Cheapest Financials, Three Ways
l@sasacul123
+0.9%
since Oct 9
The idea
I believe financials are priced like their earnings are about to fall apart, when most still generate solid returns on shareholders' money, so I'm betting that gap closes over time. I spread it across big US banks and insurers, smaller regional banks, and European and Japanese banks, screening for low price to book and price to earnings while avoiding names whose cheapness reflects real profit collapse. No single group dominates, and I keep a modest cash buffer. This is a patient, multi-year value take, not a quick trade.
What it owns
- Banks outside the US trade at some of the lowest valuations in the world and provide international diversification. · Banco Santander, S.A.It is a global retail bank priced low compared with its earnings and book value, with room to gain as returns on equity improve., Barclays PLCIt trades below its book value and remains in the take as long as returns on equity rise and buybacks continue., Mitsubishi UFJ Financial Group, Inc.Japan's biggest bank earns more as Japanese interest rates rise, supporting higher returns on shareholder equity., ING Groep N.V.It is a Dutch bank that hands a large share of profits back to shareholders, benefiting from higher European interest rates., Sumitomo Mitsui Financial Group, Inc.It is a major Japanese bank that benefits from rising rates and has increased cash returns to shareholders through buybacks., NatWest Group plcIt is a UK bank with a low price compared with its earnings and a high dividend, relying on solid borrower repayment and stable profits.32%
- Mid-sized US banks are priced for a loan scare, even though most have kept earning steadily through recent cycles. · Truist Financial CorporationIt trades at a discount to book value and remains positioned well as long as loan losses stay manageable and returns on equity hold steady., Citizens Financial Group, Inc.It trades low compared with its book value as a Northeast regional bank, and fits while profits recover and the loan book stays clean., Zions BancorporationIt still trades cheaply after regional bank scares and fits as long as deposits stay put and commercial loan losses remain contained., Prosperity Bancshares, Inc.It is a conservative Texas bank priced low compared with its book value, and remains positioned well while loans stay clean and profitability holds., First Horizon CorporationIt is a Southern regional bank priced low on book value and earnings, and fits while profits grow and loan losses stay modest.27%
- Life and specialty insurers sell at low prices compared with their earnings while higher interest rates lift their investment returns. · American International Group, Inc.It trades low on earnings after years of shrinking and simplifying, and fits while core insurance remains profitable and cash returns continue., MetLife, Inc.It is a life insurer trading at low earnings multiples that steadily returns cash to shareholders through buybacks., Prudential Financial, Inc.It trades at a low price compared with its earnings and has freed up cash through a reinsurance deal to return to shareholders., AXIS Capital Holdings LimitedIt is a specialty insurer priced low on earnings and remains in the take as long as underwriting stays profitable after storms and major losses.19%
- The largest US banks still trade near or below their book value, offering a margin of safety on their assets. · Citigroup Inc.It trades low against its book value while working through a cleanup, and remains attractive as long as returns on shareholder equity rise and buybacks continue., Bank of America CorporationIt pairs modest earnings multiples with a huge base of low-cost deposits that keep lending profitable.14%
- Cash8%