buy, page-53

Very good buy IMO, well short term anyway.
Huntley has NAB as an accumulation to $27.05 (12% above last traded price) and a hold to $38.85 (39% above last traded price!). Even though I belief in this environment, that any research paper older than 2 days is old news and my personal dislike of Huntley ever since of their BNB valuation, this time I tend to agree that NAB still have a bit of petrol left in them.

Reasons is that I think they have sufficient doubtful debt provision sitting in their balance sheet, and their hard-line take on their CDO provision effectively writing the whole thing off. Their ability to pay same dividends even in this environment is highly probable. Don't forget, we still have not experience the Australian Infrastructure boom yet, this will give NAB further growth as they are the largest commercial lender in Australia.

High Close drop Low drop Gross Yield
NAB 44.84 23.88 47% 23.39 48% 11.49
ANZ 31.74 16.85 47% 15.32 52% 11.53
CBA 62.16 42.00 32% 36.98 41% 9.05
WBC 31.32 23.26 26% 18.36 41% 8.48

As you can see the difference between the good banks and the bad, effectively CBA and WBC (the 2 least exposed to credit crunch) recovered significantly from their all time high, this is due to their conservative nature and risk management, my hats off to them.

Lets look at the 2 not so lucky banks, ATM they are both down 47% from their all time highs but both attracting a higher yield base on their current SP. The trend is ANZ is slightly recovering their ground while NAB is still near rock bottom. NAB has CDO and ANZ have CDS, both substantially written down. IMO NAB should not be in the same position as ANZ. ANZ has a range of problems e.g. CDS, Opes Prime, Tricom, Chimera etc… they are also announcing massive job cuts which is almost certain negative growth this year and next. It’s a matter of time now; either we will see ANZ continuing to drop or NAB recovering (I hope it’s the latter). Any upturns in the economy will benefit NAB the most out of the big 4.

GL all.