Top Fund Manager: Bullish on Banks ahead of Earnings

Despite a rough start to 2016 for the financial sector, one 5-star fund manager sees amazing opportunities.

Anton Schutz, President of Mendon Capital Advisors, runs the 5-star rated Burnham Financial Services Fund (BURKX). The fund has risen 19% over the past year, far outperforming the sector which fell 8%.

"I'm still bullish on the [financial] sector in a large way and margins will get better for this group," he said on CNBC's "Halftime Report".

The top fund manager expects to see bank stocks pop on earnings.

"I think the big banks have been beaten to death enough that I am optimistic we will get a pretty good bounce almost regardless of what they report," he said.

Bank of America is a standout, according to Schutz. "Bank of America is very cheap and they are very asset sensitive."

When it comes to regional banks, Schutz just added to his Yadkin Financial position. He sees the stock trading in the mid-30s within a year. "Growth in [Yadkin] is phenomenal."

The one thing big question hanging over the sector is how the banks have been dealing with the collapse in oil prices.

While Schutz says the major banks can handle putting aside reserves, investors should be wary of some smaller names. He says to watch out for those with headquarters in markets exposed to the commodity.

By CNBC Producer Bree Kelly. Follow her on Twitter @Bree_Kelly