CNBC Stock Blog

Buy Big Banks AND Regionals Now: Portfolio Manager

With 30 bank failures already in the books for 2010 and more regulation on the way, is now the time for investors to be buying the financial stocks? David Ellison, portfolio manager at FBR, shared his sector insights.

“We saw the problems we had with not enough regulation, so a little regulation is in order,” Ellison told CNBC. “This whole thing has been about three problems—liquidity, capital and credit—and I think we solved the liquidity problem.”

Banking on Darwinism

The financials also were able to raise and maintain access to capital, so it is now time to solve the credit problem, he believes.

“This is a time to be owning the companies, because there’s a lot of bad stuff that are going to get better in the next two to four years,” he said. “Relative to where the industry is today and where it’s going to be in three to four years, earnings are going to go up and stocks are going to follow.”

Ellison said that right now, one need not make the distinction between large banks and the regionals when investing, because all the banks are “in the same boat.”

“As we move down the road, it may make a difference what you own because of the nature of what happens to the regulatory environment and overseas and what they do to regulate the industry.”

The most important data to watch for is unemployment, said Ellison.

“If we get job growth or stop job losses, that will build confidence in the industry and build confidence in people’s willingness to borrow money,” he said.  

  • Watch Ellison's Previous Appearance on CNBC (Jan. 21, 2010)

Second Opinions:

More Market Intelligence:

CNBC Data Pages:

CNBC Slideshows:


Top Financials Today:

Goldman Sachs

Morgan Stanley



Bank of America


No immediate information was available for Ellison or his firm.