Deutsche Bank's Year-End Strategy For Brokers, Asset Managers And Exchanges
Deutsche Bank's Brian Bedell on Thursday released a year-end strategy guide covering the brokers, asset managers and exchanges.
In order of investment preference, Bedell favors exchanges, online brokers, large-cap asset managers, alternative managers and finally, trust banks.
Top Pick: Exchange Stocks
Bedell believes that exchange stocks will outperform the market and other subsectors over the next 12 months. The entire group is Buy rated, including recently upgraded NASDAQ OMX Group (NASDAQ: NDAQ) and Intercontinental Exchange (NYSE: ICE).
Bedell views CME Group (NASDAQ: CME) and CBOE Holdings (NASDAQ: CBOE) as "much better volume-momentum plays" over Nasdaq and Intercontinental Exchange given the outlook for higher volatility in equity markets and interest rates.
Second Pick: Online Brokers
Online brokers remain Bedell's second pick. The analyst noted that normalization of U.S. interest rate policy and improving economic data are positive catalysts to fuel growth. Additionally, the continued organic growth trends and resilient retail trading environment support growth.
Third Pick: Traditional Asset Managers
Bedell sees relative price-to-earnings shifting lower over the next 12 months for traditional asset managers, assuming the bull market continues to charge forward.
Fourth Pick: Alternative Asset Managers
Bedell noted that alternative asset managers have been seen as unfavorable since the first quarter as "investors view prospects as "glass half-empty." The analyst sees solid return on investment potential given an improved economic growth, but sentiment needs to improve before investors should invest in the sector.
The Blackstone Group (NYSE: BX) is Bedell's top pick with "execution remaining solid."
Staying On The Sideline: Trust Banks
Finally, Bedell maintained a Hold rating on the trust banks. The analyst sees less leverage to higher rates than consensus for the trust banks given higher rate sensitivity to Europe.
Latest Ratings for AMG
|Nov 2016||Deutsche Bank||Downgrades||Buy||Hold|
|Oct 2016||Deutsche Bank||Maintains||Buy|
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