Month: May 2016

Weighted Average Central Bank Rate of ~100 bps = Monetary Flexibility

Broadly speaking, Hamilton Capital Global Bank ETF (HBG; TSX) seeks to invest in banks with higher expected EPS growth, which generally means banks domiciled in the countries with the highest GDP growth rates. Importantly, as we highlighted in our “Key Themes in Global Banking”, we also favour countries with independent central banks, especially those with higher central bank rates, which provides crucial flexibility in monetary policy.…

On HBG, U.S. Mid-Cap Bank Holding YDKN “Rumoured to Explore Sale”

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.…

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…

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