Among banks and credit card names, FBR favors those picking up new teams/market share - namely Signature Bank (SBNY -1.4%) and Discover (DFS) - as well as those trading near book value, like HomeStreet (HMST -0.6%). PNC Financial remains a favorite for its strong growth prospects, as well as servicers like Nationstar (NSM +0.2%), Walter Investment (WAC -2.3%), and New Residential (NRZ -0.3%).
Those most exposed to a protracted government shutdown are smaller community banks in the D.C. area like Eagle Bancorp (EGBN -1.4%), and Cardinal FInancial (CFNL -0.2%). Capital One (COF -1.9%) - by dint of its Chevy Chase acquisition - would also feel a pinch.
On mREITs (REM -0.1%), the team expects Q3 book values to increase slightly, but warns its estimates are based on relatively static portfolios - "but for most names, portfolios are anything but that." With all the volatility, most mREITs may have hedged away the recent MBS rally. Starwood Property Trust (STWD) remains FBR's best idea thanks to its commercial real estate exposure.