Many Want To Date bank stocks, Few Are Ready To Marry Them: Mayo

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00:00I think the U.S. banks are like the period of the mid-1990s.

00:03Then you had deregulation under then-President Bill Clinton, of all things,

00:07and banks re-rated higher.

00:09Right now there's deregulation.

00:11I think banks re-rate higher again.

00:12The big banks have re-rated from 10 to around 12, 13 times.

00:16I think they go up to 15 times.

00:18And in a market over 20 P.E., they're still inexpensive.

00:21If you look at measures such as their returns versus their valuation versus their book value,

00:27they're undervalued relative to other financial stocks.

00:29So they're not in any kind of alarming territory in terms of valuation.

00:34And that's at the same time.

00:36There is multi-year EPS inflection from negative growth before this past year

00:41to positive growth, I think, for the next three years.

00:43So many people just want to kind of date bank stocks.

00:48I think there's more investors out there now ready to go steady.

00:52And maybe some will get engaged.

00:54No one's really getting ready to get married to bank stocks.

00:56But that's the way it used to be.

00:57You would own banks as a core holding for a long time.

01:00You would get married to them, a Warren Buffett sort of approach.

01:03You don't plan to sell them at any time.

01:05But we've gone from dating to going steady.

01:07We'll see if some more get engaged.

01:09But there is more activity among incoming calls from investors, portfolio managers,

01:15institutional investors that I haven't heard from in years.

01:18So there is definitely a lot of people outside the store to own bank stocks.