The 2013 All-America Research Team: Banks/Large-Cap, No. 3: Betsy Graseck

Morgan Stanley’s Betsy Graseck rises to third place after four years at runner-up. Graseck is positive on the sector because she forecasts that its companies’ are set to profit from the improving housing market, jobs growth and higher interest rates, beginning this year and extending into 2015. She is recommending that clients overweight money centers Bank of America Corp., headquartered in Charlotte, North Carolina, and New York–based Citigroup and JPMorgan Chase & Co. These banks are paying down their legacy residential mortgage assets, a move that will boost earnings, she believes. They also are likely to significantly increase their buybacks and benefit more than most from interest rate hikes. Two additional names the analyst is overweighting are Birmingham, Alabama–based Regions Financial Corp. and Atlanta’s SunTrust Banks, on valuation and their exposure to the U.S. southeast’s housing market. Graseck “knows the inner workings of bank balance sheets and regulatory issues better than anyone else in the space,” declares one backer. “She is the go-to analyst for deep-in-the-weeds questions and has great perspective.” — Carolyn Koo