Why These Huge Buybacks Are Bullish

I believe the large share repurchases are especially important for the financial sector. While its bullish for any sector when a large amount of the shares are being repurchased, it might be even more so for the financials. The reason being because managers are underweight financials. If they start to outperform it will put a lot of pressure on managers to get them back to an equal weight rating. Its almost as if they are short them.

From a fundamental perspective I am not a fan of the financials. I don't know how to value them. This is a pure trade and the size will remain small.

4 comments:

nicasurfer said...

skf puts out the wazu

Anonymous said...

yer a little late..i got FAS yesterday @ 27.5

I trade this one often, mainly because I'm more opportunistic on financials going forward.

The markets arent going to rally hard without financials. And I think we rally hard later this year.

Anonymous said...

In bull markets everyone turns bullish in the last leg. Seems everyone forgot the XLF was up nearly 200% from the 09 low.

Anonymous said...

Actually Anon, the financials have been lagging in this bull market. Up 200% yes, basic materials have rallied 500% from the 09 lows.

Financial have more room to run up!