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“Tweaking the banks”

The banks are an interesting sector at the moment, MM is slightly underweight which we are unlikely to change medium-term but we are considering the composition of our exposure. We have discussed this previously but MM is considering “lifting a leg” with our sector exposure, an idea which is helped by no dividends being due until Q4. Firstly consider how we see the sector:

  • Prominent stocks like CBA and NAB have been following our roadmap over recent months and if it continues they should struggle to add significantly to the recent bounce.

We remain comfortable with our exposure to CBA but at this stage we would probably rather hold NAB than Bank of Queensland (BOQ) plus our position in Macquarie Group (MQG) feels a touch high considering the market and economic backdrop, hence we are considering either taking a loss on our BOQ position and/or reducing our MQG position with the intention of buying NAB at lower levels i.e. we are looking to move into our preferred bank while looking to add some alpha from a price perspective.

NAB
MM likes NAB around $25
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National Australia Bank (NAB)
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