Looking for Value in Financials?

Looking for Value in Financials? Friday, August 31, 2007

Posted by ei-forum in US Traded Stocks.
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We have had some readers write to ask what we thought of the current valuation of banks and brokerage firms, wondering if it was time to pick up some bargains.

Whilst we agree that the sell-off has negatively affected companies that should not have too much trouble shaking of the current economic climate and who do not face a large exposure to sub prime, we are still hesitant on taking a position at this moment in time. We would prefer to wait for the results for this fiscal year (ending today for the banks and brokerages) to have a better understanding of the implications of the credit crunch.

Having said the above, if we had to ‘nominate’ our preferred choice today, we would definitely go with Bank of America (BAC). We have been following this company for some time and believe that with our own fair value estimates at around 65 USD, it is worth a look at recent levels. All in all, it hasn’t suffered much in recent weeks and Warren Buffett has even disclosed a position.

We feel that this Monringstar video does a really great job a explaining the investment thesis, please click here: link.

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