Dick Bove, the widely followed analyst at Rochdale Research, has been bullish for a few weeks, and, more particularly, has said that many banking stocks were oversold. In a research note this morning, Bove points to a dozen or so positive indicators. Among them, Bove notes that yields on junk bonds have been plummeting (to 13.49% versus 25.01% in November 2008); that REITs are raising money; that loan loss provisions of the 49 largest banks are four times their Q1 pretax income; and that it appears a backlog for underwriting deals is building. He also says that Ken Lewis' removal from the Chairman role of BofA is a smart one. This is not to say Lewis is a lousy manager. On the contrary, Bove says, "I am a big believer in Ken Lewis. He is one of the best bank managers in this country, if not the best." It's just that boards should be independent from management.
Bove is not afraid to take unpopular stances, by the way. For our December 2007 interview with Dick Bove---in which he defends the track record of former Merrill CEO Stan O'Neal---click here.