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Banking, finance, and taxes

Bove’s Sour Bank Call Cautions Recent Gains (BAC, C, FAS)

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By Douglas A. McIntyre Updated Published
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What happens when a sector loses a key bull, even if it is temporary?  Often nothing, but if it is a big enough market pundit then it can have an impact.  That is what we are seeing today in the money center banks.  Rochdale Securities’ Richard Bove said that the fundamentals of the banks have not improved from the first recovery wave and he even noted that many of the banks will post losses in both Q3 and in Q4.  As Bove had been active in both Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC) for some time, those are the first two to look at.  This call has larger implication for the most leveraged ETF, the Direxion Daily Financial Bull 3X Shares (NYSE: FAS).

Bove essentially pointed out that the run on banking stocks was on fumes and he expects a short-term pullback in share prices.  His thesis is that rational investors would lighten up.  But there is still a positive notion here.

Another issue noted by Bove was that the judge’s opposition to approving the SEC settlement by Bank of America Corp. (NYSE: BAC) was actually bad for the entire sector.

The good news is that this is based on a post-rally level.  Bove  still believes the sector is attractive for the long-term investor.

Bank of America shares are active today and down 4% at $15.94, while Citigroup, Inc. (NYSE: C) was down over 7% at $3.65 today.  Effectively these look like healthy pullbacks helped along by an influential analyst who determined that these stocks have gone up too far too fast.

The Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is down 9% at $68.09.

Jon C. Ogg
August 11, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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