On May 25th, media reports indicated that Yadkin Valley Bank – a U.S. mid-cap bank holding of the actively managed Hamilton Capital Global Bank ETF (HBG; TSX) – had engaged an investment bank to “explore a sale”. The North Carolina based bank has ~$7.5 bln in assets, a ~US$1.4 bln market capitalization and represents ~1.5% of the fund. Private equity firms own ~13% of the company.…
Commentary: HFG
On HBG, Five Reasons Why We Don’t Own C, JPM, or BAC
In the Hamilton Capital Global Bank ETF (HBG), we do not have positions in Citigroup (C), JPMorgan (JPM), or Bank of America (BAC), despite the fact that these banks are very inexpensive trading near or below TBV. Their lower valuations are directly linked to the fact their ROEs remain below their cost of capital. Just how low is profitability for these three mega-cap banks? ROEs in…
Minimizing Exposure to Troubled Global Investment Banking Model
In our recent Insight, “Why the Global Investment Banking Model is Under Siege” (March 24, 2016), we outlined the struggles facing the global investment banking sector. Hardly a week goes by without an important development for the likes of JPM, BAC, C, MS, GS, or in Europe, UBS, CSGN, DBK, BARC, be it the restructuring of business models, low returns, or additional regulatory pressures. Even in…
Reducing Energy Exposure; Going Modestly “Underweight” Canadian Banks
As explained in Hamilton Capital Global Bank ETF (HBG)’s prospectus, it is anticipated, over time, that HBG’s geographic mix will roughly represent: 50% North America, 25% Europe and 25% other countries. Although completely flexible, within the 50% allocation to North America, we generally aspire to a geographic mix of Canadian banks (15%) and U.S. banks (35%). Given our concerns over rising direct/indirect losses from energy lending,…