“They’re still not making money and we have some significant bumps that banks need to get over,” he explained.
“I’d like to see them return to profitability, grow their earnings, see results of that yield curve make a big difference, and get through a Fed tightening—and still see that they are able to make money,” Farr said.
On the other hand, Schutz said banks are a “generational opportunity now” from an investment perspective.
“They’ll vastly outperform the S&P this year and I think they have a lot of low-hanging fruits here,” he continued.
Schutz explained that the valuations of the banks are trading at a deep discount to where they previously were.
He told investors that Citigroup has "great upside" in the long term. However, he advised against companies that have yet to repay TARP and raise capital.
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Farr owns shares of JPM, GS and BBT. Farr, Miller & Washington owns all three stocks in client accounts in Touchstone Capital Appreciation Fund.
No immediate information was available for Schutz or his firm.