Commentary: HFMU.U

Notes from Texas: Lone Star Shines Bright

On a recent investor roadshow to Texas, we had the opportunity to meet the top management of ten Texas headquartered U.S. banks. The Texas economy is booming (annualized real GDP grew +5.2% yoy in Q4/17 making it the fastest growing economy of all 50 U.S. states) driven by a robust recovery in the energy sector and strong labor market trends in an increasingly diversified economy. With…

U.S. Banks: 3 Deals in 3 Weeks. Will M&A Accelerate Post-Dodd-Frank?

Hamilton Capital ETFs continue to benefit from material outperformance and substantial AUM growth. In this note, we discuss U.S. bank M&A and ask the question: will successful passage of the Dodd-Frank rollback bill result in an acceleration of sector consolidation? Last week, on May 24th, the President signed a bipartisan bill rolling back key provisions of the Dodd-Frank Act (named “Economic Growth, Regulatory Relief and Consumer Protection Act”).

HFMU.U Posts 41% EPS Growth Y/Y

In Q1-2018, the holdings in the Hamilton Capital U.S. Mid-Cap Financials ETF (USD) [HFMU.U] have recorded year-over-year portfolio-weighted EPS growth of a robust 41%, which is well ahead of the 35% EPS growth reported by the U.S. large-cap financials. Last quarter – Q4-2017 – HFMU.U’s holdings outgrew the large-caps by 10% (i.e., 18% for HFMU.U versus 8% for the large-cap index). Perhaps more meaningful, excluding the…

Canadian Western Bank as a U.S. Mid-Cap Proxy

Canadian Western Bank has achieved highly material long-term outperformance versus its larger peers. In this post, we relate its sizeable outperformance to our preference for U.S. mid-cap banks. In our January 24, 2018 comment, “U.S. Banks: High/Low Growth Areas in One Map (i.e., ‘Follow the Sun’)”, we explained that there are vast demographic differences within the six distinct geographic regions of the United States (five of…

U.S. Banks: Mega-Caps’ Q4 Results in 4 Charts

With reporting season now over, we thought we would offer some key takeaways for the four U.S. mega-cap banks (JPM, C, BAC, WFC). Given that these four firms account for over 33% of the U.S. financials index (S5FINL Index), they have a significant/disproportionate impact on the overall sector’s results and are therefore worth following. In this note, we show operating earnings trends for each bank. As…

HFMU.U Posts 18% EPS Growth Y/Y

With 96% of the fund having reported Q4-2017, the holdings in Hamilton Capital U.S. Mid-Cap Financials ETF (USD) (HFMU.U) have recorded year-over-year portfolio weighted EPS growth of over 18%, which is more than double the 7.6% growth reported by the U.S. large-cap Financials (100% reported). Last quarter – Q3-2017 – HFMU.U’s holdings outgrew the large-caps by 11% (i.e., 12% for HFMU.U versus 1% for the large-cap…

U.S. Banks: Wells Fargo and “Invisible” Bank Taxes

We have written several times on WFC’s inability to grow EPS and its ongoing regulatory problems. That said, even we were surprised that on Janet Yellen’s last day as Chair of the Federal Reserve (“Fed”), the central bank filed a consent order against Wells Fargo (“WFC”) requiring the bank take a number of extraordinary steps to improve corporate governance. While WFC does so, the Fed has…

U.S. Banks: High/Low Growth Areas in One Map (i.e., “Follow the Sun”)

In banking, as in most businesses, geography matters. Population growth supports GDP growth, which in turn drives revenue growth. In general, U.S. bank investors divide the U.S. into six distinct regions: the Northeast, Mid-Atlantic, Midwest, Southeast, Southwest, and West (see chart at the end of this comment). Within these regions, there are 53 metropolitan statistical areas (MSAs) with a population greater than 1 million and nearly…

Notes from the Field: “Follow the Sun” / Catching up with U.S. Banks in Phoenix

One of our themes for the U.S. banks is to “follow the sun”, which refers to our emphasis on banks domiciled in the higher population growth states/metropolitan statistical area[1] (“MSAs”). Every single one of the 15 faster growing large MSAs (i.e., those with populations in excess of 1.5 million people) are located in the (sunny) Southeast, Southwest, and West.

HFMU.U Posts 12% EPS Growth, 11% Ahead of U.S. Financials

November 20, 2017 by Hamilton Capital The holdings within the Hamilton Capital U.S. Mid-Cap Financials ETF (HFMU.U) reported a very strong Q3, posting portfolio-weighted earnings growth of ~12% Y/Y. This compares to just 1% Y/Y for the U.S. financials[1]. The two most important factors contributing to HFMU.U’s much higher growth were: (i) its substantial overweight position in U.S. mid-cap banks (which are largely unrepresented in the Index, but…

Notes from the Field: Everything’s Peachy in Atlanta

A recent trip to Atlanta gave us a chance to meet with executives from several publicly traded banks headquartered in Georgia, as well as some of their commercial customers and a local land broker. Seven months after the election of an administration with ambitions of pro-growth policies and reforms that renewed investor interest in U.S. bank stocks, the trip presented a good opportunity to check in…

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