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Goldman - buy financials; Baird - banks getting ahead of fundamentals

Published 08/07/2017, 11:51 AM
© Reuters.  Goldman - buy financials; Baird - banks getting ahead of fundamentals
FAS
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FAZ
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KRE
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KBE
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XLF
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IAT
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FXO
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IYF
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IYG
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SEF
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UYG
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FINU
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RWW
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RSPF
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KRS
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KRU
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VFH
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QABA
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FNCL
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FINZ
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WDRW
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DPST
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JHMF
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BTO
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FNCF
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FAZZ
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FTXO
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  • Ignore macro concerns, say David Kostin and team at Goldman, noting a number of reasons making the sector a buy: 1) Jump in capital returns this year 2) Higher ROEs and P/B ratios 3) Valuations still at a discount 4) Deregulation move picking up steam.
  • Investment pros, says Kostin, continue to be underweight the sector, with the top 25 equity income funds holding just a 19% weighting - 700 basis points less than the common benchmark.
  • Baird's David George, on the other hand, takes note of the BKX's 29% advance since the November election vs. the S&P's 16%. As for the benefit of higher capital returns and interest rates, one could make the case those catalysts have been fully baked in by now.
  • ETFs: XLF, FAS, FAZ, KRE, VFH, UYG, KBE, IYF, FNCL, BTO, IAT, IYG, KBWB, QABA, FXO, SEF, KBWR, RYF, FINU, XLFS, DPST, KRU, FINZ, RWW, WDRW, KRS, FAZZ, JHMF, FTXO, FNCF
  • Now read: An Update On The U.S. Credit Cycle


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