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George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Banks / Diversified Financials

European Banks: Still Risky but Good Stock Profit Potential

Excerpted from the September 2012 Issue

September 15, 2012

One of our favorite sayings is “Buy when there is blood in the streets,” which is attributed to Baron Rothschild in the early 1800’s. It is particularly appropriate to pull out the Baron’s statement now because he was a member of one of the most prominent European banking families, and the European banking sector is one of the bloodiest sectors in the worldwide financial markets today.

No doubt there is risk in European banks. Even huge banks can fail, or their stockholders can get wiped out if they are nationalized. But there is also great stock profit opportunity in this distressed investing sector. Most of these banks are cornerstones of their nation respective nation’s economy, and many of them have significant global foundations as well.

The September 2012 issue of The Turnaround Letter highlights ten very large European-based banking companies with global reach. We can’t promise that any of them will emerged unscathed from the current turmoil in Europe, but we're pretty confident that some—and possibly even all—of them will increase sharply in price when the turmoil subsides. Read more about European banking turnaround investment opportunities

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George Putnam's Favorite Stocks for 2016

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Comparing Stocks and Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Read More.

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Banking on a Financial Sector Turnaround

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MoneyShow.com recently tapped George's favorable opinion for a banking industry rebound. In "Turnaround Expert's Banking Bets," Steve Halpern highlights a trio of Putnam's top stock picks from the battered financial sector.

 

George reminds value investors: "Fortunately, many of the factors...just aren't present in the market, and the other reason that investors seem to be down on the banks is they sort of expected the Fed to raise interest rates a little faster than they have. And the banks do better when interest rates are rising because they have wider margins on their loans, but I think the Fed will gradually raise rates to we will see profits improve, and so I think this downturn is really temporary."

 

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