Bank Stocks Worth Buying Now: Analyst
With a "buyers' strike in financials right now," it could be a good time to invest in banking and broker stocks, said Jeffery Harte, a principal of Sandler O’Neill & Partners.
Harte pointed to Goldman Sachs and Citigroup as stocks that "have been beaten up to just ridiculously low levels."
"In this environment you’ve got the kind of fear where when the headline hits, the stock sells off," said Harte.
Goldman shares sank late on Monday, following the news that the firm hired a top Washington defense lawyer amid the Justice Department's investigation of Goldman's role during the financial crisis.
"I think the fears of that hire have really been kind of put aside," said Harte, as Goldman seemed to be "trading with its peers" in midmorning trading on Tuesday.
With the firms still in the spotlight, this period might be difficult for investors in financials, Harte said, though he added that if they "look out even three months" investors "are going to be happy with a lot of the names."
Harte said he doesn't see "Citigroup having its tangible book value cut in half by losses and then earning a single digit (return on equity) after that, which is what the markets are implying now."
In the same interterview, Charles Bobrinskoy, co-portfolio manager of Ariel Focus Fund, said that the market volatility "does spit out some higher-quality names," including Goldman and KKR , that "have been dragged down."
However, he said the firm hasn't been investing in Bank of America and wouldn't under the current environment.
"Unfortunately, the liabilities here are less clear and the value of their assets are less clear," he said, citing concerns about their mortgage security holdings and capital levels.
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Sandler O’Neill has received compensation from the above named companies for providing investment banking services and other services over the last 12 months. Disclosure information was not available for Charles Bobrinskoy or Ariel investments.