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Invesco Senior Portfolio Manager Kevin Holt argues U.S. financials are a good bet for investors who will hold the stock for at least two to four years...
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Bank stocks are getting hammered today and Greek bailout -- in -- Goldman Sachs downgrade.
-- Bank of America have our next guest says -- banks could be a solid buy if you have an extended time horizon is two to four years Kevin holds.
Is -- senior portfolio manager at invesco and runs their eight point six billion dollar -- -- and Comstock fun amongst many others.
He may devalue large cap focus can trade area contrarian investor.
And he joins us from Houston -- and thanks for being on contrary NA is certainly a good way.
-- to describe you because so many investors have been so -- by the banks and the financials we know that there's still.
A lot of uncertainty had for the sector but you believe that now it's a time to bias and make a case for -- are viewing audience.
Yeah I I think it's important to think about just anecdotally at this point.
Most investors whether it's those who look at the S&P 500 or the Russell 1000 value.
Everyone's underweight banks.
The contrary and we think that creates an opportunity.
From psychological standpoint.
I think to.
2008 is fresh in everyone's minds everyone knows what happened back then it's also the destruction and shareholder value.
With that said we've gone through credit cycle the banks have built up a -- not a capital on the balance sheet at this point in time.
Which we think they'll be redeployed to share buybacks and dividend so we thank everyone is still fearing 2008.
-- for an active manager in the future in value category like ourselves.
This is a great opportunity and just indicative of other opportunities in other sectors that we identify.
You know you're in -- out.
Yeah it certainly it it is is for sure that -- a lot of investors have 2008 on their back burners on the back of their minds that's because we have so -- reminders.
A what happened in 2008 because it's not acting in the past we have regulation that still -- -- hanging over our heads that will cost banks -- additional who knows millions of dollars.
Also we have this potential mortgage settlement -- Connie I mean a lot of things on the horizon that makes it make us thank.
That 2000 -- eight is in missing in the past just yet it's.
Yeah I I think when you look at it tell you did mention a lot of the negatives in the good news is is those negatives are out the market at this point in time so.
If we take them one by one.
You know -- settlement it's been rumored 25 billion dollars for the industry.
You know the company's over the last two to three years of reserves is a great amount for this and so whether it's 25 million or 27 billion.
These capitals have played capital this point to deal with that particular issue.
They did get you talked about some of the lending issues.
We think there's no credit crisis to go through good news is there hasn't been a lot of loans made in the last three years so we don't have that risk.
That we did at that point in time.
And in terms of you know other -- we have out there ma.
I think it's well known by the market so we're somewhat confident you never know what -- yet exact Volcker Rule going to be.
But we think a lot of those discount and if you look at the earnings of the large cap banks that's really where we find attractive value with cities JPMorgan's.
They have capital market exposure.
In the second half of last year -- you're going through the crisis that it that it has and still is those earnings were very depressed and we don't think he get a lot -- from this point.
Two things grow quicker and number one.
April I think it was April 2009 -- -- -- some accounting rules.
That makes me wonder because you know again -- if we talk about how much is on the balance sheet -- -- -- kind of stuff but do we really know.
Or is this all accounting trick because it was a more remarkable how all the sudden the banks went from within a losing money to making money.
And to me is still feels a little opaque and there are a lot of question marks.
Yeah -- I don't think there's no denying that if you look at the the balance sheet and cash and there is no -- they are -- financial companies so we ought to look at other industries.
But transparency is much greater.
But where we come out is with that valuation of the stock selling at or below tangible book value where they're talking about JPMorgan Citibank.
He and regulators having -- over these -- for three years.
I feel much more confident today.
In the ability of the balance sheets of these banks to withhold -- more truthful -- spent in the past.
Just given where we've come from and regulators being more involved in the industry over the past three years.
Kevin holt from invesco all those down -- -- -- -- today on the right next to those banking names of buy signals -- thank you very much for joining us today.
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