spdr financial services etf - final new

2016

Mark Fanagan

4/26/2016

SPDR Financial Services ETF – Weighting Analysis

MARKET OVERVIEW

As quarter one of 2016 comes to an end, no one can argue that it was the most volatile quarter in living memory. It

was the worst start to the year ever for most major global indexes, even worse than 2008. Several of the world’s major

indices – the FTSE 100, Nikkei and EUROSTOXX Index entered bear market territory, which is defined as a fall of over 20%

from the highs set last spring. If the so-called January effect* is to be believed, then investors are in for a roller-coaster

ride for the remainder of the1 year. Comparisons were being drawn back to the financial crisis of 2008 with many

commentators and analysts predicting the world was on the brink of recession. Given the market rout, it was

understandable why investors were nervous and panicked. Analysts such as Andrew Roberts at RBS, warned investors

to ‘sell everything’ and that 2016 would be a ‘cataclysmic’ year. It is this type of hyperbole that can exacerbate panic.

As the saying goes, the stock market has forecasted nine of the last five recessions. While hindsight is great, fast forward

to today as we close out quarter one. If everyone had taken Andrew Roberts advice, they might feel short changed

as markets haven significantly recovered from the lows reached in February. At the time of writing, U.S markets were

positive for the year and had hit 2016 highs despite being in correction (10% loss or greater) only a few weeks ago. The

Dow Jones Industrial Average had it best comeback in any quarter since 1933, at the time of the Great Depression

(CNBC, 2016). Despite the recovery, it is important to address the factors driving the selling and what sectors saw the

greatest impact. Some sectors did worse than others, most obvious has been energy due to the collapse in oil prices.

However, the focus of the research will be the financial sector which also came under significant pressure which we

will now explore.

China: The epicentre of this global market rout was

China. The health of the Chinese economy has been

hanging over investor’s mind for months now and there

are fears that a slowdown will dampen global growth

or worse tip the world economy into recession. The

stock market crash in the summer of 2015 is still fresh in

the minds of investors and Chinese regulators. Attempts

to curb the volatility and stimulate growth only

exacerbated the fear. Regulators introduced circuit

breakers, which were designed to prevent stock market

crashes by halting trading if the market fell more than

7%. It was no coincidence on January 4th, that the day

the circuit breakers came into effect, the Shanghai

Composite plunged by 7%. The trigger was set off twice

that week as Chinese investors panicked and tried to

dump stocks before the circuit breakers kicked in. The

Chinese authorities scraped the new rules that week. In

addition, the People’s Bank of China devalued the

Yuan (Renminbi) by the most since 2011. This sent a

worrying signal that the Chinese economy may be in

worse shape than initially thought. Credit has exploded

in China since 2008/2009 as authorities attempted to

kick-start growth as the rest of the world was in deep

crisis. This debt explosion fuelled a property and stock

bubble, which has since burst. Ghost cities lie idle across

China as construction has come to a halt. The

economy is struggling to transition and adjust to a ‘new

normal’ of slower growth. GDP Growth for this year has

been cut to between 6.5% - 7%. Many analysts believe

the real growth in the economy is far below what is

being reported.

*January Effect -the first month provides strong indication on the market trend for the year

Oil: The oil price collapse since last year has driven the

direction of global equity markets over the last few

months, as the highly leveraged energy sector struggles

to survive on lower oil revenue. All eyes have focused

on OPEC on whether they will freeze or cut supply in

order to drive up the price of oil. Brent Crude and WTI

hit 12 year lows earlier this year. Oil has fallen over

50% since its peak, trading below $30 a barrel as

shown in the chart below. Oil companies are not only

feeling the pressure, countries like Russia, Venezuela

and Saudi Arabia, who are highly dependent on oil

revenue have had to announce massive cuts in their

budgets to shore up their deficits. The spill over effect of

all this, has put pressure on banks, as it is estimated that

there is $123 billion of outstanding loans and lending

commitments to the industry. European banks exposure

could be as high as $200 billion which has and could

impact future earnings growth (Bloomberg: 2016).

Interest rates: One positive note for the financial

sector, was the Federal Reserve’s first interest rate last

December, since 2006. However, many investors are

worried that the U.S. economy is too fragile for a rate

rise and feared it would derail the recovery. The Fed

announced, that they planned further monetary

tightening for 2016, while other global central banks

were planning further monetary easing. The Bank of

Japan (BOJ) shocked investors by announcing

negative interest rates at its meeting in February. The

European Central Bank (ECB) announced a range of

measures – increasing QE (Quantitative Easing) monthly

purchases, cutting interest rates further to tackle low

inflation and low growth which has plagued Europe for

years. Negative interest rates are now becoming the

norm across Europe and Japan. Nearly two thirds of

sovereign and corporate bond yields are trading at

negative rates. However, with the Fed signalling further

rate hikes this year, this will provide welcome news for

the U.S. banks and the financial sector as bank margins

are likely to improve. However, this depends on the

Fed’s assessment of the economy. Expectations on

further rates cuts have diminished due to the market

turmoil.

Banking: As mentioned, fears of a global slowdown,

low to negative interest rates and plunging oil prices

have all put pressure on the global financial sector over

the last two quarters. In particular, European banking

stocks have been hardest hit, with Deutsche Bank

being at the epicentre. Rumours circulated that the

bank may be in trouble due to concerns it might be

unable to pay interest on some of its debt causing

panic (CNN Money: 2016). The panic prompted

Deutsche Bank’s CEO and the German Finance

Minister to take the unprecedented step of reassuring

investors that the bank was ‘rock solid’. This was

reminiscent of the days of the financial crisis. Bank

shares have recovered since the February lows. The

Euro STOXX 600 Bank Index is still down nearly 20% YTD

(as at 29/03). While the panic has subsided for now, these

elements are not far from the minds of investors. The U.S.

financial sector has not been immune from the panic

selling in Europe either which we will examine using the

SDPR Financial Services ETF (XLFS.).

SPDR FINANCIAL SERVICES INDEX (XLFS)

Summary:

The SPDR Financial Services Index (XLFS.) is primarily

comprised of companies from the following industries:

Insurance, Banks, Capital Markets, Mortgage Real

Estate Investment Funds and Diversified Financial

Services. XLFS is very much a banks ETF, with about 58%

of its holdings in bank and bank-like stocks. This

research will focus on the top ten holdings of the index

which are shown in the below pie chart. Berkshire

Hathaway, Wells Fargo, J.P. Morgan, Citigroup, AIG,

Goldman Sachs are the top names.

Performance:

As mentioned in the Index’s prospectus and shown in

the chart above, the fund has yet to complete a full

calendar year of investment operations. Therefore,

there is no past performance. However, as the widely

used disclaimer says past performance is not a reliable

indicator of future results. Therefore, we must examine

the holdings and highlight stocks which could provide

growth, that will positively impact the ETF. The

performance has been poor. Year to Date (31/03/16) the

fund is down 8.20%, while the low point of the quarter

the XLFS was down by over 22% in mid-February

(Bloomberg: 2016). As mentioned in the introduction,

fears over China’s economy, European banking sector

and the oil crisis have impacted financial shares

substantially. Despite the recent recovery, the XLFS is still

down 5.3% as at 31/03/16 since inception date on 6th

October 2015.

Distributions:

The fund pays a dividend quarterly. The latest dividend

per share was 0.12264c a share, paid on 29/03/16. This

is an increase on the Q4 2015 when the rate was

0.11461 according to the XLFS data. The fund also pays

any capital gains annually when the index realizes

capital gains or losses, whenever it sells securities.

Analysis:

Given the fund’s recent performance, I will be

analyzing the top ten weighted holdings and will

recommend if any of the stock weightings need to be

amended either by selling more of one stock or buying

another to adjust to weighting in an attempt to impact

the fund’s performance positively. I will be using 17

financial ratios to analyze each stock. I have broken the

ratios into five different categories including – Valuation

(P/E, PEG, EPS, Price/Cash Flow, EV/EBITDA, Dividend

Yield, Return on Total Capital) – Profitability (ROA, ROE)

- Liquidity (Cash Ratio, Current Ratio) – Capital Structure

(Debt/Equity, Tier 1 Capital) – Interest Margins (Interest

Coverage, Net Margin Interest). All are shown in the

stock screener on the next page.

12%

10%

10%

6%

5%3%

3%3%

2%

2%

44%

XLFS. Holdings

BRK.B WFC JPM C USB BAC

AIG GS CB AXP Other

https://www.spdrs.com/product/fund.seam?ticker=XLFS

https://www.spdrs.com/product/fund.seam?ticker=XLFS

FINANCIAL RATIOS – STOCK SCREENER

Ratios (as at 24.03.16) BRK.B WFC JPM C USB AIG GS CB BAC AXP

% of SPDR 11.63 10.01 9.68 6.26 5.48 2.73 2.55 2.44 2.96 2.2

Market Cap (B) 342.77 244.3 217.18 13.68 70.57 60.9 64.58 55.12 139.72 57.98

Shares Outstanding

(m) 2452.66 5076.71 3670.26 128.16 1737.32 1149.45 33820 461.67 10325.6 32818

Beta 0.84 0.99 1.21 2948 0.08 1.3 1.37 1.07 1.26 1.19

EPS 9.77 4.15 5.99 5.4 3.17 1.42 12.09 8.61 1.37 5.03

P/E 14.34 11.78 9.94 7.76 12.86 37.31 12.66 13.89 9.99 12.02

Price/Cash Flow

(ttm)* 11 16.6 2.9 3.1 10.7 29.4 16.2 9.7 10 6.7

PEG 0.93 0.99 1.44 1.42 1.08 1.05 3.51 2.49 0.2 1.14

Dividend Yield N/A 3.06 2.91 0.48 2.48 1.89 1.72 2.23 1.46 1.87

Dividend Pay-out

Ratio N/A 0.36 0.29 3 0.32 0.49 0.21 0.31 0.16 0.22

EV/EBITDA 8.22 14.52 5.83 8.26 14.78 8.59 24.96 14.23 10.64 9.87

Return on Total

Capital 7.3 4.97 2.96 2.72 5.53 1.71 1.46 7.45 2.25 7.98

ROA* 4.47 1.31 0.99 0.95 1.42 0.43 0.7 2.85 0.74 3.28

ROE 9.78 12.13 13 7.62 12.55 2.16 6.47 9.63 5.73 23.84

Current Ratio (Q4

2015) 3.04 0.52 2.11 2.15 0.4 2868 0.62 1.7 2.31 4.18

Cash Ratio N/A 0.2 1.87 1.78 0.4 0.96 0.3 0.15 0.96 1.37

Debt/Equity Ratio 0.33 1.54 1.31 1 1.3 0.327 2.801 0.324 1.034 2.558

Tier 1 Capital Ratio N/A 10.77 11.64 2 12.82 N/A 11.38 N/A 12.9 N/A

Interest Coverage 0.1 0.09 4.11 2.08 5.73 2.56 1.63 10.99 2.1 4.89

Net Interest Margin N/A 2.92 2.47 2.94 3.1 N/A N/A N/A 3 N/A

All figures:

Ycharts.com;

*Source: Morningstar

BERKSHIRE HATHAWAY BRK.B

Q4/FY 2015 Earnings:

Berkshire Hathaway (BRK.B), the third most valuable company in the world,

had an impressive 2015, as the company saw its net worth jump by $15.4 bn.

The company owned and operated by Warren Buffet, saw significant gains

across its portfolio. For the full year, Berkshire earned $17.36bn in operating

profit, with $4.67bn in Q4. Overall, Berkshire's profit increased to $24.08 billion

over the year. According to the annual report, the conglomerate’s recent

acquisition of Precision Castparts Corp for $32bn in cash will become one

the new ‘Powerhouses’ in its portfolio. These so called ‘Powerhouses’ are the

conglomerate's most profitable non-insurance companies. The report notes

that this acquisition will substantially increase their ‘normalized per-share

earning power’. BNSF, one of the company’s original ‘Powerhouse Five’,

earned $13.1 billion last year a raise of $650 million. The highly anticipated

annual report gives experts and analysts an insight into the mind of one of

the greatest value investors of all time. The report highlights the ‘Big Four’

investments made by the company. Interestingly enough two of his ‘big four’

investments are the top ten weighted holdings in the SPDR Financial Services

ETF – American Express & Wells Fargo. The reports states that the additional

shares of WFC were purchased increasing their holdings to 9.8% from 9.4%

while their AXP holdings rose as a result of stock repurchases by the company.

Berkshire’s Fundamentals:

Berkshire Hathaway has a strong list of key financial ratios. Initially as

mentioned in its latest earnings the company posted an impressive EPS of

$9.77 for 2015 and with its latest acquisition, EPS growth is likely to increase for

2016. BRK.B continues to invest for the future with $16 billion invested in

property, plant and equipment with more than two thirds of that investment

being deployed in the United States. This can be seen by its healthy ROA &

ROE ratios of 4.47% & 9.78% respectively. One attraction of the stock is its low

debt to equity ratio. Given that its recent purchase of Precision for $32bn in

cash highlights the Berkshire’s strong cash flow. Its P/CF ratio is 11%. The stock

continues to yield no dividend as Warren Buffet himself prefers, to reinvest

profits in things that will allow the company to prosper further. Finally, the

share price is currently trading at over 14 times earnings, while looks

expensive but its EV/EBITA is only at 8.22. This is explained by its low debt.

Analyst Recommendation:

Given the strong earnings growth across its portfolio and recent acquisitions,

no one can doubt the Oracle of Omaha’s expertise as shown by the last half

a century. There is potential for further deals in 2016. As mentioned in its

annual report, the company ‘craves efficiency’ and avoids companies that

are bloated and not cost efficient and Warren Buffet’s commitment to

search for opportunities that will likely add to future growth. The

conglomerate boasts strong financials and I believe the company is currently

undervalued as shown by its EV/EBITA ratio. In addition, the share price has

underperformed the S&P 500 by nearly 10%. Therefore, I would recommend

to buy the stock as the recent sell off has provided a perfect buying

opportunity. I would increase the weighting in the XLFS ETF to enhance its

performance.

Rating: Buy

March 24 2016

Company Summary: Berkshire Hathaway, Inc. is a holding

company. Through its subsidiaries, the firm

engages in the insurance and reinsurance,

utilities and energy, freight rail transportation,

finance, manufacturing, service and retailing

businesses.

Company Profile: Ticker: BRK.A

Exchange: NYSE

Industry: Conglomerate

Sector: Financials

CEO/Chairman: Warren Buffet

Share Price Performance: Closing Price (24/03): $140.07

1 Year Performance (24/03): -7.80%

YTD Performance (24/03): -10.04%

S&P 500 YTD Performance (24/03): -0.39%

SPDR XLFS YTD Performance (24/03): -8.20%

**Source: StockChart.com

Key Financials: (as at 24/03) Summary

% Weighting of XLFS. 11.63

Market Cap (B) 342.77

Shares Outstanding (M) 2452.66

Beta 0.84

Valuation

EPS (ttm) 9.77

P/E (ttm) 14.34

PEG (ttm) 0.93

Dividend Yield N/A

Dividend Pay-out Yield N/A

EV/EBITA 8.22

Return on Total Capital 7.30

Price/Cash Flow Ratio 11

Profitability

ROA (Return on Asset) 4.47

ROE (Return on Equity) 9.78

Liquidity Ratio

Current Ratio 3.04

Cash Ratio N/A

Capital Structure

Debt/Equity Ratio (31/12/15) 0.33

Tier Capital 1 Ratio (31/12/15) N/A

Margin

Interest Coverage 0.10

Net Interest Margin N/A

**Source: Ycharts.com & Morningstar

WELLS FARGO WFC.


Wells Fargo (WFC) delivered results of $4.15 (EPS) for 2015, up 1% in line with

expectations, according to its 2015 annual report. Total deposits remain

strong up 6% year on year to $1.2tr while loan growth continued to rise up

$13.3 billion. Non-performing assets fell by nearly $500m while non-accrual

loans decreased by $155m ‘driven by improvements in commercial and

consumer real estate portfolios’ however the decrease was ‘partially offset’

by a rise of nonaccrual loans, mainly as result of the deterioration in the oil

and gas portfolio. The energy sector is likely to cause a strain on bank’s

balance sheets in the coming quarters. This is something that will need to be

watched. WFC reported that its net interest margin was 2.92%, down 4 basis

points from third quarter 2015. Income from variable sources improved but this

gain was offset by consumer deposit growth. The San-Francisco based bank

relies more on a traditional loans-and-deposits business model than

competitors and is therefore more exposed to interest rate decisions (Forbes,

2016). The recent Fed rate hike and expected further increases will improve

this margin. Wells Fargo’s recent purchase of $32bn portfolio of loans and

leases from GE Capital brings the total value of deals it has struck with GE to

more than $126bn as General Electric decided to move out of its financial

services arm (WSJ: 2016). As a result, it’s long term debt increased by $14.3bn

as shown by its high Debt/Equity ratio. WFC saw higher net income in its

Wealth & Investment Management & Wholesale banking while it’s

Community Banking arm saw a 1% year on year.

Wells Fargo’s Fundamentals:

WFC’s fundamentals are very attractive. The bank still provides investors with

a healthy dividend yield of over 3%, higher than the other nine holdings. The

bank returned $12.6 billion to investors in 2015 via dividends and stock

repurchases. The Capital Tier 1 ratio, a primary yardstick employed by

regulators to measure bank's capital strength, remained strong in the Q4 at

10.77%, above the required 9%. The stock offers an impressive ROE at 12.13%.

While its return on total capital remains attractive for investors at nearly 5%.

This compares to the risk free rate (US Treasury 10-year 24/03/16) was yielding

just 1.91%. As noted, its purchase of GE’s loan portfolio has increased the

Debt/Equity to 1.54. This is slightly above average of other banking stocks. The

bank has a P/CF of 16.6 which represents better value in the stock screener.

Finally, the firm’s P/E ratio of 11.78 is below the historical average of 15 in the

S&P 500 while the EV/EBITA is 14.52 due to its moderate debt levels.


Bank shares in particular have endured a rough ride and Well Fargo is no

exception. The stock is down 10% YTD, significantly underperforming both the

S&P 500 & the SDPR XLFS. The bank’s fundamentals and key financial ratios

provide a healthy snapshot of the bank’s strength. The recent decline in my

view is overdone amidst the panic and provides a perfect buying

opportunity. Therefore, given the bank’s strong capital position, loan &

deposit growth and generous return to shareholders, I would recommend a

buy rating on the stock and to increase the weighting in the ETF

Rating: Buy

March 24 2016

Company Summary Wells Fargo & Company is a diversified

financial services company providing

banking, insurance, investments, mortgage,

leasing, credit cards, and consumer

finance. The Company operates through

physical stores, the Internet and other

distribution channels across North America

and elsewhere internationally.

Company Profile: Ticker: WFC

Exchange: NYSE

Industry: Banking

Sector: Financials

Chairman/CEO: John G Stumpf


1 Year Performance: -7.80%

YTD Performance -10.04%








Beta 0.99

Valuation

EPS (ttm) 4.15

P/E (ttm) 11.78

PEG (ttm) 0.99

Dividend Yield 3.06

Dividend Pay-out Yield 0.36

EV/EBITA 14.52


Price/Cash Flow Ratio 16.6

Profitability

ROA (Return on Assets) 1.31


Liquidity Ratio

Current Ratio 0.52

Cash Ratio 0.20

Capital Structure


Tier Capital 1 Ratio (31/12/15) 10.77

Margin


Net Interest Margin 2.92


J.P. MORGAN CHASE JPM


JPM delivered another strong set of results, with a record EPS of $6 on

revenue of $96.6bn beating analyst’s estimates. Consumer banking was a

point of strength during the fourth quarter. Its retail bank grew revenues 2%

to $11.2 billion, while profits increased 10% to $2.4 billion. Total loans

increased 25%, deposits rose 10% and credit card were up 6% across the unit.

These figures would suggest that the US consumer continues to spend and

not of a slowing economy. The nation’s largest bank by assets, was able to

post rising earnings as strong expense management amid an absence of

major litigation or trading blunders. Profits across the investment bank surged

80% to $1.7 billion, even as revenue fell 4% to $7 billion. Trading revenues fell

3% to $4.3 billion, reflecting weakness in bond, commodity and currency

trading, offset by higher activity in interest rates. Weaker trading revenue

added with these legal costs resulted in 6.6% decline in profits. The oil crash

continues to have spill-over effects for bank’s balance sheets as mentioned

by JPM’s CEO Jamie Dimon, who commented on the results in the annual

report. He said ‘businesses generated strong loan growth and credit

quality, except for some stress in energy’. While this is based on Q4, oil at the

time was trading in a high range of $50 and a low of $37. Q1 of this year saw

oil plunge to $27 a barrel which will likely increase this ‘stress’.

JPMorgan’s Fundamentals:

Its Tier 1 Capital Ratio was 11.68%, well above regulatory requirements while

its Return on Equity was 13% as result of lower legal costs and cost cutting.

However, despite the reduced legal costs, they still amounted to nearly $1bn

in the fourth quarter. JPM’s interest margins remain robust. Its net interest

margin is 2.47 – any positive number means the investment strategy pays

more than it costs. The Fed’s recent interest rate hike and possible further

hikes in 2016 will likely boost its margin further. While its interest coverage ratio

- a measure of how well a company can meet its interest obligations is a

healthy 4.11. The company continued to reward investors with $11bn return

to shareholders and a common dividend of $1.72 per share with a dividend

yield of 2.91%. Price/Cash flow is low more than likely as a result of the legal

costs. The stock is trading at under 10 times its earnings (P/E = 9.94) and It

EV/EBITDA is only 5.83%, the lowest amongst the other nine holdings.


Despite strong earnings investors shunned the stock as worries persisted over

the global banking system. However, I believe its low P/E ratio represents

value for money and looks cheap especially with the recent decline in its

share price. The stock is performing 9% worse than the S&P 500 which is slightly

worse than the SDP XLFS ETF. The firm maintains a strong capital buffer, strong

earnings and a generous dividend yield given the low rate environment.

There are headwinds for the company and while the recent turmoil will

impact on Q1 earnings, over the medium term the stock still looks attractive.

I recommend a buy rating on the bank and increase the weighting in the

SPDR XLFS.

Rating: Buy

March 24 2016

Company Summary JPMorgan Chase & Co. provides global

financial services and retail banking. The

Company provides services such as

investment banking, treasury and securities

services, asset management, private

banking, card member services, commercial

banking, and home finance. JP Morgan

Chase serves business enterprises, institutions,

and individuals.

Company Profile: Ticker: JPM

Exchange: NYSE

Industry: Banking

Sector: Financials

President/CEO: Jamie Dimon


1 Year Performance: 2.53%

YTD Performance: -9.92%








Beta 1.21

Valuation

EPS (ttm) 5.99

P/E (ttm) 9.94

PEG (ttm) 1.44

Dividend Yield 2.91


EV/EBITA 5.83



Profitability



Liquidity Ratio

Current Ratio 2.11

Cash Ratio 1.87

Capital Structure



Margin




CITIGROUP C


Citi group reported EPS of $5.40 for full year 2015 on net income of $17.2bn

with revenues of $77.2bn. For the quarter compared to last year, profits

increased substantially due to lower legal costs compared to Q4 2014.

Revenues rose 3% to $18.46bn compared to 2014. All reported quarterly

earnings this year have beaten analyst’s expectations. This comes after a

year ‘marred by failed stress test, problems in the Mexico subsidiary Banamex,

and a big mortgage-securities settlement with the Justice Department’

(WSJ). The bank is now the fourth largest in the US by assets as a result of cut

backs since the financial crisis while its competitors have expanded most

notably Wells Fargo. Citigroup ended 2015 with just $74 billion in assets, a 43%

year-over-year decline. But as Citigroup has trimmed its reach by shedding

scores of under-performing or burdensome businesses. It has re-focused on

core markets like North America, Mexico and Asia. The bank has made little

progress in chipping into its book value discount (WSJ). Under CEO Mike

Corbat, Citigroup has exited a number of businesses ranging from retail

banking to commodities trading in a handful of emerging markets and most

recently, One Main Financial, which it sold to Springleaf Financial, netting a

major accounting gain in the fourth quarter. Trading revenue fell 39% Q-On-

Q but up 29% Year-on-Year. Their earnings also showed deposits increased a

modest 1% to $908bn while loans decreased 4% year on year. The bank has

a strong Tier Capital 1 Ratio of 12%. Citigroup’s allowance for loan losses

declined overall. However, corporate non-accrual loans increased 32% to

$1.6 billion, ‘primarily related to the previously disclosed third quarter 2015

actions related to the North America energy portfolio in ICG’ (Citi Annual

Report, 2016).

Citigroup’s Fundamentals:

The stock is trading at under 8 times its earnings while its EV/EBITA of 8.26 is

also one of the lowest amongst compared to other banking stocks in the

XLFS top 10 holdings. This can be attributed to the low Debt/Equity ratio of 1-

1 which again is the lowest among the top U.S banks in the ETF. It is clear the

recent cost cutting measures have improved the capital structure of the

bank. Citi has a poor dividend yield of 0.48% which is below the US 10Yr yield.

This was a result of the bank rejecting a plan to increase capital returns to

shareholders. Given the stock’s recent run, investors have little to be cheerful

about. The company’s interest margins are encouraging with interest

coverage of 2.08 & net interest margin of 2.94 even in this low rate

environment. ROE is a modest 7.62% while the liquidity of the bank remains

fluid as shown by its current and cash ratio. P/CF is low as a result of

settlement with the Justice Department.


The company's strengths can be seen in multiple areas, such as its attractive

valuation levels, expanding profit margins and notable return on equity.

However, as a counter to these strengths, I also find weaknesses including

the unimpressive growth in net income and the company’s EPS. The stock

has suffered losses on a scale comparable to its European counterparts.

Therefore, I am recommending to sell the stock and reduce the stock’s

weighting in the XLFS ETF.

Rating: Sell

March 24 2016

Company Summary Citigroup Inc. is a diversified financial

services holding company that provides a

broad range of financial services to

consumer and corporate customers. The

Company services include investment

banking, retail brokerage, corporate

banking, and cash management products

and services. Citigroup serves customers

globally.

Company Profile: Ticker: C

Exchange: NYSE

Industry: Banking

Sector: Financials

CEO: Mike Corbat











Beta 2948.00

Valuation

EPS (ttm) 5.40

P/E (ttm) 7.76

PEG (ttm) 1.42

Dividend Yield 0.48


EV/EBITA 8.26



Profitability



Liquidity Ratio

Current Ratio 2.15

Cash Ratio 1.78

Capital Structure



Margin




US BANCORP USB


US Bancorp’s recent earnings for Q4 2015 and full year results recorded EPS

of $3.17 which was over 2% higher on 2015. However, its net income of

$1.476bn in Q4 was 0.8% lower than the previous year as a result of ‘higher

provision for credit losses and lower non-interest income’. The bank’s results

showed encouraging signs with higher deposits and loans in the fourth

quarter. Average loans in Q4 were 4.2% higher year on year at $10.bn while

deposits were $19bn higher compared o Q4 of 2014, a rise of 7%. Note one

recurring theme amongst bank’s latest are the higher provisions made for

credit losses. The annual reports note that approx. 1.2% of outstanding loans

related to the energy related business with the collapse in oil in Q4. This has

resulted in the ‘deterioration of a portion’ of these loans, while the impact

was not significant, further lower prices could see ‘additional stress’ within its

energy portfolio for 2016. It’s provision for credit losses was 5.9% higher than

in Q4 of 2014. The company boasts strong net interest margin of 3.10%. The

Chairman, President and CEO Richard K Davis wrote 2015 was a ‘remarkable

performance’ despite the challenges of ‘persistent and historically low

interest rate, modest economic growth and increasing regulatory

requirements’. He speaks about ‘momentum building in its core businesses

(Wealth Management and Security Services) and USB’s new agreement with

Fidelity Investments – exclusive issuer of Fidelity credit cards which will

strengthen their Payment Services business

US Bancorp’s Fundamentals:

USB’s fundamentals look healthy. Its P/E is under the historical average of 15.

However, its EV/EBITA is around the average for the other bank stocks in the

ETF. Its PEG looks attractive at 1.08 compared to other holdings. The net

interest margin in the fourth quarter of 2015 was 3.10 percent. ROA is one of

the highest amongst the top 10 holdings of 1.42. The company provides a

strong dividend yield for shareholders of nearly 2.5%, the second highest

amongst its peers. As noted in its report – it returned 72% of earnings back to

its shareholders. In addition, all regulatory ratios continue to be in excess of

“well-capitalized” requirements. It has a Tier 1 Capital Ratio of 12. Its liquidity

position is one area of concern. The current ratio - measures a company’s

liquidity is 0.40% which is much weaker than other bank stocks.


The stock’s performance YTD or the past year has remained resilient over Q1

among other banking stocks. It has outperformed the SDPR XLFS. Like other

banking sectors there are many things to be cautious of. US Bancorp’s recent

earning and attractive ratios do make the stock look attractive. The bank still

has to contend with many tail winds. As mentioned the higher provision for

credit losses as a result of slumping oil prices will likely impact Q1 earnings. I

would recommend buy USB and increase the weighting slightly.

Rating: Buy

March 24 2016

Company Summary U.S. Bancorp is a diversified financial services

company that provides lending and

depository services, cash management,

foreign exchange and trust and investment

management services. The Company also

provides credit card services, mortgage

banking, insurance, brokerage, and leasing.

U.S Bancorp operates in the Midwest and

Western United States.

Company Profile: Ticker: USB

Exchange: NYSE

Industry: Banking

Sector: Financials

Chairman/CEO: Richard K Davis











Beta 0.08

Valuation

EPS (ttm) 3.17

P/E (ttm) 12.86

PEG (ttm) 1.08

Dividend Yield 2.48

Dividend pay-out Yield 0.32

EV/EBITA 14.78



Profitability



Liquidity Ratio

Current Ratio 0.40

Cash Ratio 0.40

Capital Structure



Margin




AMERICAN INTERNATIONAL GROUP AIG

Q4/FY 2015 Earnings & Icahn Dispute:

AIG’s current restructuring plans have made in the headlines in the last few

months. Activist investor Carl Icahn has been pressuring and calling for a

breakup of the company. However, AIG’s CEO Peter Hancock has publically

rebuffed Icahn’s plans. Hancock has put forward a more modest plan to

simplify the company, including the sale of a broker dealer operations and

an initial public offering of up to 19.9% stake of United Guaranty Corporation.

However, the dispute has since ended. Carl Icahn and another activist

investor, John Paulson have been given two board seats in order to resolve

the dispute. The CEO notes in the company’s Q4 2015 earnings reports, that

their three year restructuring plan aims to make the company ‘leaner, more

profitable and focused insurer’. The latest earnings missed analyst’s

expectations as the insurer posted a larger after tax operating loss of $1.3

billion in Q4 2015 compared to an operating income after tax of $1.4 billion.

For the full year, operating income fell sharply to $2.2billion ($1.65 EPS) from

$7.5 billion in 2014. The loss related to ‘adverse prior year loss reserve

development, and lower returns on alternative investments as well as

realised capital losses and restructuring costs’.

AIG’s fundamentals:

Looking at their key financial ratios, AIG has the largest P/E ratio of 37.31 in

the top ten holdings. This would suggest that the stock is overvalued. While

their EV/EBITA of 8.59, is relatively cheap. This is due to the very low

debt/equity ratio of just 0.33. The issuer continues to reward shareholders by

returned more than $12 billion of capital through dividends and share

repurchases. Share buy backs totalled $2.5 billion with an additional $5 billion

authorised by the board of directors. Also they have increased their quarterly

dividend by 14% to $0.32c. The insurer’s goal is to return at least $27 billion to

shareholders by end of 2017. However, the current dividend yield is broadly

in line with the risk free rate. Price to Cash flow is the highest in the top ten

weighted stocks of 29.4. The company’s interest coverage ratio, a measure

of how well a company can meet its interest payments is quite strong at over

2.5%. Rising rates are good for large insurers because they tend to invest the

premiums paid by individuals and businesses in high-quality corporate bonds

as a way of generating income until claims come due. The fear among

insurance investors is that the Federal Reserve won’t follow through on its

desire to gradually raise interest rates. That means the pressure on insurers’

investment income could remain—potentially for years.


Despite the company’s restructuring plans and continued strong returns to

shareholders, I believe the stock is overvalued. I believe the recent

announcement of Carl Icahn being added to the board could result in

tensions and possibly derailing the planned restructure of the company in

the coming year despite the dispute being ‘resolved’. This could put pressure

on the stock. The share price is already down over 14% YTD. Therefore, I

would recommend to sell the stock and reduce its weighting in the XLFS.

_______________________

Rating: Sell

March 24 2016

Company Summary AIG. is an international insurance

organization serving commercial,

institutional and individual customers. AIG

provides property-casualty insurance, life

insurance and retirement services.

Company Profile: Ticker: AIG

Exchange: NYSE

Industry: Insurance

Sector: Financials

President/CEO: Peter D Hancock



YTD Performance: -14.51% S&P 500 YTD Performance (24/03): -0.39%



Key Financials: Summary




Beta 1.30

Valuation

EPS (ttm) 1.42

P/E (ttm) 37.31

PEG (ttm) 1.05

Dividend Yield 1.89


EV/EBITA 8.59



Profitability



Liquidity Ratio

Current Ratio 2868.00

Cash Ratio 0.96

Capital Structure



Margin




GOLDMAN SACHS GS

Q4/FY 2015 Earnings & Latest, News:

Goldman Sachs (GS) has been in the headlines for all the wrong reasons over

the past year due to litigations and settlements. The bank has agreed to pay

$5.06 billion in a lawsuit against the group that it misled mortgage bond

investors during the financial crisis resulting in investors losing billions of dollars.

The bank expected the agreement to reduce fourth quarter earnings by

about $1.5bn after tax. The settlement reduced earnings by $3.41 a share.

Adjusted earnings were $4.68 a share. These amount to $12.36 billion for 2015

with $4.01 billion as result of mortgage related litigation and regulatory

matters. This compares with $754m for 2014. Earnings have been hit because

of the settlements. During the fourth quarter of 2015, the firm recorded

provisions for the settlement with the RMBS Working Group of $1.80 billion

($1.54 billion after-tax). Their Q4 earnings were mixed. As mentioned

Goldman’s Q4 diluted EPS was $12.14 compared to $17.07 for 2014. However,

the provisions for settlements reduced their EPS by $6.53. It reported that its

2015 net revenue was $33.82bn. Revenue for the fourth quarter was $7.27bn,

down from $7.69bn a year ago. It was, however, more than the $7.07bn that

the analysts expected. Its Investment Banking section has performed well as

the company was ranked first worldwide in completed mergers &

acquisitions. Goldman’s revenue from trading bonds, currencies and

commodities (FICC) was $1.12bn, the lowest since the fourth quarter of 2008

during the depths of the financial crisis, during which the firm recorded losses

from investments and trading credit products. Goldman, like other banks,

had a tough year and according to WSJ, beset by a steady decline in a

fixed-income trading operation, that was once its most-reliable source of

profits. It is now turning its attention back to debt financing (WSJ: 2016)

Goldman Sachs’ Fundamentals:

GS is currently trading at over 12.5 times earnings with a high EV/EBITA of

24.96 which is the highest amongst the other top nine holdings. This can be

explained by the fact the company is highly leveraged – its Debt/Equity Ratio

is nearly 3/1. The company’s ROE of 6.47% ranks lower as it was impacted by

settlement costs which reduced the ratio by 3.8%. On a bright note, the firm’s

Common Equity Tier 1 ratio was 12.4%, well above regulatory requirements.

The company’s PEG ratio of 3.51 is higher than the other 9 holdings in the ETF.

GS continued its share buy back in 2015. It repurchased 22.1m shares of its

common stock. Its dividend yield is in line with other competitors while the

spread between the US 10 Year. Finally, the price to cash ratio of 16.2 would

suggest the firm is overvalued.

Analyst Recommendations:

The latest settlements, and possibly more in the future will damage image for

the firm further and impact earnings growth. I believe the stock is

unattractive, shown by its share price performance, high debt ratio, poor

liquidity position and I recommend to reduce the weighting in the ETF.

_________________________ Rating: Sell

March 24 2016

Company Summary Goldman, Sachs & Co. focuses on the

distribution of Goldman Sachs Funds. The

company provides services that include

securities brokerage, dealership, and

underwriting; investment banking; commodity

trading; and investment consulting.

Company Profile: Ticker: GS

Exchange: NYSE

Industry: Institutional Financial Services

Sector: Financials

Chairman/CEO/Partner: Lloyd C Blankefein











Beta 1.37

Valuation

EPS (ttm) 12.09

P/E (ttm) 12.66

PEG (ttm) 3.51

Dividend Yield 1.72


EV/EBITA 24.96



Profitability



Liquidity Ratio

Current Ratio 0.62

Cash Ratio 0.30

Capital Structure



Margin




CHUBB CB

Acquisition:

ACE Limited completed its $29.9bn acquisition of Chubb Corporation on

January 14th this year, creating the world largest publically traded

property/casualty insurer under the name Chubb Limited. Prior to this deal,

ACE also acquired Fireman’s Fund’s U.S. high net worth personal lines

business and launched ABR Re. According to the latest earnings report for

Q4 2015 and full year results, the new entity will be ‘better positioned and be

able to ‘pursuer profitable growth opportunities’ as the new firm will ‘enjoy

huge diversity and product mix’.


Following the acquisition, the two companies (ACE & Chubb) released

separate earnings but as one. It is important to view both earnings to give

an insight into potential future earnings.

ACE Ltd: In its full-year results, ACE reported: A 1.7 percent increase in

property/casualty underwriting income to $1.93 billion. A record 87.4

combined ratio in P/C versus 87.7 for 2014. Investment income for the year

of $2.2 billion, down a bit from $2.2 billion in 2014. A P/C expense ratio for the

year of 29.2 compared with 29.4 last year. ACE ‘s North American P/C

operation reported net premiums written increased 10.3 percent for the

year. Net premiums written, excluding Fireman’s Fund in-force business in the

second quarter of 2015, increased 6.3 percent for the year. The combined

ratio for the North American P/C operation for the year was 88.1 compared

with 88.4. Chubb: Chubb Limited (NYSE: CB) today reported net income for

the quarter ended December 31, 2015, of $2.08 per share, compared with

$1.66 per share for the same quarter last year. Operating income was $2.38

per share, compared with $2.47 per share for the same quarter last year. The

property and casualty (P&C) combined ratio for the quarter was 87.7%. Book

value and tangible book value per share remained flat from September 30,

2015, and were adversely impacted by net unrealized losses in the

company's investment portfolio (net of mark-to-market gains in the

company’s variable annuity reinsurance portfolios) of $356 million, after-tax.

In addition, book value and tangible book value per share were impacted

by unfavourable foreign currency movement of $138 million, after-tax, and

$120 million, after-tax, respectively.

Chubb’s Fundamentals and Recommendation:

Current PEG of 2.49% is the second highest on the stock screener. Attractive

dividend yields with a low pay-out ratio for investors. Its capital structure

remains strong with a low Debt/Equity Ratio. Its P/E & EV/EBITA while high, its

recent acquisition is likely to accelerate future growth. Chubb Ltd is the only

stock in the SPDR ETF which has outperformed both the S&P 500 & the EFT

itself clocking a gain of 2.36% YTD while other financial stocks have seen

declines of 10%-20%. The company maintains a strong liquidity position and

its interest coverage is very robust at 11%. The Return on Total Capital for

investors for investors is 7.45% which is impressive. Therefore, given the

insurer’s strong fundamentals, I recommend to buy more of this stock and

increase the weighting in the ETF.

Rating: Buy

March 24 2016

Company Summary Chubb Limited operates as a property and

casualty insurance company. The Company

provides commercial and personal property

and casualty insurance, personal accident

and supplemental health insurance,

reinsurance and life insurance to a diverse

group of clients.

Company Profile: Ticker: CB

Exchange: NYSE

Industry: Insurance

Sector: Financials

Chairman/CEO: Evan G Greenberg


1 Year Performance: +9.85%

YTD Performance: +2.36%








Beta 1.07

Valuation

EPS (ttm) 8.61

P/E (ttm) 13.89

PEG (ttm) 2.49

Dividend Yield 2.23


EV/EBITA 14.23


Price/Cash flow Ratio 9.7

Profitability



Liquidity Ratio

Current Ratio 1.70

Cash Ratio 0.15

Capital Structure



Margin




BANK OF AMERICA BAC


Bank of America’s 2015 results were the strongest in a decade. The bank

made $15.89 billion, the best result since 2006 and twice the amount made

in 2014. In its consumer business, loans grew by $12bn and deposits up $48bn.

Revenues rose 4% in Q4 to $19.8 bn. Net income reported at $15.9bn for 2015

with an EPS of $1.37. Although profit did improve, Bank of America endured

a number of stumbles along the way, including a flawed submission in the

Federal Reserve’s annual stress test and a shareholder battle over whether

Mr. Moynihan should remain chairman of the bank’s board. Mr. Moynihan

ultimately survived both tests but now needs to prove he can knit the slow-

and-steady consumer bank and the hard-charging investment bank into a

single force that can work together to best serve customers. One area I have

been focusing which will impact Q1 earnings for the banks is their exposure

to energy and the credit loss provision figures. The bank said that credit

quality ‘remained strong’ however there is reference to the energy sector of

their commercial portfolio which experienced ‘elevated charge off and

criticized levels’. Commercial loan defaults were up $75 million over the

quarter, driven by losses in energy, and the bank set aside an extra $144

million mostly to prepare for potential future defaults in that portfolio.

According to the earnings, the $21.3 billion energy portfolio is only about 2%

of the overall loan book The bank’s expense-cutting goals were helped by

the winding down of the unit that services troubled mortgages. Over the year,

that business cut about 6,000 jobs. Quarterly trading revenue, excluding an

accounting adjustment, rose 11% to $2.65 billion from $2.37 billion a year ago,

though that quarter was one of the industry’s weakest in recent years.

Compared with the third quarter, trading revenue fell 16%.

Bank of America’s Fundamentals:

Their PEG is the lowest among the other nine holdings at 0.20. Its dividend

yield and payout ratio are the second worst and worst in the top ten holdings.

The company does maintain a healthy Tier Capital 1 ratio of 12.90, the

compared to the other banks. While in this low rate environment, BAC’s has

strong interest margins. The bank’s P/E ratio of 9.99 does make the stock look

cheap. While the more reliable ratio – EV/EBITA is only 10.64. The share price

has lost over a fifth of its value earlier on in the quarter and is still down over

18% YTD. The bank’s liquidity positon is strong as shown by its current ratio and

cash ratio. BAC also boast a low debt/equity ratio on a comparable basis to

the other banks. Its ROE & ROA remain low at 0.74 & 5.73 respectively.


Earnings and their financials have been mixed. I believe the stock’s recent

decline does provide a perfect buying opportunity as the panic surrounding

the banking sector has been overdone. Concern about Moynihan’s position

at the bank could impact the stock negatively in the short term. Therefore, I

would recommend to hold and keep the weighting of the stock as 2.96% of

the ETF. I would re-assess the bank’s Q1 earnings and then make a

recommendation whether to increase or decrease the weighting.

Rating: Hold March 24 2016

Company Summary Bank of America Corporation accepts

deposits and offers banking, investing, asset

management, and other financial and risk-

management products and services. The

Company has a mortgage lending

subsidiary, and an investment banking and

securities brokerage subsidiary.

Company Profile: Ticker: BAC

Exchange: NYSE

Industry: Banking

Sector: Financials

Chairman/CEO/President: Brian T Moynihan

Share Price Performance: 1 Year Performance: -10.10%









Beta 1.26

Valuation

EPS (ttm) 1.37

P/E (ttm) 9.99

PEG (ttm) 0.20

Dividend Yield 1.46


EV/EBITA 10.64


Price/Cash Flow Ratio 10

Profitability



Liquidity Ratio

Current Ratio 2.31

Cash Ratio 0.96

Capital Structure



Margin




AMERICAN EXPRESS AXP


AXP’s saw its Q4 2015 earnings beat analyst’s expectations, however despite

the growth the company continues to shed jobs and restructure. The outlook

as outlined in the company’s earnings reported noted that it plans to

increase efficiency so as to reduce its overall cost base by $1bn. It also aims

to increase its EPS this year to between $5.40 and $5.70 compared to $5.03

in 2015. The stronger than expected EPS growth will be due to the planned

sale of box retailer Costco co-brand portfolio and ‘elevated spending on

growth opportunities’. Revenue rose 7% to $9.1 billion, largely driven by the

$719 million sale of the company’s investment in Concur Technologies. Much

of this money was then reinvested back into the company, put towards

things like growth initiatives and a renewed partnership with Delta. It also

went toward a $313 million restructuring charge related to the company’s

layoff plans. Net income was $1.4 billion, or $1.39 per share, up 11% from $1.3

billion, or $1.21 per share, a year ago. New York-based American Express is a

smaller competitor to Visa V and MasterCard, and is known for catering to

higher net worth customers. Recent efforts to position itself in the changing

payments landscape include acceptance of Apple Pay. The changing

technology landscape is also behind its plans to slash jobs. “Our business and

industry continue to become transformed by technology,” said Chenault on

a conference call. “As a result of these changes, we have the need and the

opportunity to evolve our organization and cost structure.” The company did

note that earnings were hurt by strong dollar. The amount cardholders spent

on their American Express cards rose 6% in the fourth quarter, while loan

balances rose 7% which would suggest consumers are more confidant and

continue to spend.

American Expresses’ Fundamentals:

The company’s earnings and fundamentals look healthy. The stock

according to its EV/EBITA ratio looks cheap at 9.87 and given the recent

share decline makes it look a bargain. Its P/E ratio is under the historical

average of 15 and its Price to Cash Ratio is low to 6.7. Looking at the

profitability ratios one figure stands out which is Its ROE. The company’s

impressive ROE is the highest compared to the other nine holdings at nearly

24% and the company’s underlying strength is also shown by its liquidity

position. One worrying ratio is the debt to equity ratio - AXP has a very high

debt to equity ratio. But given the current restructuring this should reduce.

Helping to drive the strong quarter. The interest coverage which is a measure

of how well a company can meet its interest payment obligations is strong

at 4.89. Finally, its dividend yield is in line with the other holdings.


AXP’s financials speak for themselves. The proceeds from the sale of Concur

Technologies being reinvested back into the firm could increase future

growth in earnings. The stock’s recent decline provides a perfect opportunity

for value investors. Therefore, I would recommend to purchase more of the

stock and increase the weighting in the XLFS.

_________________________

Rating: Buy

March 24 2016

Company Summary American Express Company is a global

payment and travel company. The

Company's principal products and services

are charge and credit payment card

products and travel-related services

offered to consumers and businesses

around the world.

Company Profile: Ticker: AXP:US

Exchange: NYSE

Industry: Specialty Finance

Sector: Financials

Chairman/CEO: Kenneth Chenault











Beta 1.19

Valuation

EPS (ttm) 5.03

P/E (ttm) 12.02

PEG (ttm) 1.14

Dividend Yield 1.87


EV/EBITA 9.87


Price/ Cash Flow Ratio 6.7

Profitability



Liquidity Ratio

Current Ratio 4.18

Cash Ratio 1.37

Capital Structure



Margin




CONCLUSION:

Company BRK.B WFC JPM C USB AIG GS CB BAC AXP

Rating Buy Buy Buy Sell Buy Sell Sell Buy Hold Buy

Current Weighting % of

XLS. 11.63 10.01 9.68 6.26 5.48 2.73 2.55 2.44 2.96 2.2

Analyst Summary:

The financial sector is facing a tough first quarter earnings season as result of the market rout. As shown with many of

the top holdings, the collapse in oil prices in the fourth quarter of 2015 has impacted the balance sheets of many firms

as banks have had to set aside more credit loss provisions for further deterioration in their energy portfolios. Given that

oil dropped further in Q4, this Is will have an impact for earnings. My view is that the recent declines are pricing in lower

expected earnings growth and therefore some stocks like JPM provide a perfect buying opportunity to seek bargains

as some stocks have lost between 10-20% of their value in the space of a few weeks. Of the top ten weighted stocks in

the SDPR Financial Services ETF (XLFS), I have recommended a buy rating on BRK.B, WFC, JPM, USB CB & AXP to increase

their weightings in the ETF. I have recommended four sell ratings for C, AIG & AXP to decrease their weighting in the

XLFS, while I have advocated a hold rating on BAC.

The ETF has had a tough ride since its inception in

October 2015. as the financial sector has had to deal

with strong economic headwinds from China, to

increased regulation and dovish monetary policy over

the past seven years. But the Federal Reserve’s

anticipated interest rises and more hawkish tone will be

a positive for bank shares while the rest of the developed

world in grappling with negative interest rates. However,

that said, raising rates too fast could impact negatively

on the economic outlook for the U.S. and the globe. The

IMF have recently cut their global growth forecasts again

citing the slowdown in emerging economies remain

fragile and the stability and recovery of the Chinese

economy will be crucial. It is important for investors to take stock of the recent rout. Despite the comeback, was it the

correction that many have predicted that has been long overdue or it is a calm before the storm? Only time will tell.

* Warning: The value of your investment may go down as well as up and you may lose some or all of the money you invest. Past performance is not a reliable

guide to future performance. Investments denominated in a currency other than your base currency may be affected by changes in currency exchange rate

60%30%

10%

Stock Ratings

Buy Sell Hold

REFERENCES:

Stock Charts:

Stock Charts (2016): Berkshire Hathaway, Stock Charts: Available at: http://stockcharts.com/h-sc/ui?s=BRK%2FB

[Accessed, 25th March 2016]

Stock Charts (2016): Wells Fargo, Stock Charts: Available at:http://stockcharts.com/h-sc/ui?s=WFC [Accessed,

25th March 2016]

Stock Charts (2016): JPMorgan, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=JPM [Accessed,

25th March 2016]

Stock Charts (2016); Citigroup, Stock Charts Available at:http://stockcharts.com/h-sc/ui?s=C [Accessed, 25th

March 2016]

Stock Charts (2016): USBancorp, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=USB [Accessed,

25th March 2016]

Stock Charts (2016): American International Group, Stock Charts, Available at:http://stockcharts.com/h-

sc/ui?s=AIG [Accessed, 25th March 2016]

Stock Charts (2016): Goldman Sachs, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=GS


Stock Charts (2016): Chubb, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=CB [Accessed, 25th

March 2016]

Stock Charts (2016): Bank of America, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=BAC


Stock Charts (2016): American Express, Stock Charts, Available at:http://stockcharts.com/h-sc/ui?s=AXP


Financial Ratios:

Morningstar

Morningstar (2016): Berkshire Hathaway. MorningStar, Available at:

http://www.morningstar.com/stocks/xnys/jpm/quote.html [Accessed, 25th March 2016]

MorningStar (2016): JPMorgan Cash & Co., Available

at:http://www.morningstar.com/stocks/xnys/brk.b/quote.html [Accessed, 25th March 2016]

MorningStar (2016): Wells Fargo, MorningStar., Available

at:http://www.morningstar.com/stocks/xnys/wfc/quote.html [Accessed, 25th March 2016]

MorningStar (2016): Citigroup., Available:http://www.morningstar.com/stocks/xnys/c/quote.html [Accessed,

25th March 2016]

MorningStar (2016): US Bancorp., Available at:http://www.morningstar.com/stocks/xnys/usb/quote.html


MorningStar (2016): American International Group., Available

at:http://www.morningstar.com/stocks/xnys/aig/quote.html [Accessed, 25th March 2016]

http://stockcharts.com/h-sc/ui?s=BRK%2FB

http://stockcharts.com/h-sc/ui?s=WFC

http://stockcharts.com/h-sc/ui?s=JPM

http://stockcharts.com/h-sc/ui?s=C

http://stockcharts.com/h-sc/ui?s=USB

http://stockcharts.com/h-sc/ui?s=AIG

http://stockcharts.com/h-sc/ui?s=AIG

http://stockcharts.com/h-sc/ui?s=GS

http://stockcharts.com/h-sc/ui?s=CB

http://stockcharts.com/h-sc/ui?s=BAC

http://stockcharts.com/h-sc/ui?s=AXP

http://www.morningstar.com/stocks/xnys/jpm/quote.html

http://www.morningstar.com/stocks/xnys/brk.b/quote.html

http://www.morningstar.com/stocks/xnys/wfc/quote.html

http://www.morningstar.com/stocks/xnys/c/quote.html

http://www.morningstar.com/stocks/xnys/usb/quote.html

http://www.morningstar.com/stocks/xnys/aig/quote.html

REFERENCES:

MorningStar (2016): Goldman Sachs., Available at:http://www.morningstar.com/stocks/xnys/gs/quote.html


MorningStar (2016): Bank of America., Available at:http://www.morningstar.com/stocks/xnys/bac/quote.html


MorningStar (2016): Chubb Ltd., Available at:http://www.morningstar.com/stocks/xnys/cb/quote.html


MorningStar (2016): American Express Co., Available

at:http://www.morningstar.com/stocks/xnys/axp/quote.html [Accessed, 25th March 2016]

Ycharts

Ycharts (2016): Berkshire Hathaway (BRK.B): Ycharts, Available at: https://ycharts.com/companies/BRK.B


Ycharts (2016): Wells Fargo (WFC): Ycharts, Available at: https://ycharts.com/companies/WFC [Accessed, 25th

March 2016]

Ycharts (2016): JPMorgan Chase & Co. (JPM): Ycharts, Available at: https://ycharts.com/companies/JPM


Ycharts (2016): Citigroup (C): Ycharts, Available at: https://ycharts.com/companies/C [Accessed, 25th March

2016]

Ycharts (2016): US Bancorp (USB): Ycharts, Available at: https://ycharts.com/companies/USB [Accessed, 25th

March 2016]

Ycharts (2016): American International Group (AIG): Ycharts, Available at: https://ycharts.com/companies/AIG


Ycharts (2016): Goldman Sachs (GS): Ycharts, Available at: https://ycharts.com/companies/GS [Accessed, 25th

March 2016]

Ycharts (2016): Bank of America (BAC): Ycharts, Available at: https://ycharts.com/companies/BAC [Accessed,

25th March 2016]

Ycharts (2016): Chubb Ltd (CB): Ycharts, Available at: https://ycharts.com/companies/CB [Accessed, 25th

March 2016]

Ycharts (2016): American Express (AXP): Ycharts, Available at: https://ycharts.com/companies/AXP [Accessed,

25th March 2016]

http://www.morningstar.com/stocks/xnys/gs/quote.html

http://www.morningstar.com/stocks/xnys/bac/quote.html

http://www.morningstar.com/stocks/xnys/cb/quote.html

http://www.morningstar.com/stocks/xnys/axp/quote.html

https://ycharts.com/companies/BRK.B

https://ycharts.com/companies/WFC

https://ycharts.com/companies/JPM

https://ycharts.com/companies/C

https://ycharts.com/companies/USB

https://ycharts.com/companies/AIG

https://ycharts.com/companies/GS

https://ycharts.com/companies/BAC

https://ycharts.com/companies/CB

REFERENCES:

Market Overview:

Linsell, K. (2016): Deutsche Bank to Buy Back $5.4 Billion Bonds in Euros, Dollars. Bloomberg, Available at:

http://www.bloomberg.com/news/articles/2016-02-12/deutsche-bank-to-buy-back-5-4-billion-bonds-in-euros-

dollars [Accessed, 25th March 2016]

Egan, M. (2016): Why investors are freaking out over European banks (again). CNN Money, Available at:

http://money.cnn.com/2016/02/10/investing/european-banks-oil-prices-deutsche-bank/ [Accessed, 26th March

2016]

Cherney, M., Baer, J., Kurlioff A. (2016): Global Growth hit bank stocks again. Wall Street Journal. Available at:

http://www.wsj.com/articles/global-stocks-mostly-steady-as-commodities-prices-rise-1454923578 [Accessed,

25th March 2016]

Wang, C., Pramuk, J. (2016): Dow posts biggest quarterly comeback since 1933. CNBC, Available at:

http://www.cnbc.com/2016/03/31/dow-posts-biggest-quarterly-comeback-since-1933.html [Accessed, 31st

March 2016]

Strasburg, J. (2016): Deutsche bank shares fall again in broad bank rout. Market Watch, Available at:

http://www.marketwatch.com/story/deutsche-bank-shares-fall-again-in-broad-bank-rout-2016-02-08


The Irish Times (2016): Shares in global banks fall further. The Irish Times, Available at:

http://www.irishtimes.com/business/financial-services/shares-in-global-banks-fall-further-1.2521256 [Accessed,

25th March 2016]

Laurent, L (2016): European banks $200 billion oil slick. Bloomberg, Available at:

http://www.bloomberg.com/gadfly/articles/2016-02-25/european-banks-200-billion-oil-slick [Accessed, 25th

March 2016]

El-Erain, M (2016): The perils of China’s currency devaluation, The Guardian, Available at:

http://www.theguardian.com/business/2016/jan/13/perils-of-china-currency-devaluation-yuan-renminbi


Rosenfeld, E (2016): Chinese yuan: Here’s what’s happening to the currency, CNBC, Available at:

http://www.cnbc.com/2016/01/07/chinese-yuan-heres-whats-happening-to-the-currency.html [Accessed, 25th

March 2016]

http://www.bloomberg.com/news/articles/2016-02-12/deutsche-bank-to-buy-back-5-4-billion-bonds-in-euros-dollars

http://www.bloomberg.com/news/articles/2016-02-12/deutsche-bank-to-buy-back-5-4-billion-bonds-in-euros-dollars

http://money.cnn.com/2016/02/10/investing/european-banks-oil-prices-deutsche-bank/

http://www.wsj.com/articles/global-stocks-mostly-steady-as-commodities-prices-rise-1454923578

http://www.cnbc.com/2016/03/31/dow-posts-biggest-quarterly-comeback-since-1933.html

http://www.marketwatch.com/story/deutsche-bank-shares-fall-again-in-broad-bank-rout-2016-02-08

http://www.irishtimes.com/business/financial-services/shares-in-global-banks-fall-further-1.2521256

http://www.bloomberg.com/gadfly/articles/2016-02-25/european-banks-200-billion-oil-slick

http://www.theguardian.com/business/2016/jan/13/perils-of-china-currency-devaluation-yuan-renminbi

http://www.cnbc.com/2016/01/07/chinese-yuan-heres-whats-happening-to-the-currency.html

REFERENCES:

Stocks:

BRK.B

Berkshire Hathaway 2015 Annual Report:

http://www.berkshirehathaway.com/2015ar/linksannual15.html

WFC:

Team, T (2016): Energy Exposure Drags down Wells Fargo’s Q4 Performance. Forbes. Available at:

http://www.forbes.com/sites/greatspeculations/2016/01/20/energy-exposure-drags-down-wells-

fargos-q4-performance/#1325ce937620 [Accessed, 15th April 2016]

Mann, T., Glazer, E (2016): GE to Sell Commercial Lending, Leasing Business to Wells Fargo. Wall Street

Journal, Available at: http://www.wsj.com/articles/ge-to-sell-commercial-lending-leasing-businesses-

to-wells-fargo-1444742310 [Accessed, 4th April 2016]

Wells Fargo Q4 2015 news release: https://www.wellsfargo.com/about/investor-relations/quarterly-

earnings/

JPM:

Lopez, L (2016): JPMorgan Misses Big, Business Insider, Available at: http://uk.businessinsider.com/jpm-

q4-earnings-2015-1?r=US&IR=T [Accessed, 4th April 2016]

Team, T (2016): Strong Q4 Retail Banking Performance Helps JPMorgan Post Record Results for 2015.

Available at: http://www.forbes.com/sites/greatspeculations/2016/01/15/strong-q4-retail-banking-

performance-helps-jpmorgan-post-record-results-for-2015/#20d2ff2f6ee8 [Accessed, 4th April 2016]

JPMorgan 4Q 2015 Earnings Press Release: https://www.jpmorganchase.com/corporate/investor-

relations/quarterly-earnings.htm

C:

Citigroup Reports Fourth Quarter 2015 Earnings per Share of $1.02; $1.06 Excluding

CVA/DVA1http://www.citigroup.com/citi/news/2016/160115a.htm

Rexrode, C., Rudegeair, P (2016): A Leaner Citigroup Weighs in with a Robust Profit. Wall Street

Journal, Available at: http://www.wsj.com/articles/citigroup-earnings-jump-on-lower-legal-fees-

higher-revenue-1452862861 [Accessed 10th April 2016]

Gara, A (2016): Citigroup Misses Lowered Earnings Bar as CEO Corbat Faces Capital Test. Forbes,

Available at: http://www.forbes.com/sites/antoinegara/2015/01/15/citigroup-revenue-falls-9-missing-

lowered-bar-as-capital-test-looms/#5657e3138131 [Accessed 16th April 2016]

USB

US Bancorp 4Q Earnings Release: http://phx.corporate-ir.net/phoenix.zhtml?c=117565&p=irol-

quarterlyearnings

http://www.forbes.com/sites/greatspeculations/2016/01/20/energy-exposure-drags-down-wells-fargos-q4-performance/#1325ce937620

http://www.forbes.com/sites/greatspeculations/2016/01/20/energy-exposure-drags-down-wells-fargos-q4-performance/#1325ce937620

http://www.wsj.com/articles/ge-to-sell-commercial-lending-leasing-businesses-to-wells-fargo-1444742310

http://www.wsj.com/articles/ge-to-sell-commercial-lending-leasing-businesses-to-wells-fargo-1444742310

http://uk.businessinsider.com/jpm-q4-earnings-2015-1?r=US&IR=T

http://uk.businessinsider.com/jpm-q4-earnings-2015-1?r=US&IR=T

https://www.jpmorganchase.com/corporate/investor-relations/quarterly-earnings.htm

https://www.jpmorganchase.com/corporate/investor-relations/quarterly-earnings.htm

http://www.citigroup.com/citi/news/2016/160115a.htm

http://www.forbes.com/sites/antoinegara/2015/01/15/citigroup-revenue-falls-9-missing-lowered-bar-as-capital-test-looms/#5657e3138131

http://www.forbes.com/sites/antoinegara/2015/01/15/citigroup-revenue-falls-9-missing-lowered-bar-as-capital-test-looms/#5657e3138131

http://phx.corporate-ir.net/phoenix.zhtml?c=117565&p=irol-quarterlyearnings

http://phx.corporate-ir.net/phoenix.zhtml?c=117565&p=irol-quarterlyearnings

REFERENCES:

AIG:

Basak, S. (2016): Icahn says AIG Presentation Inadequate, Seeks Director Slate. Bloomberg. Available

at: http://www.bloomberg.com/news/articles/2016-02-01/icahn-calls-aig-presentation-inadequate-

seeks-director-slate [Accessed 10th April 2016]

Benoit, D, Scism, L (2016): Activist Investors Make Peace with AIG. Wall Street Journal, Available

at:http://www.wsj.com/articles/aig-reaches-agreement-with-icahn-for-board-representation-

1455226425 [Accessed 10th April 2016]

AIG Reports Fourth Quarter 2015 After-Tax Operating Loss of $1.3 Billion or $1.10 Per Diluted

Sharehttp://www.aig.com/about-us/news-and-media

GS:

http://www.goldmansachs.com/media-relations/press-releases/current/announcement-14-jan-

2016.html [Accessed 12th April 2016]

Keats, R (2016): Investment Banking Drove Goldman Sachs’ Earnings Growth. Yahoo Finance,

Available at: http://finance.yahoo.com/news/investment-banking-drove-goldman-sachs-

210751478.html [Accessed 12th April 2016]

Barlyn, S. (2016): Goldman Sachs to pay $5 billion in U.S. Justice Dept Mortgage bond pact. Reuters.

Available at: http://www.reuters.com/article/us-goldman-sachs-mbs-settlement-idUSKCN0X81TI

[Accessed 12th April 2016]

Kasperkevic, J (2016): Goldman Sachs profit drops after $5bn mortgage-backed bond settlement.

The Guardian, Available at: http://www.theguardian.com/business/2016/jan/20/goldman-sachs-

fourth-quarter-earnings-report-profits-slump [Accessed 12th April 2016]

Baer, J. (2016): Goldman Sachs Wants to Make More Giant Loans. Wall Street Journal, Available

at:http://www.wsj.com/articles/goldman-turns-to-loans-bond-underwriting-1453199400 [Accessed

12th April 2016]

Goldman Sachs Q4 2015 Earnings Release: http://www.goldmansachs.com/media-relations/press-

releases/current/2016-01-20-q4-results.html

CB:

Simpson, A (2016): ‘Old’ ACE, Chubb Report Q4, Full Year 2015 Results. Insurance Journal, Available

at: http://www.insurancejournal.com/news/national/2016/01/27/396592.htm [Accessed 12th April

2016]

Chubb 4Q 2015 Financial Supplement Dec 31 2015: http://investors.chubb.com/investor-

information/default.aspx

BAC:

Bank of America 2015 Quarterly Earnings Dec 31 2015:

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=quarterlyearnings#fbid=IleMLAN4wg

U

http://www.bloomberg.com/news/articles/2016-02-01/icahn-calls-aig-presentation-inadequate-seeks-director-slate

http://www.bloomberg.com/news/articles/2016-02-01/icahn-calls-aig-presentation-inadequate-seeks-director-slate

http://www.wsj.com/articles/aig-reaches-agreement-with-icahn-for-board-representation-1455226425

http://www.wsj.com/articles/aig-reaches-agreement-with-icahn-for-board-representation-1455226425

http://www.theguardian.com/business/2016/jan/20/goldman-sachs-fourth-quarter-earnings-report-profits-slump

http://www.theguardian.com/business/2016/jan/20/goldman-sachs-fourth-quarter-earnings-report-profits-slump

http://www.wsj.com/articles/goldman-turns-to-loans-bond-underwriting-1453199400

http://www.insurancejournal.com/news/national/2016/01/27/396592.htm

http://investors.chubb.com/investor-information/default.aspx

http://investors.chubb.com/investor-information/default.aspx

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=quarterlyearnings#fbid=IleMLAN4wgU

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=quarterlyearnings#fbid=IleMLAN4wgU

REFERENCES:

Rexrode, C., Rudegeair, P (2016). Bank of America’s Profit Gains, as Legal Costs Tumble. Wall Street

Journal, Available at:http://www.wsj.com/articles/bank-of-americas-results-improve-1453204588

[Accessed 12th April 2016]

AXP:

American Express Q4 2015 Earnings Dec 31 2015. http://ir.americanexpress.com/Earnings-and-Events

http://ir.americanexpress.com/file/Index?KeyFile=32615475

Gensler, L (2016: American to Slash 4,000 jobs on heels of strong quarter. Forbes, Available

at:http://www.forbes.com/sites/laurengensler/2015/01/21/american-express-earnings-rise-11-on-

increased-cardholder-spending/#26d23aea5bfa {Accessed 17th April 2016]

http://www.wsj.com/articles/bank-of-americas-results-improve-1453204588

http://ir.americanexpress.com/file/Index?KeyFile=32615475

http://www.forbes.com/sites/laurengensler/2015/01/21/american-express-earnings-rise-11-on-increased-cardholder-spending/#26d23aea5bfa

http://www.forbes.com/sites/laurengensler/2015/01/21/american-express-earnings-rise-11-on-increased-cardholder-spending/#26d23aea5bfa

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