Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Looking for exposure to US investment banks that are more diversified than traditional pure IBs like GS. What’s your thoughts on Citi and BofA. Citi appears to now be trading around 1x tangible book value vs most other US banks significantly higher than this. Would this be a compelling way to play US banks right now and all their business units appear to now be performing in sync.
Hi Scott,
The US banks have looked good this week as they trade through reporting season – we hold Goldman Sachs (GS US) in our International Equities Portfolio but as you said it’s a more of pure investment bank (IB), more leveraged to M&A.
The two you mentioned both look destined for new highs into Christmas which is a solid start:
Citi has been undergoing a major turnaround under CEO Jane Fraser, pushing through a massive reorganisation of the group over the past year or so, stripping out layers of management, selling off unwanted businesses and simplifying the organisation, and we are now seeing this translate into higher returns, which should drive a continued re-rating of Citi’s multiple back towards the sector average, after a long period of underperformance.
We like their strategy, and still think Citi has more improvment to go. We actually think Citi and ANZ have similar characteristics – major underperformers for many years, now undergoing significant changes to improve returns, with competent (newish) leadership. The two we’d call ‘self help stories’ with the greatest upside from current levels.
Bank of America (BAC US) – 3rd quarter earnings this week beat estimates as investment-banking activity increased amid a long-awaited comeback in M&A, though the breakdown of the revenue illustrated that BAC remains primarily a more traditional bank:
Our preference between the two is Citi (C US), believing is has more upside from a continued re-rate of it’s multiple as returns improve.
Take a free trial.
No payment details required.
Forgot password? Request a One Time Password or reset your password
One Time Password
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
A link to create a new password will be sent to the email address you have registered to your account.
Hi, this is only available to members. Join today and access the latest views on the latest developments from a professional money manager.
Our Smart Phone App will give you access to much of our content and notifications. Download for free today.
