In Walt Bettinger's six years at the helm of Schwab (SCHW +0.6%), total client assets have doubled to $2.4T, surpassing what once was the world's largest retail broker - Merrill Lynch Wealth Management. Maybe more importantly, he has transformed Schwab from its roots as a discount broker making money on trades to one in the business of offering fee-based financial advice and wealth management.
Transactional fees make up just 13% of revenue today, down from 24% in 2009. That's lower than not just traditional rivals like E*Trade and TD Ameritrade, but also full-service shops like UBS and Edward Jones. Bettinger now sees Schwab's main competitors as the Morgan Stanleys, BlackRocks, and Wells Fargos of the world.
Schwab has a long history of disrupting financial services, and next up could be the 401(k) market dominated by Fidelity with $1.1T in 401(k) AUM (Schwab is ranked #15 with $115B in assets). The fact that 84% of the $3.7T in defined-contribution assets are in high-cost mutual funds gets Bettinger's blood up as most won't beat or even keep up with lower-cost index funds. "This idea of beating the market does not need to be a part of 401(k) plans."
Analyst Steven Delaney spots value in one of the mortgage REIT sector's underperformers this year, and initiates coverage on Dynex Capital (DX) with a Market Outperform and $9 price target.
Dynex is up just 3.75% YTD vs. many in the sector higher by well into the double-digits. Two names downgraded by JMP this week, American Capital Agency and AG Mortgage are each higher by nearly 20% in 2014.
The results of the ECB stress tests aren't to be made public until this weekend, but an early leak from Bloomberg suggests 25 of the 150 or so lenders tested have failed - roughly inline with what was expected (and those failing are likely smaller names). Ten lenders, says Bloomberg, are in talks with regulators regarding capital shortfalls.
Education Realty Trust (NYSE:EDR) is boosted to a Buy from Hold at MLV & Co., while American Campus Communities (NYSE:ACC) is downgraded to Hold from Buy.
American Campus' Q3 beat estimates earlier this week and the company provided strong guidance, but the stock has failed to advance, perhaps suggesting to the MLV team the shares need a breather after a 20% gain this year. Of course, EDR is ahead 25% this year.