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Sat, Aug. 30, 6:48 PM
- "Most of the reason that banks are underearning relative to their historical norms ... is economic and not regulatory," says Richard Pzena (NYSE:PZN), who remains bullish on the TBTFs. Low interest rates, weak trading, and "government persecution" are the three factors, and - should these normalize - earnings could nearly double at Bank of America (NYSE:BAC) and Citigroup (NYSE:C), though JPMorgan's (NYSE:JPM) boost would be more modest. Goldman Sachs (NYSE:GS) is another favorite.
- Broad financial ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- Another cheap sector is energy, says Pzena, and based on relative valuation against the broader market - whether price-to-book or price-to-earnings - the major integrated oil companies are selling near all-time lows.
- What the market is missing, says Pzena, is the nature of oil investment. The old days saw capital spending one year, and boosted volume the next. Projects nowadays are far larger and require several years of spending before returns roll in. "We think those big new projects are going to perform and produce decent returns." HIs favorites: BP, RDS.A, RDS.B, XOM, TOT.
- Broad energy ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, PXJ, FENY, RYE, FXN, DDG
Wed, Jul. 23, 9:02 AM
Mon, Mar. 31, 9:01 AM
Nov. 27, 2013, 1:03 PM
- The all-equity asset manager is in a sweet spot, says the team, benefitting from strong market conditions, and Richard Pzena's (PZN +9.6%) deep value investing style which is generating "material excess returns, which could persist for three more years."
- "Sales have rebounded, helped by endorsements by Vanguard and ABN Amro, better performance, and greater confidence in deep value investing. We also see material operating leverage, with costs more fixed than at peers."
- The upgrade is to Buy with price target raised to $11 from $9.
Oct. 23, 2013, 3:25 PM
- 'Skepticism about equity markets remains high," says deep-value investing giant Richard Pzena. Given the level of interest rates, the S&P 500 would have to rise by about 15% just to restore the historical equity risk premium. Put another way, the 10-year Treasury yield would have to rise to 3.8% vs. 2.5% today for the current level of the S&P to make sense.
- Think the market should go down? By Pzena's calculation, the 10-year Treasury yield would have to jump to 5% to justify a S&P 500 10% lower than it is now.
- What about value? Even five years since the end of the financial crisis, value stocks still have double-digit expected returns going forward if value spreads return to their norms, he says.
- Pzena Investment Management (PZN) Q3 earnings call transcript.
- S&P 500 ETFs: IVV, SPY, VOO, RWL, SFLA, SSO, UPRO, SDS, SPXU, SH, EPS, RSP, BXUB, BXUC, BXDB.
- S&P 500 value ETFs: SPYV, IVE, RPV, VOOV, FTA.
Oct. 22, 2013, 5:58 PM
Jul. 23, 2013, 5:41 PM
Apr. 24, 2013, 3:58 PMRichard Pzena (PZN) - still heavily overweight financials (XLF) and mature tech (XLK) - makes his case for global banks in today's earnings call (transcript): With capital levels of 11-13% at JPM, C, and BCS double what they were pre-crisis, will regulators allow banks to earn a decent return on said capital? A definite "yes," says Pzena, seeing no reason demand for financial products won't continue to grow faster than GDP, and noting bank managers' "laser-like focus" on improving returns. An average price-to-book ratio of 0.7x combined with a modest ROE of 12-13% suggests fair value more than double current prices. | Comment!
Apr. 23, 2013, 5:19 PM
Feb. 13, 2013, 3:08 PMDeep-value investor Richard Pzena (PZN) remains bullish on the big banks, calling their improved situation nowhere near reflected in their share prices. Big-cap tech is also a favorite as it's now investor habit to price these top-quality, cash-flow heavy businesses at a discount to the market. He notes finance and tech makes up 55% of his portfolio vs. 32% for managers identifying themselves as large-cap value. | 1 Comment
Feb. 12, 2013, 4:45 PMPzena Investment Management (PZN): Q4 EPS of $0.08 misses by $0.01. AUM of $17.1B, up from $13.5B a year ago, with market gains accounting for 75% of the increase. The firm is a large holder of DELL and CEO Richard Pzena opposes the LBO. The conference call is set for 10 AM ET tomorrow. (PR) | Comment!
Oct. 13, 2011, 12:38 PMMacquarie adds to the drubbing in financials today after it downgrades a number of asset managers on a combination of deteriorating fundamentals and relative valuation: Legg Mason (LM -6.1%) is cut to Neutral, and Affiliated Managers (AMG -5.1%) and Pzena (PZN -6.6%) are both reduced to Underperform. | Comment!
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