Sesit on the Big Banks

Bloomberg's always-interesting Michael Sesit considers the big banks in his new column:

Battered, beaten and bruised, commercial and investment banks -- many of them with world-class names, if somewhat tarnished reputations -- look like bargains.           

But before handing over their hard-earned cash, investors should ask themselves several questions, including how cheap is cheap and whether all the potential bad news is priced in. Bottom fishing can be very rewarding, but not when you discover that bottom is a lot deeper than you thought.

Like I said (more or less) in my previous post on Royal Bank of Scotland, there are bound to be fantastic bargains in these names. But how anyone can trust the net asset values not to be quicksand is beyond this humble value player. At least at this point in time.

One thing that will be interesting is this: UBS became a full position in Longleaf's international fund several months back. I don't own it. But it will be interesting to see what Mason Hawkins & Co. say about it in their next report.
    

Comments

[themicrokid]

It is really bothersome, when we can't have confidence in S&P, witness the BSC fiasco and the DRL fiasco of a couple years ago.

The Fed seems so accommodative, I think there will be ways to wash over major issues left in the banking sector.

Maybe a few more failures, but I think they keep them limited.

Micro
http://themicrokid.blogspot.com/

[David]

Today's (4/21) news on the banks really bares this out. BoA and National City are both reporting losses and National City just cut its dividend to 1 cent. Meredith Whitney expects Citibank to cut or eliminate its dividend.

As you said in the earlier post, it's just very hard to know what these bank balance sheets even look like. Jim Rogers has been making this same point for months now.