U.S. bank stocks fell sharply in late afternoon trading on Thursday as nervous investors monitored Europe’s sovereign debt crisis . Bank of America and Morgan Stanley, in particular, led the financials lower.
Investors should avoid the big commercial banks that have considerable exposure to Europe, said Fred Cannon, director of research at New York-based KBW Inc., specifically Morgan Stanley , Goldman Sachs , JPMorgan Chase , Bank of America and Citigroup .
Trader Steve Grasso of Stuart Frankel said he’s still in Bank of America, but has become concerned with the stock after it dropped below the $6 level this week. After all, BAC has held above the $6 level since early August. To him, the stock now looks as though it will continue to head lower with the overall market. At current levels, he would not add to his position.
For those interested in still playing financials, Cannon recommends focusing on well-capitalized regional banks. UBS , for example, has “tremendous value.” Perhaps the best approach to investing in smaller regionals is through a basket of stocks, such as the PowerShares KBW Regional Banking exchange-traded fund . Patty Edwards, chief investment officer at Trutina Financial, agreed and supported the idea of investing in a basket of small regional bank stocks.
Trader Jon Najarian also likes the small regional banks because they have been “super hot” lately. He is especially bullish on Huntington Bancshares , PNC Financial and Regions Financial .
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Trader disclosure: On November 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns NUE; Adami owns MSFT; Adami owns BTU; Najarian has long call spreads AKS; Najarian has long call spreads IBM; Najarian has long call spreads FSLR; Najarian has long call spreads RAM; Najarian is long CME; Najarian is long CBOE; Najarian is long CIGX; Grasso owns AA; Grasso owns AKS; Grasso owns ASTM; Grasso owns BA; Grasso owns BAC; Grasso owns D; Grasso owns KEG; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Dicker has positions in WTI; Dicker has positions in SLB; Dicker has positions in HP
For Patty Edwards
Trutina Financial is long AAPL
Trutina Financial is long GLD
Trutina Financial is long INTC
Trutina Financial is long SLB
Trutina Financial is long GOOG
Trutina Financial is long TGT
Trutina Financial is long NEE
For Steve Grasso
Stuart Frankel & Co and its partners own CSCO
Stuart Frankel & Co and its partners own CUBA
Stuart Frankel & Co and its partners own GERN
Stuart Frankel & Co and its partners own HPQ
Stuart Frankel & Co and its partners own HSPO
Stuart Frankel & Co and its partners own MET
Stuart Frankel & Co and its partners own MU
Stuart Frankel & Co and its partners own NYX
Stuart Frankel & Co and its partners own PRST
Stuart Frankel & Co and its partners own XRX
For Camilla Sutton
No disclosures
For Jeff Kilburg
No disclosures
For Brent Thill
UBS Securities LLC makes a market in the securities and/or ADRs of this company.
For Fred Cannon
Bank of New York Mellon (BK - $19.64, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Bank of New York Mellon in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in Bank of New York Mellon securities.
Wells Fargo & Company (WFC - $24.94, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Wells Fargo & Company in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in Wells Fargo & Company securities.
Morgan Stanley (MS - $14.66, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Morgan Stanley in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in Morgan Stanley securities.
Goldman Sachs Group, Inc. (GS - $95.60, Outperform)
KBW expects to receive or intends to seek compensation for investment banking services from Goldman Sachs Group, Inc. in the next three months.
KBW has received compensation for investment banking services from Goldman Sachs Group, Inc. in the past 12 months.
KBW currently makes a market and/or acts as a liquidity provider in Goldman Sachs Group, Inc. securities.
Goldman Sachs Group, Inc. currently is, or was during the 12-month period preceding the date of distribution of this report, a client of KBW.
Citigroup (C - $26.86, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Citigroup in the next three months.
KBW has received compensation for investment banking services from Citigroup in the past 12 months.
Citigroup currently is, or was during the 12-month period preceding the date of distribution of this report, a client of KBW.
Bank of America Corp. (BAC - $5.90, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Bank of America Corp. in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in Bank of America Corp. securities.
State Street Corporation (STT - $39.93, Outperform)
KBW expects to receive or intends to seek compensation for investment banking services from State Street Corporation in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in State Street Corporation securities.
JPMorgan Chase & Co (JPM - $31.47, Outperform)
KBW expects to receive or intends to seek compensation for investment banking services from JPMorgan Chase & Co in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in JPMorgan Chase & Co securities.
For Brian Kelly
Shelter Harbor Capital is long PM
Shelter Harbor Capital is long GLNG
Shelter Harbor Capital is long LNG
Shelter Harbor Capital is long SRE
Shelter Harbor Capital is long V
Shelter Harbor Capital is long CLF
Shelter Harbor Capital is short German bunds
Shelter Harbor Capital is short SPY
Shelter Harbor Capital is short EWO
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