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Feb 17
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LONG
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Julie Biel
Portfolio Manager, Kayne Anderson Rudnick
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Biel notes that regional banks did not participate in the rally last year but now have an opportunity to improve due to "deregulation" and the ability to "do more with the balance sheets." If regulatory pressure eases and consolidation occurs (which Biel expects), regional banks can regain profitability and market share, trading at attractive multiples compared to large caps. Long Regional Banks as a deregulation/catch-up trade. Continued commercial real estate exposure and high interest rates. |
Bloomberg Markets
Stocks Gain as Tech Holds Up; Bonds Steady | ...
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Feb 13
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LONG
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Thomas Michaud
CEO, KBW
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KBW CEO Michaud notes that fundamentals (loan growth, credit quality) are green lights and the "moratorium on bank mergers" for banks over $200B is effectively over. Wells Fargo's Willis advises rotating into Financials as a way to play AI trends through incumbents. The combination of strong fundamentals, a regulatory environment conducive to M&A (creating takeover premiums), and a rotation out of expensive tech makes financials attractive. LONG Regional Banks and Financials for M&A upside and valuation rotation. Commercial real estate credit deterioration; interest rate volatility. |
Bloomberg Markets
Stocks Lower as Tech Selloff Deepens Ahead of...
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Feb 10
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AVOID
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Scott Rechler
Chairman & CEO, RXR (Real Estate Developer / Fed Board Director)
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Rechler explicitly says regional banks are "broken," "can't afford to compete with the big banks," and "don't have the capacity to be lenders." Construction and Commercial Real Estate (CRE) lending were the bread and butter of regional banks. If they are retreating from this due to capital constraints and regulatory pressure, their earnings growth engines are stalled. They are losing their best clients to private credit or G-SIBs (Global Systemically Important Banks). Avoid the sector. Even if they appear "cheap" on book value, they are value traps with no clear path to growing their loan books. A sudden, aggressive Fed rate cut cycle that steepens the yield curve and rescues their balance sheets. |
CNBC
RXR CEO Scott Rechler on housing affordabilit...
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