We have written several times on WFC’s inability to grow EPS and its ongoing regulatory problems. That said, even we were surprised that on Janet Yellen’s last day as Chair of the Federal Reserve (“Fed”), the central bank filed a consent order against Wells Fargo (“WFC”) requiring the bank take a number of extraordinary steps to improve corporate governance. While WFC does so, the Fed has…
Commentary: HFG
U.S. Banks: High/Low Growth Areas in One Map (i.e., “Follow the Sun”)
In banking, as in most businesses, geography matters. Population growth supports GDP growth, which in turn drives revenue growth. In general, U.S. bank investors divide the U.S. into six distinct regions: the Northeast, Mid-Atlantic, Midwest, Southeast, Southwest, and West (see chart at the end of this comment). Within these regions, there are 53 metropolitan statistical areas (MSAs) with a population greater than 1 million and nearly…
U.S. Bank Mergers in Two Charts
In the Hamilton Capital U.S. Mid-Cap Financials ETF (USD) (TSX: HFMU.U) and the Hamilton Capital Global Bank ETF (TSX: HBG) our exposure to the U.S. mid-cap banking sector is ~65% and ~48%, respectively (owing to the sector’s low dividend yields, Hamilton Capital Global Financials Yield ETF has just 10% exposure to U.S. banks).
Notes from the Field: “Follow the Sun” / Catching up with U.S. Banks in Phoenix
One of our themes for the U.S. banks is to “follow the sun”, which refers to our emphasis on banks domiciled in the higher population growth states/metropolitan statistical area[1] (“MSAs”). Every single one of the 15 faster growing large MSAs (i.e., those with populations in excess of 1.5 million people) are located in the (sunny) Southeast, Southwest, and West.
HBG’s U.S. Bank Portfolio Posts 16% EPS Growth Y/Y
November 16, 2017 by Hamilton Capital In the Hamilton Capital Global Bank ETF (Ticker: HBG), the U.S. bank portfolio reported another very strong quarter, posting portfolio-weighted earnings growth of ~16% Y/Y, its fifth consecutive quarter of double-digit Y/Y growth. HBG is up 10.3% YTD (through October 31st), making it 13% ahead of the KBW Global Bank Index (CAD). HBG continues to generate very consistent performance, with comparatively…
HBG: U.S. Bank Portfolio Posts EPS Growth 20% Y/Y
September 5, 2017 In the Hamilton Capital Global Bank ETF (HBG, HBG.U; TSX), the U.S. mid-cap bank portfolio reported another very strong quarter, posting portfolio weighted year-over-year earnings growth of ~20% – its fifth consecutive quarter of double-digit growth. As we have noted in the past, with over 150 mid-cap banks (i.e., those with market caps between $0.5 bln and $20 bln), there is greater opportunity…
Notes from the Field: Everything’s Peachy in Atlanta
A recent trip to Atlanta gave us a chance to meet with executives from several publicly traded banks headquartered in Georgia, as well as some of their commercial customers and a local land broker. Seven months after the election of an administration with ambitions of pro-growth policies and reforms that renewed investor interest in U.S. bank stocks, the trip presented a good opportunity to check in…
Notes from the Field: At Home with the Challengers of U.K. Banking
During a recent trip to London, we had the opportunity to sit down with executives from six UK-based banks, including teams from two High Street banks and four from what are commonly referred to as “Challenger banks”. In this note, we review our stance on U.K. banks, provide a brief breakdown of the market, and discuss our key takeaways from the trip.
Notes from the Field: U.S. Mid-Cap Bank Meetings in New York
We recently attended a U.S. financial services conference in New York City and had the opportunity to meet with executives from seven mid-cap banks. These meetings were of particular importance to us, as the Hamilton Capital Global Bank ETF (HBG) has ~46% of NAV invested in the U.S., with the majority of that in banks with less than US$50 bln in assets. Given the relatively low…
HBG: Raising U.S. & Australian Bank Exposure Post-Pullback
Supported by active management, the Hamilton Capital Global Bank ETF (HBG) continues to enjoy material outperformance. The since-inception returns have exceeded the global banks index by ~11%[1], despite comparatively lower drawdowns relative to major indices. In the past month we made two noteworthy adjustments to the ETF’s country weightings. On February 14th we posted an HBG Comment disclosing that we had recently reduced our weighting to…
HBG: EPS for U.S. Bank Portfolio Grows 15%+ in Q1
U.S. banks are by far the largest portfolio within the Hamilton Capital Global Bank ETF (HBG) and over time, we expect this group will represent between 30% and 50% of the ETF. As we have written previously, we typically prefer U.S. mid-cap banks over their larger peers because they: (i) are generally more rate-sensitive, (ii) are merging, and (iii) are growing earnings faster. In fact, during…
JPM Investor Day: Capital Return, Tax Reform, and Interest Rates
As we have written in the past, in the Hamilton Capital Global Bank ETF (HBG), we generally prefer mid-cap U.S. banks over their larger peers. With respect to the Hamilton Capital Global Financials Yield ETF (HFY), our U.S. bank allocation is very small (~6%), because yields for the sector are among the lowest in global banking (although we expect them to rise in the next two…