Michael Price, who said the market now is “ideal for a stock picker,” said he bought shares of BB&T Corp. and that community banks are attractive investments.
“This is what you wait for: Being prepared on valuations and waiting for the market to hand you things at big discounts,” Price, who managed some of the best-performing mutual funds during the 1980s and 1990s and now runs New York- based MFP Investors LLC, said in an interview with Bloomberg Radio.
The Standard & Poor’s 500 Index has surged as much as 37 percent from a 12-year low in March. Banks and other financial institutions led the rebound.
Citigroup Inc., the New York-based bank that’s relying on $45 billion in U.S. government aid, will survive the credit contraction after selling businesses, Price said. The lender, created by Sanford “Sandy” Weill through two decades of takeovers, became too big to manage, Price added.
He suggested considering investments in banks such as BB&T and Wells Fargo & Co. now that they have raised money following the government’s evaluation of their health. Both companies received funds from the Treasury’s Troubled Assets Relief Program.
“If you want to place some bets, you can place them right after the recap like BB&T and Wells Fargo, or you can start nibbling on the way down in Citicorp now, or you can put money into smaller, less liquid banks that are not in TARP,” Price said.
Shorted Citigroup
That’s a reversal from Price’s strategy in August, when he shorted Citigroup, saying the New York-based lender had “more pain coming.” The collapse of the subprime mortgage market to that point had caused almost $500 billion in bank losses worldwide. That figure has about tripled since then, with the amount at Citigroup doubling, spurring an 81 percent plunge in the shares.
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