HSBC Holdings P L C (HSBC)

(A Top Pick Nov 14/12. Up 13.16%.) Still a Buy. The big financials in the Far East haven’t taken off yet.

Not his favourite stock. He doesn’t like global mega-banks. They always seem to get into problems due to their size and scale.

Have been doing a lot of cost cutting because they have been caught in the Libor scandal. Been trying to find ways to raise cash for paying expected future fines. Standard Charter (STAN-LSE) and this one are the 2 international banks that he could live with as an investment. Their earnings are growing a little bit faster than North American or European banks because of their global exposure. It’s okay as an investment. Doesn’t think the dividend yield is going to hang around at 8% too much longer. Will probably have to reduce the dividend payout in the near-term.

One of the good things about this is it is a behemoth and is pretty much everywhere. Didn’t blow up during the global financial crisis. Had a risk management culture, which a lot of banks didn’t. Thinks they are going to return to their roots where they are going to start to look at the trade finance, which is the import/export business. Any increase in the interest-rate to going to benefit this company. It will be the low risk play in terms of UK banks.

One of his bigger positions. He really likes it. No government assistance, 55% of profits out of Asia, focused on Asian growth. It is in so many countries but he thinks they have it turned. It has lots of room to go and is a well run company. They got rid of divisions that did not support their strategy.

Likes it. Cost management and focus on it is good. Taking a hard look at all their assets around the world. Normalization of ROE will continue. It is an emerging market banks so we have to see a break out in emerging markets, but he sees a breakout over the next 5 years. Pretty good dividend yield.

Got out of assets that are not profitable and they are quite diversified. Most of their revenues are from Europe. Dividends look good and will increase. A global name focusing on the fastest growing parts of the world.

The long story here is that an interest-rate recovery will obviously cause all banks to move higher. Moving into the trade finance (import/export finance) in Asia a little more aggressively, which is a big growth engine. The gradual recovery in Europe will move the stock higher. 4.2% dividend yield. Strong balance sheet.

Great company and well run. Pulled back because of some really bad assets they bought over the last several years. Have really consolidated themselves. Not expensive and has a good dividend yield. Doesn’t expect there will be a huge upside in the price of the stock but will chug along like a lot of other banks.

Looking for good yield with growth. 5% yield. 55% of revenue is from developing markets. Canadian banks are trading at all time highs.

UK banking system has to be recapitalized. This one is obviously best-of-breed in Europe but he is still quite concerned around the issues of capital losses they are going to get exposed to as the recession continues to bite.

One of his bigger financial positions. Likes it because it is a world-wide bank (~35 countries) focused on Asia, where the growth is. Canadian banks are great, but the growth profile is just one other country in each case. HSBC has positioned themselves in the sweet spot where global growth will happen.

European banking sector is a sell. US is a better story. Banks will have big losses and will have to build more capital.

Largest financial institution in the world. Half profit is coming out of greater China area right now. Strategically they are really well positioned to take advantage of growth that will happen in Asia. They have been positioned in Asia for a long time. Have not been hurt in Europe. You shrug your shoulders to the money laundering. Look at the size of the company.

[Show did not air however top and past picks were posted to web site]