What Would Cause Bank Of America To Do 'Super Well'?

Bill Smead, founder of Smead Capital Management, thinks Bank of America Corp BAC is about to see a massive bull run all thanks to millennials. Smead was on CNBC to explain what makes Bank of America his top pick and how millennials are going to be the next driver of growth for the bank.

Key To Succeed: Lending To The Millennials

"The United States is just about to have its largest population group -- the millennials -- engage the banking system for the first time on the liability side, Smead said. "They've saved money, so far, but they have yet to borrow it and to become good customers on the borrowing side."

He continued, "[And] the history of the stock market is you anticipate that and so far we have not yet seen these banks anticipate a dramatically better economy and that is the thing that would cause Bank of America do super well is if they make a lot of mortgage and auto loans to the 86 million millennials."

The Moat Has Widened Dramatically

Smead was asked if he likes any mid-cap banking name. He replied, "No, we stick pretty much to the big ones. We think the moat has widened dramatically. The share of deposits, ultimately the share of mortgage loans and car loans will go to JPMorgan Chase & Co. JPM, Bank of America and Wells Fargo & Co WFC. And again when the news or the regulatory or political environment is negative, but your moat is widening, that lays the groundwork for you to be a good long-term holding."