Crude futures are off sharply today as fears that Brexit will lower demand for the commodity resurface. Not surprisingly, all three indexes are also lower this morning. In this article, we’ll take a closer look at five banking stocks that are making noise today: Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS), and Barclays PLC (ADR) (NYSE:BCS). We’ll examine how elite funds are positioned in these stocks, and how they are being traded coming out of the long weekend.
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Barron’s Bullish on Banks, Asset Managers
The financial magazine Barron’s published a bullish piece on several banks this weekend. In the subscriber-only article ‘Bargain Banks: Goldman Sachs, Citi, JPMorgan’, the author Andrew Bary observes that many of the big banks trade for considerable discounts despite the fact that they are in great condition. Specifically, Mr. Bary notes that Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), Morgan Stanley (NYSE:MS), and Goldman Sachs Group Inc (NYSE:GS) shares have collectively retraced almost 20% year-to-date while the S&P 500 has rallied by 3% during the same time frame. Mr. Bary thinks the divergence makes the banking stocks “one of the best values in the market,” especially given that the latest round of regulatory stress tests has allowed many of those banks to return around two-thirds of their income to shareholders through buybacks and dividends. Given that many of those banks trade for P/E multiples of around 10, the valuation and capital returns make many of the bank stocks compelling in Mr. Bary’s eyes. Although there is a lack of catalysts given the low interest rates, many banks have strong balance sheets and all four banks mentioned trade below their tangible book value.
On the next page, we analyze how hedge funds are positioned among the four banks and also take a closer look at why Barclays is also drawing interest on Tuesday.