As its share price plungedto 232p in March, I loudly proclaimed that Barclays has slipped even deeper into buy territory.
I wrote a string of articles on the stock at the time, claiming that the worse Barclays gets, the more I want to buy it.
Was I right to stick my neck out?
One year ago, Barclays was having a tough time of it. Profits at its investment banking arm had collapsed, as regulatory demands weresqueezing itout of Wall Street.
In Europe, it was facing a costly financial transactions tax.At home, chief executive Anthony Jenkins had stumbled into a major row over fat banker bonuses.
His costly overhaul Project Transform had yet to bear fruit, and the public still loathedBarclays, forgetting thatit didnt need a taxpayer bail out in the financial crisis.
Worse, its share price had just hitan 18-month low, and was a depressing5% lower than five years earlier.
On The Contrary
All of which made Barclayslook like a great contrarian opportunity to me. I concluded: You could wait for it to get cheaper, but frankly, it looks like a buy today.
And it did get cheaper, before a moderaterecovery finally kicked in. Today, Barclays is trading at 262p.
Thats a rise of 13% I wrote those words atthe end of last March, against under5% on the FTSE 100.
Most of the action came inthe last six months, when Barclays outperformed the other UK banks, and most European banks as well.
It now trades at 0.8 times book value, up from0.6 times before.
Which is good, although hardly the stuff that makes fortunes.
Get With The Programme
Barclays, like the banking sector generally, remains a stock in recovery. It keeps lapsing into bad habits, with the seemingly endless stream of mis-selling and rate-rigging scandals.
Its investment banking arm continues to wither, stunted by regulation, and in urgent need of radical surgery that management seem reluctant to perform.
At 10.3%, at least its capital position is stronger. And the yield is returning to respectability: currently 2.5%, but forecast to hit 3.7% laterthis year, and 4.7% at the end of 2016.
I wasnt wrong to big up Barclays last year. And if you want exposure to UK banks it is trading at an undemanding valuation.I reckon itis still a buy today.
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