Banks – Only 1 Industry Group Is Trading Below 1x Book Value by Eric Bush, CFA – Gavekal Capital Blog
Financials have been pretty beaten up in 2016. The worst performing developed world industry group YTD have been the banks. Banks have fallen by over 16% (in USD) YTD. Of the five worst performing industry groups, three are from the financial sector. Surprisingly, the best performing industry group is also from the financial sector: real estate. As is usually the case, the only upside to poor performance is current valuations are becoming cheap, at least on a relative basis. In fact, banks are the only industry group, either from a median perspective or from an average perspective, that are trading below book value. Insurance companies are trading just a smidge over book value from a median perspective. All four financial industry groups are trading below 2x book value. To put this into better perspective, not a single consumer staples industry group is trading below 2x book value.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More