Dick Bove: Buy Banks, Avoid Brokers

Bove Says Bear Holder Lewis Won’t Find Alternative Deal: Video Play

Interesting interview with Dick Bove, the Punk Ziegel analysts who has been so dead right about the banks and brokers this past year.

Richard Bove, an analyst at Punk Ziegel & Co.,
talks with Bloomberg’s Carol Massar and Julie Hyman about the outlook for
financial markets, brokerage and bank earnings, and the possibility that Bear
Stearns Cos. shareholder Joseph Lewis may push the company to consider
alternatives to the $339 million buyout offer from JPMorgan Chase & Co.

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Discussions found on the web:
  1. JustinTheSkeptic commented on Mar 21

    Wait a minute, he was saying buy WAMU, way too early. I think the guy uses his position, or someone behind him is using him, to use it… Even a clock is right twice.

  2. m3 commented on Mar 21

    This link should work better.

    I couldn’t get the other one to work.

  3. JB commented on Mar 21

    Barry, Bove right on…what!!!???

    Listen, I used to think highly of Bove but he’s damaged goods now. Barry, this guy has been as bad as they get at predicting the banks and brokers.

    Bove for months that Citi’s dividend was fine and all the way down said Citi was a buy.

    Meredith Whitney is the shinging star here. Listen to her.


  4. Paul commented on Mar 21

    Jesus, Barry, did you really post an item at 3 a.m.? Eastern time? On Good Friday? That’s dedication or madness, but it’s definitely good for us readers either way.

  5. andiron commented on Mar 21

    poor dick bove is bleeding in his position in CITI, a bank that is most likely to be broken up in near future..
    most are assuming writedowns in banks are nearing end..an assumption made based on house price bottoming nearing as well.
    As recession sets in and unemployment rate jumps to 6-7%, home prices ,esp in bubble areafurther, will decline further stressing the finacials even more.
    Home prices are set to fall to 2001 level in most areas and this will crimp consumption big time.

    The real estate bubble & credit binge impact is yet to severely stress the euro/uk areas as well as OZ/china/india and extremely bubbly DUBAI…

    This play is not even half over…

  6. IBH commented on Mar 21

    JB is right, to a point. His call on C dividend status has been way off. Right now, he has made a bold call on the banks, opposite that of the Ms. Whitney. We will see who is right. Dueling analysts that CNBC jsut eats up.

    What i find interesting is how a “good call” can still make you a star. In both cases, CNBC has given them star status.

    In Ms Whitney case, she has capitilized on that status to quickly moved from financial analyst at CIBC to Managing Director of Reasearch at Oppenheimer.

    In Mr. Bove’s case, he has put Punk Ziegel on the map as a niche firm. So much so that many people missed the headline in early March, “Ladenburg Thalmann to Acquire Punk, Ziegel & Company”.

  7. dhukka commented on Mar 21

    Bove got the call right a year ago to avoid financials. However he lost the plot later in the year. I think he put a buy on Citi at around $30 and went on CNBC at least 3 times saying that Citi didn’t need to cut its dividend.

    Looks like Bove is trying to repair a damaged reputation by making a big call.
    Meredith Whitney has been more on the ball than Bove. Bove will either look like a sage or a fool in a few months time. I’m betting on the latter.

  8. Bob_in_MA commented on Mar 21

    Interesting interview with Dick Bove, the Punk Ziegel analysts who has been so dead right about the banks and brokers this past year.

    Sorry, Barry, but that’s just nonsense.

    He had buy on Citi last July, and a market-perform until October. And a buy on WaMu until October!

    I heard him recommend buying Citi when it fell to the $35 range. And he was shell-shocked when Citi cut it’s dividend, just sputtering. That caught him completely off guard, even though so many others were predicting it would happen.

    He completely missed the debacle on the horizon and was blind-sided by it’s severity. He’s just another go-along to-get-along talking head.

    This may be the bottom for banks, but a monkey would make a correct call sooner or later.

    You really should edit that post. It’s embarrassing to you.

  9. larster commented on Mar 21

    The problem is that everyone wants to make a name for themselves and be on the fron page of the WSJ, as the guy was that shorted the mortgage derivatives. This makes for unsound analysis and a babbling background of bs. Someone with more patience than me should start tracking the calls that this is a bottom. When they decline significantly, the bottom will be in place.

  10. Marcus Aurelius commented on Mar 21

    It’s all speculation, and we act as if these people were doing more than beating the law of averages.

    Want to impress me? Tell me who’s going to win the next 6 World Series (and, of course, be right about it).

  11. Neal commented on Mar 21

    Dick Bove is making his statement with the assumption that the Fed will rescue all fiancial players–no-one will be allowed to fail.

    By the way–check this article about the liquidity trap..


  12. Philippe commented on Mar 21

    Sometimes Banks CEO’s know better than the analysts, should one had followed :

    Société Générale board members shares sales
    Bear Stern Caynes’s shares sales
    Country west chairman and may be this one?


    There are always perverse effects in the Central Banks accomodative policies. How big and how far should they go?

  13. yeahMarcus commented on Mar 21

    Marcus, per usual, is spot on. Hard to believe you folks are wasting breath on sell-side calls/analysts…Barry touting Bove is harder to believe? Do these folks even trade? No. They spout. And, once in awhile, they get one right (one out of 40?) but you can’t make money with a batting average that low (how can you tell who and when they will get one correct?). Please look at what these clever men and women are paid to do…follow the money…and you will better understand why their calls are no good.
    cheers mates.

  14. Deborah commented on Mar 21

    Can’t get the link to work.

  15. BDG123 commented on Mar 21

    Now I like Bove. But I wouldn’t trust him with my money. He has made alot of bad calls after recognizing there was a banking problem. This isn’t the first time he has said to go long and has been wrong.

    I’m amazed at the people, many who call themselves traders, who are breaking every rule known to mankind to keep calling bottoms and to keep plowing back into stocks. That’s good though. We need this kind of destruction. We need lots of destruction. We just don’t need the whole of society to collapse in the process. We aren’t even close to ending this banking crisis. The worst banking crisis since the Great Depression and it’s over in a few months? Now, that’s funny. Wall Street doesn’t get it. Their party is over. Their industry has peaked. We are going to see significant change in their employment landscape and their business models.

    The markets still aren’t working, there are still large unrecognized problems. And, anyone who says the markets are seeing an end to this and thus are rallying are party of the delusional Wall Street crowd.

    Oh, as an aside, guess what? Industrial production in many emerging markets is cratering. How about all of those banking investments in emerging markets?

    There is now a belief on Wall Street that the Fed will save the day. Just as was believed a year ago. Baaahhaaaa. Not. The Fed will try to save the major banks. Those that could cause a systemic melt down. Did the Fed stop over ten thousand bank failures in the 1930s? Or S&L failures in the early 1990s or banks in the early 80s?

  16. Read: Ben Franklin commented on Mar 21

    Long time reader, first post….

    Barry – Please retract the Dick Bove post. Perhaps this was an Easter joke? (too much wine?)

    Bove has actually been remarkably WRONG on banks and brokers.

  17. Donkei commented on Mar 21

    Marcus is spot on as usual.

    It seems everyone in MSM wants to say that everything here is okay. That Bernanke/Paulson saved the entire United States of America from economic doom. That the housing market/financial alchemy securities implosion has run its course.

    Hmm. My guess is that it won’t be over until the fed completely destroys the money by propping up failed or failing companies. The government even now is the only real player in the residential mortgage market, w/ Fannie and Fred accting for 80% of new originations, and the other GSE’s (FHA, etc.) accounting for another 10%. And the FHLB has now become the lender of first resort for short-term money to fund loans, its last balance sheet (4th qtr 07) showing an increase in short-term lending of over $200b.

    As long as there are optimists about what the fed can do. As long as there are folks ready to call a bottom at every intervention. As long as markets continue their bizarre pyschosis of 1-2% swings up and down being commonplace. As long as nothing real changes about the relative decline of US power and prestige internationally, the bottom is not upon us.

    And it is not pessimism to say so. It is just rational observation. The bottom line is that the markets–for money or equities or commodities–really anything, are not behaving rationally. Throw out the models and figure that we’ll have a bottom when all hope is lost. The sooner we get there, the better, because only then can real, sustainable economic growth occur.

  18. dblwyo commented on Mar 21

    Bove’s a great analyst but as in all such you have to exercise your own judgment and interpretations. That said first off you have to go to Bloomberg just copying their listing won’t work at it points to the javascript:

    Bove’s key point in my mind was that the danger of a systemic collapse of the financial system has been averted and with a toolkit that makes it sustainably addressable. I agree. That doesn’t mean the rest of the problems are gone just that they can be worked out. On that score C is cheap but Whitney on my analysis is write – they’ll get cheaper.

  19. surferdude commented on Mar 21

    we are in the midst of the largest downturn in housing since the 1930s. against this backdrop, banks have more exposure than ever to this sector of the economy. most observers think at best we are in the third inning of this game, which could turn out to be a doubleheader. domestically, there has only been one casualty to date, an I-bank. yes C is bruised and CFC will not survive, but there are many more exposed C-banks left. moreover, with JPM and BAC now in digestion mode, who is left to accomplish the next bailout with. yet, bove wants to call the bottom and declare that headline risk is over. sounds pretty heroic!

  20. Dumpster commented on Mar 21

    Well I guess I need to agree with most of the folks here. Bove and his commentary are utter nonsense and should be ignored.

    While the Fed’s new policy of accepting used toilet paper and dogshit in flaming paper bags will help to unblock the clogged arteries of the lending machine — it isn’t going to increase the value of various derivative that are now worthless (worst case) or seriously imparied. More pain to come.

  21. Marcus Aurelius commented on Mar 21

    osted by: yeahMarcus | Mar 21, 2008 9:56:37 AM

    Thank you, whoever you are!

  22. Bob_in_MA commented on Mar 21

    Bove’s key point in my mind was that the danger of a systemic collapse of the financial system has been averted…
    Posted by: dblwyo

    Sorry, no dice. If Bove had a fundamental understanding of the issues involved, he would have seen this all coming. The fact is, he really doesn’t understand the dynamics of what’s happening. He understands traditional banking, not SIVs, CDO squareds, the intricate hedge fund positions, REITs with 32x leverage, etc.

    I’m sure he’s a nice guy. But just because someone makes himself available to the media any time they want his opinion, doesn’t make him a guru.

  23. John Borchers commented on Mar 21

    How nice of the S&P to rain on everyone’s holiday weekend. Those 6-10% banking rallies are going to disappear quicker that the koolaid.

    March 21 (Bloomberg) — Goldman Sachs Group Inc., the biggest U.S. securities firm, and smaller rival Lehman Brothers Holdings Inc. had their credit-rating outlook cut to negative by Standard & Poor’s, which said Wall Street banks’ profits may fall as much as 30 percent this year.

  24. Bob_in_MA commented on Mar 21

    I would put it this way. Find the person who correctly predicted what’s happening–that this would affect Municipal debt auctions, that the Fed would cut rates by 300 bps and flood the system with liquidity and 30 year mortgages would be about where they were a year ago, that German banks would be taking some of the biggest hits, etc., and get his opinion as to whether this is over.

    Good luck finding that person.

  25. Pool Shark commented on Mar 21


    Probably the closest thing to that person would be Nouriel Roubini (though he was early with his calls).

    Roubini has outlined the path this crisis would take, and to date, has been pretty close to reality.

    In any case, Roubini says this is all far from over…

  26. SR commented on Mar 21

    Ok, Give Barry a pass on this Good Friday.

    Overall Senor Barry gets an AAA rating (and not from Finch/Moody’s/S&P)for his efforts, honesty and integrity for providing this platform

    After all, If Bob Rubin does not have a clue… Well, your mileage may vary!

    Morning Edition, March 21, 2008 · The Federal Reserve took historic steps earlier this week to save investment bank Bear Stearns, in an effort to stop panic from infecting Wall Street. But the credit crisis isn’t just a problem for the investment community, says former Treasury Secretary Robert Rubin, it is also “a Main Street problem” that could affect all Americans.

    As such, Rubin says policymakers must examine the series of events — and the failures in the regulatory process — that led to the current crisis of confidence in financial markets in order to prevent a similar crisis in the future.

    “There were a goodly number of observers who felt over the last three, four, five years that excesses may well have been developing in the financial markets … but I don’t know of anybody who foresaw the combination of circumstances that has occurred here,” says Rubin, who serves on the executive committee of Citigroup, another financial institution hit by losses in the mortgage market.

    Rubin cites the confluence of events that allowed things to spin out of control — including historically low interest rates and ratings agencies that gave top marks to complex financial instruments with risks that weren’t clearly understood. The market relied on those ratings.

    “All evidence suggests that should not have been done,” he tells Renee Montagne.

    “The question,” he says, “is what can we learn from this and what do we do moving forward?”

    According to Rubin, although the Fed has taken various steps to calm skittish investors and lenders, and Congress has adopted a stimulus plan, the risk of worsening financial conditions is such that policymakers should be proactive and aggressive in addressing the situation.

    “If it were only a Wall Street issue, I don’t think anybody would be terribly worried about it except people on Wall Street,” he says. “But if there are problems in the credit markets, and if credit extenders aren’t willing to extend credit, and mortgage availability dries up, that affects vast numbers of Americans. And that’s what all this is about, that is the focus of these various policy measures by the Fed.”

  27. TKL commented on Mar 21

    Ditto to all the posts noting Bove’s way-too-early call to buy Citi at $30-$35. I remember it like it was yesterday, which it practically was.

  28. Denzel commented on Mar 21

    “…but I don’t know of anybody who foresaw the combination of circumstances that has occurred here,” says Rubin…”

    And yet another expert saying “No one could have seen this coming.”

  29. insane clown posse commented on Mar 21

    never posted here before and never will again, but Barry? Touting Dick Bove? Are you kidding?

    FYI – This is doing real damage to your credibility in my opinion. Fortunately for you, my opinion is meaningless.

  30. MitchN commented on Mar 21

    > This is doing real damage to your credibility in my opinion.

    Barry, don’t worry, your credibility is just fine. Keep up the great work.

  31. Mephisto commented on Mar 21

    Can I just clarify re: the Denninger/Bubbles post—Bove reiterated a market perform on 3/11–he didn’t place a market perform on 3/11. Not that it makes much difference, but…

    Also, I haven’t seen anyone else point out the blurbing at 1440 Wall.com. I like this take. Bove (the media whore) didn’t like being upstaged by that shooting star Meredith Whitney (who is getting promoted so fast she’ll be CEO of Oppenheimer soon). So he puts it all on the line to say, “Hey…look at me, she may be purdy, but I’m snappily dressed, my middle name begins with an X, and, by the way, the financial crisis is over–you should buy BANKS now.”

    People keep suggesting he says buy “financials” but the videos seem to suggest he is saying specifically to buy BANKS.

  32. j-daddy commented on Mar 21

    I don’t mean to take anything away from Meredith Whitney by saying this, but isn’t it interesting and a little sad that we’re praising her for conclusions that most of us had already come to? We’re not praising her analysis. We’re praising her honesty.

  33. Fuzz commented on Mar 21

    Bove upgraded BSC to a market perform rating on Feb 4. He NEVER subsequently downgraded his uprating. From then to Monday morning SPX opened -11.2%. BSC opened down -96.5%.
    Maybe he meant “some other” market.

    It looks more to me like Dick is just enabling more overpriced stocks to be unloaded to chumps that believe CNBC propaganda. Did CNBC mention that the big bad bond market has bid the IRX yield down to Depression levels?

    The only discussed cures for it are:
    1 propaganda
    2 money devaluation
    3 market manipulation

    It’s definitely “generational” out here.

  34. ksfq commented on Mar 21

    He upgraded BSC to “market perform” from “sell” in February. And reiterated that rating just few days before BSC collapse.

    Anybody remember 2000/2001 and “ratings” games?

    He is just big hack – there is no reason to believe him. He is just lying. Simple. That is not illegal.

  35. Paul commented on Mar 21

    Um, doesn’t anyone else think that BR has his tongue firmly planted in his cheek?

    It won’t be time to buy any financials until the TED spread returns to normal and the high yield bond market rallies.

  36. Jay commented on Mar 22

    Few months ago Bove was on
    Bloomberg touting Citigroup as a compelling buy. Right there, he was buying, at 29…
    He is a salesman, first.

  37. bdphil commented on Mar 23

    Anyone else find it interesting that GS recently pulled their bull (Abby Joseph Cohen) and put in bear (not sure of his name) to make thier short term S&P forecasts? Good contrary indicator perhaps?


    BR: My thoughts EXACTLY.

  38. bdphil commented on Mar 23

    Yeah, flip-flopping analysts are available year round, but these events seem to be a little more seasonal.

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