Berkowitz on financial holdings: it's all just a little bit of history repeating

Well, to me, it's very much déjà vu all over again with the financials. This is exactly what I did in the early 90s. It's very reminiscent of the early 90s. And how can you not buy companies selling tangible book value that are essential to the country?

~Bruce Berkowitz, founder, Fairholme Funds, CNBC interview, June 9, 2011

Epitaph For 2010?

Once left for dead, shares of bailed-out American International Group Inc. have defied critics and rallied to become one of the market's top performers in 2010.

On Tuesday, AIG's publicly traded shares closed 45 cents lower at $58.93, capping a nearly 97% gain in the year to date and over 42% in December alone. The insurer is the fourth-best performer in the S&P 500 index this year.

~The Wall Street Journal, "AIG Stock's Unlikely Comeback", December 28th, 2010

Bill Fleckenstein on clueless money managers

So much in the investment business is about marketing. I see people with horrendous strategies and horrible numbers and they're still running zillions of dollars! I mean, how can anyone have any money at all with someone who was loaded with financial stocks in 2008? If they owned financial stocks they basically have a neon sign on their forehead that says, 'I DON'T GET IT! I don't understand the financial crisis.' Or housing stocks or anything like that. If you didn't understand the biggest bubble in the history of the world, why should you be allowed to run money?

~ Bill Fleckenstein, interviewed on King World News, January 23rd, 2010

Bill Miller on his decision to increase his holdings of financial stocks in 2007

We bought financials after the Fed [first] injected liquidity [into the market by cutting the discount rate on Aug. 17, 2007, and then the fed-funds rate on Sept. 18, 2007, continuing into 2008.] That's what you do in a liquidity crisis... This turned out to be a collateral-driven crisis caused by underperforming debt... We've analyzed that mistake and tried to make adjustments to risk management and the portfolio-construction process.

~ Bill Miller, portfolio manager, Legg Mason Value Trust, "It's Miller Time!," Barron's, October 12, 2009

Ken Heebner on the credit crunch

A year from now, credit will be available because of the government's actions.

~ Ken Heebner, "Heebner the Contrarian," The Wall Street Journal, December 6, 2008, by Diya Gullapalli

(About 40% of Heebner's $4.3 billion CGM Focus Fund was in financial stocks as of Sept. 30, according to its portfolio report.)

Ken Heebner turns bullish on financial stocks

For now, at least, ace fund manager Ken Heebner has turned bullish on financial stocks. At the same time, Heebner, who has been running mutual funds for more than 30 years and is known for his uncanny ability to measure the pulse of the market, has dramatically pared back his funds' commitment to commodity-related stocks.

Heebner, who trades feverishly, says he now has more than 30% of the assets of his flagship CGM Focus fund in financials and only about 10% in commodity stocks. As of June 30, according to Morningstar, Focus (symbol CGMFX) had 86% of its assets in energy and industrial-materials stocks and nothing in financials.

Heebner revealed his moves on September 19, as stocks rallied furiously in response to an array of government actions designed to end a crisis in global financial markets.

~ Kiplinger.com, "Ken Heebner Is Bullish on Bank Stocks," October 3, 2008, by Manuel Shiffres

Bill Fleckenstein on the government's efforts to rescue Fannie Mae and Freddie Mac

The government's efforts will not create a bottom for financial stocks because of the fundamental problem in this country: People carry too much debt against homes that are sinking in value, homes they really couldn't afford in the first place and homes that have become all the more burdensome due to the inflation that's ravaging their paychecks. That the implosion of the housing debt bubble is dragging the economy down with it will just put additional pressure on jobs and the ability to service housing debt.

~ Bill Fleckenstein, "The Repugnant Bailout Nation," Contrarian Chronicles, MSN.Money, July 28, 2008

David Dreman: "Safest plays are among the big banks" (2008)

The safest plays are among the big banks. Most of this group have taken large reserves against their losses in the various mortgage areas, hoping that the market would reward them for their candor. Wall Street's response, however, has usually been to punish the reserve-takers with further cuts in their stock prices.

Perhaps investors are spooked by memories of the 1990--91 crisis in the financial sector, when real estate losses were so huge that investors questioned the ability of some commercial banks to survive without additions to their capital bases. At the same time, scores of savings and loans were collapsing from ill-considered forays into junk bond buying and construction lending.

The story is very different today. Yes, losses are towering, yet Tier I capital--the core measure of a bank's financial strength, chiefly shareholders' equity (including that from preferred shares)--is not threatened, as was true 17 years ago. While most large banks had lousy third quarters, the worst may well be over. Bank of America (43, BAC), Wachovia (40,WB), Citigroup (31, C) , KeyCorp (23, KEY) and JPMorgan Chase (45, JPM) are five that should show good appreciation with time. While you wait for a stock market recovery, all pay above-market yields. Bank of America, KeyCorp and Wachovia pay 6% or better.

~ David Dreman, "Seize the Day," Forbes, January 7, 2008

Short seller Doug Kass getting long financials

While the negatives of the credit cycle, the dilutive effect of the industry's refinancings and other factors cannot be dismissed, quite frankly, I can make the case that we are now at an unprecedented point of time to get long financials.

I have added Bank of America (BAC) to my banking basket of Citigroup (C) and Wells Fargo (WFC).

~ Doug Kass, "Kass: I'm Putting My Money in the Banks," TheStreet.com, May 29, 2008

David Dreman recommends "gold-standard financials" for 2008

For 2008 I recommend holding on to these three gold-standard financials: Fannie Mae (37, FNM), Wachovia (35, WB ) and Bank of America (39, BAC ), as well as Washington Mutual (14, WM ) and CIT Group (22, CIT ). As the experience of the 1990s shows, they will have substantial upside once the current fright subsides.

I expect the market to likely end the year flat or down somewhat. A real bear market, which we can define as a 20% decline, is quite unlikely from here.

On the positive side: A recession is not likely. The financial panic will gradually ease as we move into 2008. Investors will crawl out of their fallout shelters. Remember that this is an election year, and the incumbent party will do what it takes to prime the pump. Increased federal spending and more Federal Reserve easing are givens. My high-quality financial stocks will soar once that becomes apparent. Just as they did in the early 1990s, banks will maintain fairly good yields on their assets while their funding costs go down. BofA earned $4.70 a share in precrisis 2006. I think it will earn $5.50 or more in postcrisis 2010.

~ David Dreman, "Tug of War," Forbes, February 11, 2008

Kevin Duffy on banks putting their names on major sports stadiums

Today 24 of 72 major sports stadiums have granted naming rights to financial firms, 14 of them banks. (Recall that 19% of the Stadium Class of 2000 -- including PSINet Stadium and Enron Field -- went bankrupt within five years.)

~ Kevin Duffy, Bearing Asset Management, "For Whom Do the Bells Toll", Barron’s, June 18, 2007

David Dreman: Bank stocks are bargains

Frightening as the markets look today, there will come a time when the liquidity crisis ends and today's prices for bank stocks look, in retrospect, like bargains.

~ David Dreman, "Looking Beyond the Bailout," Forbes, May 5, 2008

Jim Cramer on financials

Jamie Dimon's books are a thing of nonfiction. Thank heavens Jamie Dimon seems like a pretty realistic guy.

With Wells Fargo you're dealing with fact, not fiction. Goldman Sachs is deeply rooted in fact.

~ Jim Cramer, Mad Money Host, CNBC, January 17, 2008

Jim Cramer bullish on financial stocks

You want to get in bed with the financials now... We should get huge moves in financials again.

~ Jim Cramer, Mad Money, CNBC November 30, 2007

(Cramer recommended Bank of America (BAC), Wachovia Bank (WB), Citigroup (C), Goldman Sachs (GS), and Annaly Mortgage (NLY).)

Vince Farrell on bank stocks

The deal of the century is these bank stocks with a 6 1/2% yield.

~ Vince Farrell, as appeared on CNBC, November 2007

David Dreman on likely survivors of the credit crunch

Obviously, Citigroup will be a survivor. Bank of America will be a survivor. And obviously Freddie Mac and Fannie Mae. So those are companies I would look at.

~ David Dreman, as interviewed on Bloomberg Video, November 1, 2007