Morgan Stanley CEO James Gorman recently responded to rumors that its European bank exposure is three times its market cap, and well over its entire book equity value, and that its exposure to French banks is 60% greater than its market cap.
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The problem is that Mr Prot was referring to the book value of equity at BNP Paribas.
Not 2.5 times its book value like the U.S. equity market, but its book value.
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And the rise in the book value of their equity holdings adds to the proportion of risky assets held by life companies, adding also to the mismatch of duration.
In another measure, the ratio of price to tangible book value (shareholders' equity minus intangibles like goodwill), Citi is close to typical at 3.6.
While the dividend cut was expected, the management changes and the possibility of a dilutive equity raise (under book value) was not expected by The Street.
Number-wise, Nieman is fond of the company's dividend yield (0.9% as of Nov. 30) and low price-to-earnings, price-to-book and debt-to-equity metrics, but also sees potential in the company's active pursuit of alternative energy solutions.
Frederick, a respected industry veteran with more than 20 years of experience, writes monthly columns for Schwab's client newsletters and is the author of the book The Trader's Guide to Equity Spreads.
Snowling ticks off other advantages for Sallie: low interest rate risk (given government guarantees), profit growth expectations in the 15% range, a rich return on equity (net income divided by average book value) of 38%, and a cheap valuation relative to history and the broader market.
For instance, if a San Francisco broker-dealer wants an equity sales trader with both a series 7 and series 63 certification (exams that designate a particular knowledge set and the ability to get state registration to solicit debt and equity orders), and a transferable book of business, they can tailor a search for exactly those needs on StreetID.
The book's most insightful point is that private-equity firms may fill the role that banks used to occupy, since many were weakened during the financial crisis.
In an interesting new book, The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything, Bloomberg News reporter Jason Kelly has gone behind the scenes to understand what makes the industry tick.
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Of course he could and should endorse the practice of private equity, and the evidence supporting such an endorsement would be the book he wrote.
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From a text book perspective, Basel III requires banks to hold 4.5% of common equity, Basel II requires 6% of Tier I capital of risk-weighted assets.
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For long picks, the Ward Ferry team puts a lot of emphasis on such classic numbers as return on equity, free cash flow, dividend yields and price-to-book ratios.
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