Chilton Investment Company buys stake in TransDigm in 4Q13
Chilton started a new position in aerospace engineering company TransDigm Group Inc. (TDG) that accounts for 0.76% of the fund’s fourth quarter portfolio.
Must-know: Determining a bank’s value
The first challenge is that banks are highly regulated and any change in regulations has a huge impact on the valuation of a bank—the second challenge is that it’s difficult to determine cash flow for a bank because both debt and reinvestment are difficult to calculate.
US Banking Sector: Key Trends and Outlook
Changes in technology have reshaped the banking sector. Banks are increasingly collaborating with fintech firms to improve their customer service.
Why Wells Fargo has the highest net interest margin
Maintaining a high net interest margin has always been part of Wells Fargo’s (WFC) strategy. Wells Fargo has consistently been better than the industry’s average net interest margin.
An investor’s guide to financial intermediation and key risks
Financial intermediation can result in concentration of risks that increase the fragility of the financial system. These risks are referred to as systemic risks.
The State of Treasury Yield Spreads in 2015
Yield spreads between different maturity Treasury securities, when compared to historical trends, can indicate how the market views economic conditions.
Financials Steal the Spotlight on July 15: Stellar Q2 Earnings
Financial-sector companies such as Bank of America (BAC), U.S. Bancorp (USB), and BlackRock (BLK) shared the spotlight on July 15.
The Big Picture in US Equity Mutual Funds: November Rundown as of October
Investors need to keep a close watch on signs that indicate a “liftoff” in December and should be ready to rebalance their equity mutual funds accordingly.
Why Treasury Yield Spreads Have Fallen to Over 8-Year Lows
Yield spreads between different maturity Treasury securities, when compared to historical trends, can indicate how the Market views economic conditions.
Which Sectors to Avoid if Inflation Rises
Telecom services and utilities, the traditional dividend stars, have provided a fillip to US equities in 2016.
Markets Give a Thumbs Up to ‘True Merger of Equals’
Today, Sun Trust Banks and BB&T announced a merger that would create the sixth largest bank in the United States.
Low-cost deposit growth is a key strength for U.S. Bank
U.S. Bank does well in increasing its low-cost deposit base. In 4Q14, money market deposits grew the fastest at 19.7%—compared to 4Q13.
Chilton opens a new position in Abbott Laboratories in 4Q13
Abbott Laboratories (ABT) is a brand new position that accounts for 1.19% of Chilton’s fourth quarter 2013 portfolio.
U.S. Bank’s non-performing assets declined in 4Q14
U.S. Bank’s (USB) non-performing assets were $1,808 million at the end of 4Q14. The ratio declined by 11.24%—compared to 4Q13.
How does Bank of America make money?
Net interest income contributes about half of Bank of America’s total income. Investment and brokerage services contribute the most to noninterest income.
Why Bank of America’s commercial loan portfolio is diversified
In addition to assessing the credit profile of the borrower, Bank of America ensures that loans aren’t too concentrated by industry, geography, or customer.
A brief overview of U.S. Bank
We’ll provide an overview of U.S. Bank. It’s the fifth largest retail bank in the US—by deposits and assets. At the end of September 2014, it held $391 billion in assets.
Why U.S. Bank’s loan growth showed interesting trends
You need to understand loan categories better in order to see some very interesting trends in U.S. Bank’s loan growth. Its loans are divided into five main categories.
Efficiency ratio improved for U.S. Bank in 4Q14
U.S. Bank led the industry in terms of the bank efficiency ratio. At the end of 4Q14, the sector efficiency ratio was 68.66%.
Must-know: Traditional banks face challenges
When a borrower isn’t able to pay back the loan, the loan is considered a non-performing asset (or NPA)—since the money for lending came from a depositor, the bank needs a large enough pool of capital to withstand such a shock.
Are Banks a Good Bet for Buffett and Berkshire?
Banks comprise around 30% of Warren Buffett’s portfolio by market value. Out of Berkshire Hathaway’s portfolio of 46 stocks, five are commercial banks.
Chilton Investment Company buys a new stake in US Bancorp
Chilton initiated a new position in the multi-state financial holding company U.S. Bancorp (USB) that accounts for 0.92% of the fund’s fourth quarter portfolio.
American Express Stock Dips Despite Q3 Revenue Beat
American Express Company (AXP), the New York-based financial services company, released its third-quarter earnings on Friday.
Soros Exits, Buffet Increases: Who Is Right on Apple?
In Q4 2018, legendary investor George Soros sold all his holding in Apple (AAPL). In Q3 2018, Apple represented around 0.2% of his total portfolio.
Berkshire Hathaway 13F: Warren Buffett Played It Safe
There weren’t any real surprises in Berkshire Hathaway’s 13F for the second quarter. In some ways, the 13F replicated the first quarter.
How Warren Buffett’s Banking Investments Look after Q2
Warren Buffet loves banking stocks. Out of his current portfolio of 47 stocks, five are commercial banks, including two regional banks.
Berkshire Hathaway’s Banking Holdings in Q1
Among Berkshire Hathaway’s financial holdings, JPMorgan Chase was the worst performer, while Goldman Sachs was the top performer.
How Warren Buffett Views Apple’s Big Bets on Payment Industry
Earlier this week, Apple (AAPL) announced new services including video streaming, a gaming subscription, and a credit card in partnership with Goldman Sachs (GS).
How Warren Buffett’s Investment Philosophy Has Evolved
Berkshire Hathaway trimmed stakes in Apple, Wells Fargo, Southwest Airlines, United Continental, Phillips 66, and Charter Communications in the fourth quarter.
Could Warren Buffett’s Views on Bitcoin Change?
Berkshire Hathaway (BRK-B) chair Warren Buffett has never been a fan of cryptocurrencies like bitcoin.
Did Buffett Miss the Bus on Apple?
Berkshire Hathaway (BRK-B) is Apple’s second-largest shareholder.
Buffett to Investors: ‘Focus on the Forest, Forget the Trees’
One of the world’s most successful investors of all times, Warren Buffett believes in investing for the long term.
Warren Buffett’s Berkshire Hathaway Lost $25.4 Billion in Q4 2018
On Saturday, February 23, Warren Buffett’s Berkshire Hathaway (BRK-B) released its fourth-quarter earnings report.
Warren Buffett and the Problem with Elephants
In the annual shareholder letter, Buffett lamented the lack of big acquisition opportunities, which he called “elephants.”
Buffett’s Love for Banking Stocks Continued in Q4
Berkshire Hathaway is the largest shareholder in Wells Fargo (WFC), Bank of America (BAC), U.S. Bancorp (USB), and American Express (AXP).
Key Changes in Berkshire Hathaway’s Holdings in Q3
Looking at Berkshire Hathaway’s third-quarter 13F, the company added more Apple shares and added a new position in JPMorgan Chase.
Buffett Banking Too Much on the Banking Sector with J.P. Morgan?
As we discussed in the last three parts of this series, renowned billionaire investor Warren Buffett’s Berkshire Hathaway (BRK.A)(BRK.B) has increased its bets on the banking sector.
Buffett Raised Bets on U.S. Bancorp and Goldman Sachs in Q3 2018
So far in this series, we’ve looked at Warrant Buffet’s investment firm, Berkshire Hathaway’s (BRK.A)(BRK.B), top five investments in the third quarter.
What Are USB’s Key Growth Drivers?
U.S. Bancorp’s (USB) revenue net of interest expense grew 5% and 4% in 2016 and 2017, respectively.
Are You a Treasury Bond Mutual Fund Investor by Choice or Chance?
Much of what you can do with your Treasury bond mutual fund for the remainder of 2016 depends on what your intention of investing in the instrument is.
Rate Hike Expectations Propelled Financial Stocks Higher
Many banks and financial service providers’ stocks rose on December 15. US investors picked the stocks with the expectation of the zero interest rate policy.
Monetary Policy 101: What You Should Know ahead of the FOMC
The Federal Reserve seems ready to tighten its monetary policy stance. But before we move ahead with our analysis, let’s make sure we understand why the Fed’s tightening in the first place.
What Can Investors Expect from the Interest Rate Environment?
Central bankers haven’t taken a rate hike in 2015 off the table. Market participants felt that the liftoff would take place in 2016. They seem to be preparing for 2015.
Treasury Market Liquidity: Cause for Concern?
In a Fed assessment, research showed that there’s ample liquidity in the Treasury market. But other measures point to a deterioration in liquidity.
The US Monetary Policy: Fischer and Brainard Speak Out
With regard to US monetary policy, there’s been a lot of emphasis on the timing of the first increase in the federal funds rate. The path of the funds rate is more important than the first increase.
Loan-to-Deposit Ratio Moves in the Right Direction for Banks
The ideal loan-to-deposit ratio for a bank depends on the bank’s business model. Some banks that focus on core banking, like U.S. Bancorp (USB), have high loan-to-deposit ratios.
J.P. Morgan and Its Diversified Funding Sources
Banks like US Bancorp (USB) and Wells Fargo (WFC) have an advantage over J.P. Morgan in terms of debt rating. Both banks secure higher ratings.
Why the Federal Reserve’s Meeting Minutes Affect Your Investments
You don’t have to be an institutional investor or money manager for the FOMC’s meeting minutes to have an impact on your investments.
SunTrust Bank’s Deposit Growth Lower than Industry Average
STI’s deposit growth is clearly lagging behind the industry average. Other banks are experiencing strong growth in this area.
BB&T’s Relative Valuation Is close to the Industry Average
BB&T’s loan and deposit growth is marginally below the industry average. Its ROE and price-to-book ratio are close to the peer average.
Why BB&T Has Low Funding Costs Compared to Its Peers
Deposits are the cheapest funding source. Since deposits fund a major chunk of BB&T’s assets, the overall funding costs are low.
BB&T to Expand Its Footprint in Ohio and the Mid-Atlantic Region
BB&T’s Susquehanna acquisition will significantly expand BB&T’s Mid-Atlantic footprint. The deal is valued at ~$2.5 billion. It will close in the second half of 2015.
Why Is the Loan-to-Deposit Ratio Declining for US Banks?
The industrywide loan-to-deposit ratio has declined over the last few years, largely due to the increase in non-interest-bearing bank deposits.
Why Lower Funding Costs Impact Net Interest Margins
Lower funding costs determine a bank’s net interest margin. A bank has funding cost advantage when it pays less interest on borrowed funds and deposits.
Teachers fund eliminates stake in Citizens Financial Group
Citizens Financial Group is a retail bank holding company. It posted fourth-quarter net income of $197 million, up from $152 million.
Why trading assets are an important indicator for banks
Total trading assets at banks stood at $655 billion at the end of 2014. Trading assets have increased by 24 basis points since 2Q14.
Valuation of PNC Bank is close to historical mean
PNC stock was trading at a PBV ratio of 0.75 in November 2012. Since then, the stock has seen a smart move up and trades at a PBV multiple of ~1.08.
PNC Bank’s financial strengths outweigh its weaknesses
PNC Bank has done a good job at reducing its non-interest expenses, but the bank’s efficiency ratio still remains above 60%.
Why loans are the most important earning asset for smaller banks
Loans as assets are less important for larger banks, as large banks tend to have a more diversified asset portfolio.
Why loan assets are gaining importance in the banking sector
In recent years, trading assets had grown in importance, but after the sub-prime crisis, the importance of loan assets increased again.
Why earning assets are an important indicator for the banking sector
The banking sector has shown a trend of increasing earning assets, because banks have focussed on becoming leaner and improving operational efficiency.
Banking asset indicators: Do they make analysis easy?
Banking asset indicators are important because the majority of banking income comes from the assets side of the balance sheet.
Why the auto finance market share needs to be protected
Auto finance is a business where Capital One (COF) grew rapidly. The bank entered the market in 1997. Since then, it has been able to build a sizeable market share.
Analyzing Capital One’s business segments
Capital One (COF) can be understood best by breaking it into different business segments—Credit Card, Consumer Banking, and Commercial Banking.
What are Capital One’s three main subsidiaries?
Capital One is organized into subsidiaries. Capital One’s principal subsidiary is a limited purpose credit card bank. It’s chartered in Virginia.
Capital One’s history: From credit cards to a diversified bank
Capital One’s history is shorter than other banks. In 1994, Signet Financial Corp. spun off its credit card business into a separate subsidiary—Capital One.
Why the composition of banking assets matters
The two main types of banking assets are loans and securities held.
Non-interest expense management can improve at PNC Bank
PNC’s net interest expenses stood at ~$9.5 billion at the end of 2014, $193 million lower than 2013 after curtailing salary and miscellaneous expenses.
PNC Bank loan book carries some risks
PNC Bank’s loan book is skewed toward a few types of loans: commercial and industrial loans and 1–4 Family First Liens, about 44.5% of its total loans.
Does PNC Bank remain a strong long-term play?
With a strong presence in the East, South, and Midwest, PNC Bank offers community banking, wholesale banking, corporate banking, and asset management.
Why Wells Fargo ranks high in overall competitiveness
Cards represent another big area of opportunity for Wells Fargo. Only 36% of its retail banking clients and 20% of its mortgage clients have Wells Fargo cards.
Why Wells Fargo’s strategy is different from other banks
“Strategy” can be defined in many ways. Generally, strategy is a long-term plan. There are two main aspects to strategy—operational level strategy and human resource level strategy.
Wells Fargo has room to grow in the international arena
Being present in many countries helps banks profit from today’s borderless economy. Aside from the U.S., the top three countries where Wells Fargo is present are United Kingdom, Canada, and China.
Overview: The way traditional banks make money
Generally, the interest charged from those who took the loans is higher than the interest paid to depositors—the difference in the interest earned and interest paid is the interest income that is essentially the money made by the bank from its core operations.
Chilton Investment Company sells its shares in CarMax in 4Q13
Chilton liquidated its position in CarMax Inc. (KMX) in the fourth quarter that had accounted for 0.71% of the fund’s third quarter portfolio.
Chilton Investment Company sells its shares in Genesco
Chilton exited its position in Genesco Inc. (GCO), which had accounted for 1.15% of the fund’s third quarter portfolio.