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  • Looking Past U.S. Banks For Better Returns: Why I Like Canada's Scotia Bank [View article]
    Paulo I hope to publish some further articles on Canadian banks and a comparative analysis between them, U.S banks and Australian banks. I also agree currency risk is a key consideration for investors considering investing in a Canadian or Australian bank and I should have covered this off in further detail in the article. It is also an issue that I will address in later articles.
    Nov 19, 2012. 08:58 PM | Likes Like |Link to Comment
  • Looking Past U.S. Banks For Better Returns: Why I Like Canada's Scotia Bank [View article]
    Greg thank you for the comment and additional information. I wanted to go into further detail on their international and emerging market exposure but space was at a premium and I thought a back to basics analysis of the company would be the best approach. I would agree that the Canadian banks have stronger balance sheets than their U.S counterparts.

    I am also a fan of Australian banks for many of the same reasons. But what makes Canadian banks stand out in comparison is that they are less reliant on wholesale funding and it is the over-reliance of Australian banks on wholesale funding combined with tighter international credit markets that will create problems for them.
    Nov 19, 2012. 08:47 PM | Likes Like |Link to Comment
  • Finding Bank Of America's True Value: Legacy Assets And Legal Risks Continue To Weigh Heavily On Its Market Price [View article]
    nasa I don't have a favorite stock and I do my best to refrain from becoming emotionally involved when investing because it clouds judgement and creates unnecessary losses. I will admit though that I do have sectors which I won't consider making investments in for ethical reasons such as tobacco or gambling. I also have preferred sectors such as financials (but that may be more to do with my education and background) along with preferred locations in my case South America.
    Nov 19, 2012. 06:17 PM | Likes Like |Link to Comment
  • Looking Past U.S. Banks For Better Returns: Why I Like Australia's ANZ Bank [View article]
    Hi Rokjok thought I might jump in here if Col doesn't mind.
    One of the crucial factors you are overlooking is that the level of competition in Australia and the number of banks operating in the market is significantly lower than either the U.S or Europe. The market for financial services is no where near as saturated as the U.S or Western Europe.

    This is also the case when you consider the number of non bank financial institutions competing for lending and deposits business in Australia. In Australia there are only four majors and a handful of other institutions operating in the banking and finance space, where as in the U.S or any of the European countries there are literally hundreds.

    Australia also in comparison to Europe and the U.S also has a far lower penetration of banking products and services with a private sector credit to the domestic sector to GDP ratio that is around 2/3rds of the U.K and the U.S and almost half of Spain's. This would indicate that there is still opportunity for Australian banks to continue growing.

    The economic moat that is available to Australian banks is far greater than it is for many U.S and European banks and historically has been far greater as well, along with which the top four banks control the majority of the market. They are also diversified across all financial product and service lines from retail and commercial banking to insurance, funds management and financial advice. All of which supports their continuing profitability and therefore market caps.

    With regard to the AUD I agree it is overvalued but there are a range of factors driving this, not just the commodities boom. The weakness of the USD and Euro are significant factors along with Australia having a higher interest rate and more stable economy which makes it more attractive to foreign investors to park their money there for the short-term.

    On top of this it is also perceived as a safe haven (somewhat like Switzerland) and this is attracting increased investment, which along with the factors listed above is supporting the AUD's high valuation.
    This won't change until the situation in Europe is well on the path to being resolved and the U.S economy stabilizes, which is some way off yet. But any investor in an Australian banks needs to be aware of the currency risk and manage this appropriately, just as they do with Canadian or Latam banks. 
    Nov 19, 2012. 06:06 PM | 2 Likes Like |Link to Comment
  • Looking Past U.S. Banks For Better Returns: Why I Like Canada's Scotia Bank [View article]
    staypositive thank you for the feedback. I have spent some time analyzing banks with a focus on Latam banks, but I have been trying to find quality banking investments for investors that are in mainstream non-emerging markets that are outside of Europe, with strong balance sheets and are performing profitably. This has seen me start to look more closely at Canadian and Australian banks.
    Nov 19, 2012. 04:38 PM | Likes Like |Link to Comment
  • Looking Past U.S. Banks For Better Returns: Why I Like Canada's Scotia Bank [View article]
    Paulo thank you for the feedback. I agree the emerging market exposure is what makes it an interesting and compelling investment particularly as this is difficult to obtain with any major commercial U.S bank. I came across Scotia Bank and the idea for this article when researching Peru´s Credicorp some time ago.
    Nov 19, 2012. 04:34 PM | Likes Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    AlphaSquare thank you for the feedback. With regard to your questions my responses are below.
    1. The upside is basically derived from the market having unfairly valued C as the business now stands. Much of this has been driven by the negative sentiment from C's near collapse, poor treatment of investors, poor asset quality, failing the last Fed stress test, extensive litigation against the bank and a large pool of substandard legacy assets. This is also being driven by the negative sentiment towards big banks in general as well as the regulatory risk being generated by the uncertainty over the introduction of Basel III. I don't see C having any specific operational or strategic strengths at this time rather that it is being heavily discounted by the market on sentiment thus creating an opportunity for investors.

    2. At this time I couldn't give an informed opinion on the absolute value of C in comparison to other U.S banks, as I typically don't analyze U.S banks, with the exception of BAC. I believe that C represents far better value than BAC. You can read my last analysis of BAC here http://bit.ly/RXvNyz. I am also currently working on a review of Wells Fargo, which will be published in the next week and this should help answer this question. However, when considering a comparative valuation it is always difficult to compare what is now predominantly a commercial bank like C with what are predominantly investment banks like GS or MS or others that are basically retail banks.
    Nov 15, 2012. 10:52 PM | Likes Like |Link to Comment
  • Finding Bank Of America's True Value: Legacy Assets And Legal Risks Continue To Weigh Heavily On Its Market Price [View article]
    benisha I would certainly agree that nasa's view is overly optimistic. The lawsuits will take far longer than 9 months to play out and the legal costs from those will have a significant impact. It is also going to take a significant amount of time for the legacy asset pool to be would down to a level where it will cease having a significant effect on the bank's profitability. Even if the housing market rebounds significantly this will not be enough to have a significant impact on the bank's profitability because of the other significant and multiple issues affecting the bank.
    Nov 14, 2012. 03:42 PM | Likes Like |Link to Comment
  • Gafisa: A Speculative Play On Brazilian Residential Property [View article]
    HI David

    Thank you for the comment. I am in the process of reviewing Gafisa on the back of its latest earnings and hope to publish an article on this shortly.

    regards,

    CV
    Nov 14, 2012. 03:37 PM | Likes Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    untrusting investor again some very good points, overall I think we are taking a similar approach to investing but coming at it from different angles, plus I am little more optimistic in my view of the market. One thing I definitely agree on though, is the approach that your taking towards tech stocks. While this sector is well outside of my area of expertise I believe that many companies in the sector are over valued, with some of the companies like HPQ representing value traps. I appreciate your comments and the additional perspective that you bring to the articles as this only improve the experience for other readers and I look forward to more comments.
    Nov 13, 2012. 12:48 AM | Likes Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    Patience and a strong stomach is the key to Citigroup and continue to be so for some time. But as the numbers show this will pay off over the long-term.
    Nov 12, 2012. 11:35 PM | Likes Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    siew thankyou for commenting, I am not quite sure if I understand what you are getting at. But I certainly didn't set out with a positive view on Citigroup and I was expecting to find it in a less healthy position than I did. I have never been a fan of Pandit nor the strategic direction in which he was taking the bank.

    Ultimately though it is hard to deny that the bank's performance, balance sheet and level of risk have improved tremendously. It is also hard to deny once these factors have been taken into account in the valuation model that the bank is currently trading at a significant discount to its indicative fair value, which is not much higher than its TBV.

    The next big journey for the bank to undertaker is to repair its severely tarnished reputation with all of its key stakeholders and particularly regulators, investors and customers. This in banking is usually a far greater undertaking than repairing a broken balance sheet, reducing risk or building new business.

    It would appear though that Corbat is the right person to execute this and his appointment has increased my confidence in Citigroup. I also did not like Pandit's strategy of focusing on emerging markets, because it was clear there is still substantial work to be done on rebuilding the bank's core business.
    Nov 12, 2012. 11:32 PM | 1 Like Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    untrusting investor they are some very good points. I certainly agree with your sentiments regarding SAN and would also include BBVA, although they are both very different beasts to Citigroup and fill a different part of the portfolio.

    With regard to market timing it is always very easy to discuss it in hindsight but taking a forward looking approach is very difficult. The number of times I have seen investors try and time the market and miss the boat far outweigh those when they have been successful.

    However, there is always an element of deciding on an entry point or a price that you will buy at and then looking for the indicators to show that it is achievable. This is what many of the fund managers I have worked for typically do and it is a tool I employ in my own portfolio management, so I guess in essence to a degree I am timing the market.

    I also don't subscribe to the theory that time in the market is more important than timing the market. If you blindly invest without taking into account the economic factors driving the market, the operational circumstances driving company performance and the impact this has on company fundamentals it is hard to enter at the right price. So again timing the market does play a role.
    Nov 12, 2012. 11:21 PM | 1 Like Like |Link to Comment
  • Looking Beyond The Hype To Find Citigroup's Fair Value [View article]
    jmartz you have raised some very interesting points. When I started this analysis I had quite a lot of negative sentiment towards Citigroup and did not expect to make the call that I did. Overall the positives outweigh the negatives and the recent management changes are a huge plus for investors, with every indication that the bank will go back to basics and continue to build a sustainable business. This should see the bank stay focused on rebuilding its core business, mitigating risk and the necessary cultural changes to continue the recovery.

    I was never a big fan of Pandit's strategy of focusing on growth in emerging markets because banks from those markets do a far better job than Citigroup at a lower cost and with far better local knowledge. I would rather see the bank focused on rebuilding its core U.S business, which while delivering less spectacular returns and growth opportunities will see a more solid sustainable business emerge.
    Nov 12, 2012. 11:13 PM | Likes Like |Link to Comment
  • Chevron Demonstrates Impressive Free Cash Flows [View article]
    Bax they certainly won't be but other than CVX's appeal against the court order preventing them from continuing to operate in the country there hasn't been any material progress in the case. Again, Brazil only contributes a small amount of revenue and it will be the potential fines of up to $22 bn that will be the issue. Determining the outcome of that case is far more difficult than determining whether the Lago Agrio plaintiffs will be able to successfully enforce the Ecuadorian judgment.

    I am currently in the process of pulling together an article on the Ecuadorian judgement, its likelihood of enforcement and the worst case impact on Chevron. I will also do the same once there is material progress on the Brazilian case. 
    Nov 12, 2012. 07:55 PM | Likes Like |Link to Comment
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