At Summer Analyst HQs, there’s no such thing as a HOLD rating. Either you buy it, implying a hold, or you sell it, implying that you’re not holding. After going through Barclays’ 3Q operating results, we’ve removed Barclays from our BUY list.
A few disclosures – we bought Barclays early on, but did not hold it through the earnings announcement. There were a few reasons for this, but one particular one was the technical trend change in the overall market. We found favorable conditions to sell the stock we bought months back – totally separate from our fundamental view. At Summer Analyst HQs, we buy with fundamentals and sell by looking at technicals.
With that said, because there’s still an uptrend in the market, if we were to be holding onto Barclays still, we’d be looking to sell our holdings over several days to get the most favorable price.
Good night.
-SA
Update: There’s only one strong reason why we’re changing this to a sell – apart from the mediocre results: “Overall, we’re comfortable with the 3rd quarter.” Investing in financial companies, you have to take much of their financial statements with a grain of salt. Their business revolves around financial statements, and they’ve been in the business long enough to know what can be massaged into looking good even when things are mediocre or bad – and I believe they have every right to do that as confidence is the single most important thing for these institutions. I can go out there and work on a dividend discount model with a lot of assumptions, or listen carefully to what they have to say about their own results. Quite frankly, I think the management made a mistake by saying “overall, we’re comfortable with the 3rd quarter.” Comfortable, to me, means they’ve used a masseuse.
It’s extremely critical to examine the tone and language of management reports when determining whether or not it’s a financial firm you want to put your dollar in.
Other indulgence
