Major financial stocks were mixed on Tuesday. Goldman Sachs reported strong earnings amid an investigation by U.S. and European financial regulators after being charged with fraud by the SEC. Is this the right time to buy the financials? Alan Lancz, president of Alan B. Lancz & Associates, shared his insights.
“We had a target of $185 to $195, which was where it was trading before Friday’s news, so we’re starting to take profits and getting out of Goldman ,” Lancz told CNBC.
However, Lancz said the “trend is up and the fundamentals are good” for financials in general.
“Why we are a little bit hesitant and gone from overweight to underweight on banks and equal weight on financials is just the inherent risk. If you look at their earnings and the progress that they have made, most of it has been proprietary trading and derivatives," he explained.
"And with what’s going on right now with bank regulatory reform and the added catalyst with the Goldman suit, a lot of their lucrative areas might be restricted and their great source of profits might be lowered."
“So it may be a difficult period for the financials—you have to be in the right ones.”
Meanwhile, Citigroup posted a quarterly profit on Monday, its best result in more than two years.
“Citigroup earnings were good and everyone was doing the right thing, but their non-recurring revenue and recurring revenue were both were down and their tangible book value is down, so they still have a ways to go,” said Lancz.
“I would be equal weighted at best," he suggested. "If you’re overweight, take profits and if you’re underweight, be very selective."
- Watch Lancz's Previous Appearance on CNBC (Mar. 25, 2010)
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No immediate information was available for Lancz or his firm.