Category Archives: $C

US Financials Update – 6 Months on from Post on April 23rd – take some profit ahead of reporting..

Posted back in April the pull back was a chance to buy some US Financials, and to buy GS which looks the cheapest (prior to that it was C). They were all trading below fair value – now they are above fair value as prospects of higher rates and tax reform. Sometimes strategies do take time to play out.Take some profit, but keep a core position as these stocks may break out to new high if results are good.

Px Vs Fair Values

April: $JPM 84.5 vs 83 Yield 2.3% [Dimon top CEO!]

Now: $JPM 95 vs 90 Yield 2.3% – going to a 100.

April: $C 58 vs 64 Yield 1% – cheapest to Book value – but seems to be the least liked!

$C 69 vs 72 Yield 1% – best performer over 2 years

April: $MS 42 vs 44 Yield 1.9% – reported a great quarter, Gorman is doing a great job…

$MS 49 vs 45 Yield 1.9% –

April: $GS 217 vs 250 Yield 1.4% [ 1.1 x book value] tough quarter, but they will bounce back!

$GS 237 vs 247 Yield 1.4% – they need to report a good quarter.

April: $BAC 22.5 vs 25 Yield 1.4%

$BAC 25 vs 24.5 Yield 1.4%

2CentView has a trading position in GS average cost 225, looking to take some profit at above 245 next week. Also, have a core position, which was trimmed back at 49 ahead of results. Keeping core positions in both – think US rates are going higher.

US Financials Update post results….one is great buying opportunity….

US Financials have had a great run since the US election, but have pulled back as the bond markets have rallied following the failed US Health care bill and a FED which does’nt seem to be in any rush to raise rates soon….

The pull back is a potential buying opportunity, especially Goldman Sachs which reported a disappointing quarter where their fixed income trading revenues disappointed – maybe they were caught offside on the bond rally!
Remember MS which reported a terrible quarter about a year ago – but reported a great quarter in Q1 in – with earnings well exceeding expectations – even great companies have bad quarters – look for these bad quarters as a buying opportunity!

Px Vs Fair Values

$JPM 84.5 vs 83 Yield 2.3% [Dimon top CEO!]

$C 58 vs 64 Yield 1% – cheapest to Book value – but seems to be the least liked!

$MS 42 vs 44 Yield 1.9% – reported a great quarter, Gorman is doing a great job….

$GS 217 vs 250 Yield 1.4% [ 1.1 x book value] tough quarter, but they will bounce back!

$BAC 22.5 vs 24.5 Yield 1.4%

Goldmans is now the CHEAPEST of the banks, and a great buying opportunity. Mnuchin and Cohn, 2 key people in the Trump Administration are ex Goldman!

Tax reform and deregulation is coming – and these will help the banks regardless of interest rates and the shape of the yield curve.

2CentView has a core position in Morgan Stanley, added a trading position in MS at 40.5 and plans to add a trading position on Goldman Sachs tomorrow.

Suggested trade: Buy here at 217, Take profit Target 250, Stop 195.

Post Trump: US Financials surge pretty amazing….should you…

A month ago, to the day, recommended going overweight Financials, as less regulation and steepening yield curve will take bank valuations higher – the run has been pretty amazing – should you take profits?

Fair value updates below – earnings have been revised up so the stocks are still not expensive versus Fair Value, and could go higher:

Px vs FV

$JPM 84 vs 80 Yield 2.1%

$GS 240 vs 225 Yield 1.1%

$MS 43 vs 43 Yield 1.9%

$C 60 vs 60 Yield 1.0%

$C – which was the cheapest – is now trading in line with fair value after a whopping 12% move in one month.

UK Based International Banks

$HSBC 673 vs 650 Yield 5%

$BARC 233 vs 200 Yield 1.49% [Book value = 290, FV unchanged – think it will be a while before analysts re-rate Barclays earnings]

2CentView has a core position in Morgan Stanley and decided to add a position in BARC at 211 which is trading well below book value (around 290). Barclays is the only serious European Investment bank and after reading an article in the FT think they have the right strategy to recover to a more full valuation around 300p (book value).

2CentView also retains a core position in $HSBC.

2CentView is that the financials have the potential to have more to run in the long term – but always to good take some profit after such a good run – but keep a core position.

Post Trump Opps: Financials could benefit…

If you are underweight financials – go equal or overweight to around 20%.

The Trump presidency could be the start of the end of low interest rates as growth and inflation picks up. The yield curve has already started to steepen (implying rates will start to rise).

Insurance companies will also benefit – they sit on a lot of cash – and usually invest it in long term assets.

US Banks have rallied – perhaps a bit too much – earnings estimates will be revised , so fair values below are conservative:

Px vs FV

$BAC  19 vs 19   Yield 1.6%

$JPM 76 vs 70 Yield 2.5%

$GS 204 vs 210 Yield 1.27%

$MS 38 vs 36 Yield 2.1%

$C 53 vs 58 Yield 1.2%

So C is the cheapest – it also one of the few banks trading below tangible Book Value.

2CentView has a core position in Morgan Stanley and may add $C (Citi).

$JPM is a great bank with a great CEO in Jamie Dimon but the stock has overrun a bit.

UK Based International Banks

$HSBC 617 vs 580 Yield 5%

$BARC 200 vs 200 Yield 1.49%

2CentView has a core position in $HSBC.

Also think Insurers will do well in a higher rate environment:

US Names:

$AIG $63 vs $62 Yield 2%

UK Names

$DLG 355 vs 400 Yield 6%

$LGEN 229 vs 251 Yield 6%

2CentView has a core position in $DLG and trading position added at 347.

No need to rush into any of the above – if you like $JPM for example, wait for a pull back to 70 before buying.

However, these stocks will benefit from less regulation and hedge you against rising rates – which could lead to higher mortgage costs and lower property prices…..

US Fins feel the pain from JPM results&lower interest rates.$C,$MS,$BAC report this week..

The US Economy is strong – bonds should fall stocks should rise was the belief a month ago – but the complete opposite has happened…10y bonds have rallied 40bp and stocks have sold off!! Is it the prospect of slower growth China? Ukraine/Russia getting out of control? Tax selling? Who knows – it is doesn’t seem to be clear.

Financials do well in a higher rate environment so sold they sold off as rates went lower..

Fair Values below:
$MS FV=33
$C FV=54 [the cheapest – but they recently failed the stress test!]
$BAC FV=18

2CentView pick is $MS – Morgan Stanley, as it re positions itself as a wealth management firm as well as a top investment bank.

Happy 2014 from 2CentView 2014?…..

2013 was a great year for stocks. Central bank policies are designed to create real jobs as their benchmark is unemployment figures – if real jobs are created, then corporations must be doing to well to be convinced to hire – if the corporations are doing well then there is real growth and stocks will go higher. All that said, no-one really knows how the market will do in 2014 and finding bargains like $YHOO, $FB, $TCG will be harder but they will be there and YOU NEED TO BE IN IT TO WIN IT!
2CentView will keep sending out recommendations – looking for 15% upside on low risk stocks with dividend yields and 25% upside on more riskier stocks – with stops which you should stick to just in case the it does go south! And some will!

Tweet 2CentView if you want to know the FV or a strategy for any other stocks you like. Remember, the next big thing maybe staring in you the face every day – so don’t send out stuff regurgitating what you get from news letters – but if your girlfriend or wife spots a new trend in fashion share it with us!

Here are a few (large cap) recommendations from the outset in different sectors:

$NYSE:$AAL – 40, 37, 19 [FV/PT/STOP] – current px = 25

$HPQ 35/35/23 – if they go into 3D printing especially! – px=27.5

$C 59/59/45 (px = 50) or $BARC 350/330/245 px=271
$PFC (petrofac) 1400/1400/ 1125 px =1220 3% Div yield
$AAL (Anglo american) 1500/1500/1200 3.9% Divi Yield

All the best for 2014, 2CentView team!