The World's Most-Watched Bank

There's still huge money to be made in the banking sector. There's also huge money to be lost. The turmoil surrounding commercial banking and financial services has most investors scratching their heads but watching intently. And today, among the hundreds of players that investors are keeping tabs on, we're able to single out the one financial services company that is garnering the most attention.

People watch stocks for different reasons -- they're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can better understand market sentiment by seeing who's watching what. With the Fool's free My Watchlist service now three months old, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.

My colleague Matt Koppenheffer recently wrote:

I happen to think there are investment opportunities in the banking sector. However, I'm under no illusion that the sector has left its problems in the past. To see what I mean, you don't have to look any further than the current delinquency rates on real estate loans at U.S. banks. The third quarter of this year was the first quarterly decline in delinquency rates since the first quarter of 2006. That may be a positive development, but it's still an ugly scene.

But Matt sees reasons for optimism: The government seems to see steadier footing among the biggest players, as it unloads its investment in Citigroup (NYSE: C  ) , and rumors are swirling that banking regulators might allow banks such as Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) to raise their dividends. Further, a spasm of recent banking buyouts might be the start of a deal surge that could provide struggling banks with necessary financial backing. In short, the industry is showing signs of finding its footing, and the big players could be the big winners -- which is why it's not surprising that the most-watched stock among commercial banks and financial services companies is...

Drumroll, please
Looking at the aggregate data, we can see that Citigroup is the clear leader in terms of watch interest, the percentage of people keeping an eye on the banking and financial services industry in general who are specifically watching each company. And for good reason. As Matt summarized in his look at the year in banking, "Looking at the individual stocks, Bank of America (NYSE: BAC  ) was dragged down more than most during 'foreclosuregate,' and it's lost more than 18% so far this year. Both JPMorgan Chase and Goldman Sachs have spent most of the year drifting and are currently slightly down. Wells Fargo tacked on a modest 10%, but, interestingly, the best performer so far this year among the biggest banks has been Citigroup with a sweet 39% gain. Go Uncle Sam!"

Here are the rest of the top six most-watched companies in the industry with their watch interest along with the stocks' CAPS rating (out of five possible stars) to show the sentiment of our free investing community.

Company

Market Cap
(in millions)

CAPS Rating (out of 5)

Watch Interest

Citigroup

$138,857

***

20.5%

Bank of America

$134,536

***

14.1%

Leucadia National (NYSE: LUK  )

$7,122

*****

8.3%

Interactive Brokers (Nasdaq: IBKR  )

$761

*****

5.6%

Wells Fargo

$163,761

***

4.8%

JPMorgan Chase

$166,570

***

4.7%

Sandwiched among industry giants, Leucadia and Interactive Brokers look a little out of place. When I talked to Motley Fool Stock Advisor associate advisor Alex Scherer last month, he told me there's a lot to like about Leucadia, which he described as a Berkshire-Hathaway-esque conglomerate run by, in Alex's words, "a couple of really smart guys." The highly diverse holding company -- which owns positions in manufacturing, real estate, medical product development, and winery operations, among other areas -- has a history of successful investments and strong management. Even its stock is reasonably priced. Unfortunately, it's been fighting an unseemly courtroom battle with one of the businesses in its portfolio, but Alex is optimistic.

As for Interactive Brokers, analyst Dan Caplinger wrote that the company has been able to avoid a painful price war over the past year by sticking to its niches:

It offers a sophisticated trading platform with low commissions oriented toward frequent traders, attracting investors who execute far more trades than Schwab's customer base. IB also works as an options market maker, meaning that it acts as the middleman in coordinating trades between buyers and sellers, pocketing a fee in the process. Unfortunately for IB, that market-making niche fared poorly in 2009. Even though things appear to be turning around in the segment, the stock still trades at low valuations. If investors can regain confidence in the markets, then growth should resume -- and while IB may never get close to a perfect 10, you should see it improve significantly on many of these measures.

Whether you're keeping an eye on the industry giants or are watching the up-and-comers, especially in such a volatile industry, it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, free from the Fool. Click below to start following one of the stocks mentioned above:

Roger Friedman doesn't own shares of any of the companies mentioned, but they'll all be on his watchlist. Interactive Brokers Group and Leucadia National are Motley Fool Stock Advisor picks. The Fool owns shares of Bank of America, Interactive Brokers Group, JPMorgan Chase, and Wells Fargo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 31, 2010, at 2:20 PM, TiredTriDude wrote:

    Last time I listened to this guy for advice, the stock he suggested lost half it's value in just under a year. Think I'll pass.

  • Report this Comment On January 14, 2011, at 5:16 PM, vseader wrote:

    atvi.......when I was with stock advisor.....purchased

    atvi....one of your most regarded stocks...now

    it appears downhill for sure...each day going

    lower....shud we sell it? has it had its big run

    before I purchased it? thanks again

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