Cameron HurstCharles Schwab CorpSCHWDON'T BUYJun 05, 2019

True, anything can go wrong with banks, and he's made the wrong call on this in the past, but you can't go wrong buying it at $56.

It got hammered when the regional bank crisis hit. Makes no sense, because Schwab there was little tie-in with those banks. They reported a great quarter last month, but has declined with the rest of the market as bond yields rise. Again, makes little sense. Shares fell 5% yesterday after announcing they close some offices, but they're still integrating TD Ameritrade. Their bond offering doesn't bother him as long as they don't sell common stock (are not).

It's been punished for being a San Francisco financial, but it's now showing momentum and it offers organic growth as it trades at a low PE.

He stuck by this during spring's banking crisis. There was zero chance of a bank run on Schwab. They reported a strong quarter last Tuesday and shares jumped 12%.

She recently added to her position. SCHW has inflows in February and March during the regional bank crisis. Trades at 13x 2024 PE.

He just bought it. SCHW got it pretty hard  in March. He loves the broker dealer business. Also, SCHW has scale. So, he added when shares got hammered by the regional banking crisis. He's overweight financials.

The downgrade is late to the party. Shares are down 30% YTD. Schwab has seen an inflow of assets since the banking crisis in mid-March. This is a brokerage firm that does asset management; it isn't First Republic Bank. It trades at 10x earnings 2024.

They're still making a lot of money in their spreads, in their money market funds, for example.

Their woes are not unique and effect all financials, which all face 5% interest rates and investors seeking yield beyond these stocks.

Panic is not a strategy, but it has fueled the sell-off in this stock. But the CEO has been buying shares and they just reported a good quarter: their assets are sticky and are not in flight. Sellers were acting like Schwab was going under. That was panic. In reality, Schwab lost a bit of earnings power--no big deal. Lately, shares are rallying, up 2.87% today.

#3 loser in Q1, down 37%, a victim of the banking crisis. That's unfair. It has little in common with the regional banks, though they carry large losses in their bond portfolio. It's been punished enough, but can go higher if you aren't squeamish.

 TD still owns 9.8% of SCHW. While we are not too worried about a 'bank run' on Schwab, there is definitely a shift from low interest accounts to money market accounts, with estimates of $20B a month moving. 
Customers are staying, but this shift is likely to impact earnings. 
The company also bought long term bonds and has significant unrealized losses. So, it is a question of what happens next. 
On paper it looks fine, at 13X earnings, a good dividend and historical earnings growth. But EPS could be impacted by 30%, and that is before any decision to take a loss on the bond portfolio. Actual outflows have still been more than $1B a day, and in such cases investors and depositors cannot be counted on to act rationally. 
A bad headline could accelerate the situation. Brokers are falling over themselves to downgrade, and the stock has had its worst month since 1987. The CEO comments help, and there has been insider buying at least. But we can't really add depth. 
Either confidence returns, or it doesn't. In the latter, the company gets into an ugly situation of having to sell securities at a loss to backstop capital, and this can be a downward spiral. It is hard to really endorse it considered extreme uncertainty. 
Especially compared with safer Canadian banks with higher dividends and lower valuations. 
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It's too early to bottom-fish the regional banks. But the contagion has hit related sectors and stocks like Schwab, which has plunged from $76 below $52 though has bounced past $54. It's doing worse than the regional bank sector. Schwab got lumped unfairly with the regionals. Investors are nervous with a company that most of its investments in securities rather than loans. Schwab has 60% of their interest earnings assets in securities. Another concern is their $14 billion in unrealized losses in agency mortgage-backed securities, which is only a real worry if Schwab must sell its bonds in a pinch rather than holding them to maturity. Buy this dip. They can tap many sources of capital to stay liquid. They should have $100 billion in cash flow this year from regular business and can raise another $8 billion a month in selling certificates of deposit. Trading at 13x earnings now, a steep discount from its normal 19x. There's a ton of insider buying from the CEO and other execs. Net interest margin spreads can tighten, though. Earnings estimates have recently fallen. Bottom line: There's no crisis in Schwab.

He models $43.16, 16% lower than today. Wait. This will fall to book value at $29. It will bounce like crazy given the macro environment, not their fundamentals.