Kenneth Zerbe
Morgan Stanley
First-place appearances: 0

Total appearances: 4

Team debut: 2009

Repeating in second place, Kenneth Zerbe “provides a good balance between short-term and long-term views and is not worried about being out of consensus,” according to one investor. “The biggest issue in the midcap banks is what is the right valuation to pay for the group,” the Morgan Stanley researcher says, “given an improving economy yet challenged near-term earnings.” Zerbe notes that the market is already valuing the sector’s stocks based on earnings per share for 2015 — while he expects short-term rates to rise. Even if he agrees that the EPS trajectory is positive and that further fundamental improvement is on the way, he’s concerned that “a lot can happen in two years, before the fed funds rate begins to rise, and there is more downside risk than upside, given current valuations.” Against this backdrop, Zerbe has two growth picks, money center First Republic Bank of San Francisco and Northeast regional provider Signature Bank of New York; and two value picks, Midwest banks Huntington Bancshares of Columbus, Ohio, and Fifth Third Bancorp of Cincinnati. He also favors New York Community Bancorp, thanks to the Westbury, New York–based savings and loans’ valuation, dividend yield and possible further upside from a potential acquisition. — Carolyn Koo