Over the weekend, I put out a post (Weekend thoughts: interest rates and climbing the wall of worry) discussing where markets are right now and why I didn’t think a big increase in interest rates was a huge cause for concern for stocks.
I think your COF/BAC comparison is interesting in a sort of "not everything that counts can be counted" way. The truth of this comparison is really somewhere in the middle of your conclusion. The fact is, in a perfect data world, loans on the balance sheet would be marked to market as well because interest rates increasing reduce the economic value of those assets. Just because accounting standards only adjust for tradeable assets doesn't mean BAC should be given a full discount for having more liquid investments. The real tangible book should be adjusting for all these investments at current discount rates.
I like FHN for many of the reasons discussed.
Great read and I think this is one of the reasons why CMA is now my largest holding at 57% TBV and EX-AOCI is doing 19.94% ROCE. AOCI losses are rolling off 500-1B every quarter and deposits are actually growing; this quarter beat on top and bottom line. I wrote about it a bit on my own substack.
Thank you for the insight
why does this feel like the same recommendation to buy telecom stocks......
I enjoyed the article. But I'd like to seek a comparison of sorts. For example, "the five best non-mega cap banks vs the 5 worst"