Take a look at the regional banks, that make their money on NII, that is net interest income, from industrial loans, mortgage loans, and not much from credit card and investment bank. Of course pay bit close attention to office RE, and multi-family RE exposure. Not all commercial RE is having issue, only the above two.
There are many names, where the dividend yield is good and relatively good value.
On hindsight, it is a bad decision not to take profits. I pretty much left this position alone is a big mistake. Now, I think tariff related supply chain disruption will hit SME sector and who has the biggest exposure to that sector? Regionals. Housing is another sector that is hurting.. who has exposure to that sector? Regionals.
While NII will be better, but the loan growth, M&A, capital markets and Regulatory relief didn’t play out as expected.
While some regionals are buying back stocks, the regionals will not be very aggressive and primarily will be limited to any profits that is left after paying dividends to do the buyback and will not take capital out.
It is time to do chose individual names and get out of the Index. I have been saying this for the last 6 months, but too lazy to start digging.
The banks, and specifically regionals had good loan growth in Q2, and the capital market activities have picked up in June, and the regulatory relief started playing out, we have seen some of that in stress test, analysts are moving up their YE EPS and price target.
After a strong move up in big banks, may be the time for the regionals to catch up.
I have $60 synthetics, and $65 to $70 Jan 26 spreads bought recently all moved up nicely. And the volatility has come down for the puts, closed all of the $TFC puts, I own the common so I am still in that name, and own a bunch of $KEY calls.