened and shareholders will be pleasantly surprised.
Whether or not this is the moment to open the gift remains to be seen. But here are the Investment Gurus who own these stocks substantially compared to the total asset under their management.
Wells Fargo & Company (WFC)
Wells Fargo & Company has a market cap of $131.23 billion; its shares were traded at around $28.09 with a P/E ratio of 31.6 and P/S ratio of 2.5. The dividend yield of Wells Fargo & Company stocks is 0.7%. Wells Fargo & Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated Wells Fargo & Company the business predictability rank of 4-star.
As of 2Q09, Wells Fargo & Company is owned by 24 Gurus. Noticeably:
JPMorgan Chase & Co. (JPM)
JP Morgan Chase & Co. has a market cap of $172.25 billion; its shares were traded at around $43.8 with a P/E ratio of 112.3 and P/S ratio of 2.6. The dividend yield of JPMorgan Chase & Co. stocks is 0.5%.
JPMorgan Chase & Co. is owned by 27 Gurus. Among them:
Bank Of America Corp. (BAC)
Bank Of America Corp. has a market cap of $146.73 billion; its shares were traded at around $16.96 with a P/E ratio of 30.3 and P/S ratio of 2. The dividend yield of Bank Of America Corp. stocks is 0.2%. Bank Of America Corp. had an annual average earning growth of 7.5% over the past 10 years.
Bank of America Corp. is owned by 24 Gurus. Among them, noticeably:
Capital One Financial Corp.(COF)
Capital One Financial Corp. has a market cap of $16.35 billion; its shares were traded at around $35.93 with and P/S ratio of 0.9. The dividend yield of Capital One Financial Corp. stocks is 0.6%. Capital One Financial Corp. had an annual average earning growth of 16.3% over the past 10 years.
Capital One Financial Corp. is owned by 9 Gurus. Heavy on COF Gurus include:
Comments
A year ago, bank stocks were more toxic than the problematic assets they were holding, now they are coming back in full swing. We see these big banks account for a lion share of the money managed by the countries best money managers. Some of them, made money by betting on the ill fate of these stocks in 2009.
Even though we have guys George Soros thinks Banks are essentially bankrupt and have to earn their way out, according to Goldman Sachs, out they way the banks will earn.
Soros did not say the Banks are not good investments.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and many other Investment Gurus for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
Remember during the months and weeks that led up to the demise of Lehman Brothers, investment banks came out and downgrade each others in a hurry? Goldman Sachs’ move shows how much the sentiment has shifted to the positive. Cautious people like John Hussman and Nouriel Roubini must be watching in disbelief how in the world in an overvalued market, an upgrade from a bank on its peers can re-ignite the otherwise stalled market rally, at least for one day.
One can argue that in a moderately overvalued market, there is still pockets of value un-appreciated by the market and hence investment opportunities. These banks were once beaten down to ashes; some had near-death experience. Most of them are still so far away from the all-time highs, yet their earning capacity as measured by their asset have grown tremendously coming out the crisis. Among the stocks upgraded, Wells Fargo acquired Wachovia for next to nothing; JPMorgan Chase first took Bear Stern, and then Washington Mutual, both for pennies on a dollar; and then Bank of American had its own buying spree last year with Countrywide and Merrill Lynch, arguably at less favorable terms. Most of the high-profile acquisitions were marriages under the gun point and not dilutive to the acquirers’ shareholders. The values lost by the acquired companies have not been lost forever, they are simply wrapped as gifts for the acquirers’ shareholders. Sooner or later, the gift will be opened and shareholders will be pleasantly surprised.
Whether or not this is the moment to open the gift remains to be seen. But here are the Investment Gurus who own these stocks substantially compared to the total asset under their management.
Wells Fargo & Company (WFC)
Wells Fargo & Company has a market cap of $131.23 billion; its shares were traded at around $28.09 with a P/E ratio of 31.6 and P/S ratio of 2.5. The dividend yield of Wells Fargo & Company stocks is 0.7%. Wells Fargo & Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated Wells Fargo & Company the business predictability rank of 4-star.
As of 2Q09, Wells Fargo & Company is owned by 24 Gurus. Noticeably:
Warren Buffett owns 302,609,212 shares, which accounts for 15% of the $48.95 billion portfolio of Berkshire Hathaway.
Prem Watsa owns 20,028,700 shares as of 06/30/2009, which accounts for 9.32% of the $5.21 billion portfolio of Fairfax Financial Holdings, Inc..
HOTCHKIS & WILEY owns 17,927,577 shares, which accounts for 3.75% of the $11.61 billion portfolio of HOTCHKIS & WILEY Capital Management LLC.
Chris Davis owns 97,447,688 shares as which accounts for 4.56% of the $51.82 billion portfolio of Davis Selected Advisers.
Mohnish Pabrai owns 369,701 shares which accounts for 3.82% of the $234 million portfolio of Pabrai Mohnish.
Arnold Van Den Berg owns 2,129,371 which accounts for 3.63% of the $1.43 billion portfolio of Century Management.
JPMorgan Chase & Co. (JPM)
JP Morgan Chase & Co. has a market cap of $172.25 billion; its shares were traded at around $43.8 with a P/E ratio of 112.3 and P/S ratio of 2.6. The dividend yield of JPMorgan Chase & Co. stocks is 0.5%.
JPMorgan Chase & Co. is owned by 27 Gurus. Among them:
Andreas Halvorsen owns 8,620,500 shares, an increase of 55.44% from the previous quarter. This position accounts for 5.12% of the $5.74 billion portfolio of Viking Global Investors LP.
John Paulson owns 7,000,000 shares, an increase of 20.69% from the previous quarter. This position accounts for 1.39% of the $17.13 billion portfolio of Paulson & Co..
Ken Heebner owns 6,065,000 shares, an increase of 14.43% from the previous quarter. This position accounts for 3.39% of the $6.11 billion portfolio of CAPITAL GROWTH MANAGEMENT LP.
Mark Hillman owns 525,683 shares, which accounts for 4.86% of the $369 million portfolio of Hillman Capital Management.
Brian Rogers owns 14,954,200 shares, which accounts for 3.74% of the $13.63 billion portfolio of T Rowe Price Equity Income Fund.
NWQ Managers owns 13,338,057 shares, which accounts for 3.07% of the $14.8 billion portfolio of NWQ Investment Management Co.
Richard Snow owns 2,473,505 shares, which accounts for 4.3% of the $1.96 billion portfolio of Snow Capital Management, L.P..
Chris Davis owns 48,671,491 shares, which accounts for 3.2% of the $51.82 billion portfolio of Davis Selected Advisers.
Steve Mandel owns 12,544,028 shares as of 06/30/2009, which accounts for 5.8% of the $7.37 billion portfolio of Lone Pine Capital.
Bank Of America Corp. (BAC)
Bank Of America Corp. has a market cap of $146.73 billion; its shares were traded at around $16.96 with a P/E ratio of 30.3 and P/S ratio of 2. The dividend yield of Bank Of America Corp. stocks is 0.2%. Bank Of America Corp. had an annual average earning growth of 7.5% over the past 10 years.
Bank of America Corp. is owned by 24 Gurus. Among them, noticeably:
John Paulson bought 167,990,464 shares in the quarter that ended on 06/30/2009, which is 12.95% of the $17.13 billion portfolio of Paulson & Co..
Daniel Loeb bought 6,650,000 shares in the quarter that ended on 06/30/2009, which is 9.77% of the $898 million portfolio of Third Point, LLC.
Andreas Halvorsen bought 20,561,200 shares in the quarter that ended on 06/30/2009, which is 4.73% of the $5.74 billion portfolio of Viking Global Investors LP.
Ken Heebner bought 18,486,200 shares in the quarter that ended on 06/30/2009, which is 3.99% of the $6.11 billion portfolio of CAPITAL GROWTH MANAGEMENT LP.
Richard Snow owns 6,115,467 shares, an increase of 58.88% from the previous quarter. This position accounts for 4.11% of the $1.96 billion portfolio of Snow Capital Management, L.P..
HOTCHKIS & WILEY owns 28,576,262 shares, an increase of 39.3% from the previous quarter. This position accounts for 3.25% of the $11.61 billion portfolio of HOTCHKIS & WILEY Capital Management LLC.
Ronald Muhlenkamp owns 3,243,394 shares, which accounts for 6.48% of the $660 million portfolio of Muhlenkamp Fund.
David Tepper owns 46,848,201 shares, which accounts for 37.86% of the $1.63 billion portfolio of APPALOOSA MANAGEMENT LP.
Capital One Financial Corp.(COF)
Capital One Financial Corp. has a market cap of $16.35 billion; its shares were traded at around $35.93 with and P/S ratio of 0.9. The dividend yield of Capital One Financial Corp. stocks is 0.6%. Capital One Financial Corp. had an annual average earning growth of 16.3% over the past 10 years.
Capital One Financial Corp. is owned by 9 Gurus. Heavy on COF Gurus include:
John Paulson owns 17,000,000 shares, an increase of 709.52% from the previous quarter. This position accounts for 2.17% of the $17.13 billion portfolio of Paulson & Co..
David Tepper owns 3,000,000 shares, an increase of 200% from the previous quarter. This position accounts for 4.02% of the $1.63 billion portfolio of APPALOOSA MANAGEMENT LP.
Dodge & Cox owns 57,773,231 shares, an increase of 24.36% from the previous quarter. This position accounts for 1.89% of the $66.88 billion portfolio of Dodge & Cox.
Arnold Schneider owns 1,919,370 shares, an increase of 20.31% from the previous quarter. This position accounts for 2.91% of the $1.44 billion portfolio of Schneider Capital Management.
Edward Lampert owns 10,062,700 shares, which accounts for 2.27% of the $9.71 billion portfolio of ESL Investments. Bill Nygren owns 3,014,800 shares , which accounts for 2.56% of the $2.04 billion portfolio of Oak Mark Fund.
Comments
A year ago, bank stocks were more toxic than the problematic assets they were holding, now they are coming back in full swing. We see these big banks account for a lion share of the money managed by the countries best money managers. Some of them, made money by betting on the ill fate of these stocks in 2009.
Even though we have guys George Soros thinks Banks are essentially bankrupt and have to earn their way out, according to Goldman Sachs, out they way the banks will earn.
Soros did not say the Banks are not good investments.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and many other Investment Gurus for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
