Dick Bove Celebrates New Home, Debuts 'Manifesto'
Big banks must get smaller. Small banks must get bigger. All banks must turn their attention away from crisis-era baggage and show how they'll consistently make money from now on.January 30
The combative bank analyst has joined a small firm with little background in bank research because, he says, it promised the freedom to speak his mind.December 21
Dick Bove is back in business.
The country's most quotable bank analyst has a new home, a new manifesto and a lot of optimism about the industry's future. On Wednesday, he predicted that banks are about to enjoy a 14-year surge in profits.
"There's something wrong with bank analysis. … This industry did come back," he told a room full of journalists Wednesday. "We're going to see fourteen years of higher earnings."
The three-course lunch was hosted by his new employers, Rafferty Capital Markets, as a sort of comeback party for Bove and a press conference for his new "Banking Manifesto." His son, Joe, passed copies of the 167-page document around a long dining table, and Bove spoke about it for almost two hours while reporters ate filet mignon and apple galettes.
Bove is generally, though not exclusively, optimistic about the banking industry. At one point last year, he simultaneously complained about Wells Fargo's (WFC) customer service and recommended buying the bank's stock, because Wells Fargo wasn't "getting bogged down by offering service."
He told journalists on Wednesday that he has no "sell" ratings on any of the banks he covers at Rafferty, and only two "hold" ratings: Wells Fargo and State Street (STT), because their stock prices are too high.
But when he sees something he dislikes, Bove rarely pulls punches. He once called Wal-Mart's (WMT) banking ambitions "an abortion," and had a long-running feud with the former BankAtlantic Bancorp after he predicted that the company was at risk of failing.
Bove's previous firm, Rochdale Securities, imploded last year after a trader was arrested for fraud. After fielding offers from 10 different firms, he chose Rafferty for its exclusive focus on research. The firm will also allow Bove to continue working from his home in Lutz, Fla.
On Wednesday, Bove presided over a three-course lunch in a midtown Manhattan steakhouse, the kind of place where waiters poured miniature glass bottles of Diet Coke into hefty crystal tumblers. Dapper in a vest and tie, the 71-year-old analyst left the food to his guests and spoke without many notes, standing at the head of a long table in the restaurant's private dining room.
He ambled through the contents of his manifesto, effortlessly fielding questions and interruptions, and occasionally swerving into topics like the fertility rate in Milan, the poor hitting performance of Yankees slugger Alex Rodriguez and the diverging population trends of Christian versus Muslim countries.
But it all came back to banking. Investment banking has a lot of growth ahead of it, Bove told reporters, and big companies like Bank of America (BAC) and Citigroup (NYSE:C) are due for a long run-up in their stock prices and in their profits, in part because they have been struggling with both for so long.
"Do you think Bank of America's going to go out of business? … If it's not, then do you think the mortgage lawsuits will go away eventually?" he asked one guest, referring to the massive backlog of claims filed by private and government buyers of B of A's mortgage-backed securities.
And if it's safe to assume that the bank won't go out of business and will eventually resolve those claims, Bove concluded, "So why should they matter?"