One investment management company has decided to cut NAB shares and buy up another ASX 200 bank share instead.
National Australia Bank Ltd (ASX: NAB) shares finished trading down 1.54% at $31.40 on Friday. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) finished Friday down 0.80%.
Let's take a look at which ASX 200 bank share this fundie recommends.
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Virgin Money
NAB may be one of the big four banks in Australia, but Allan Gray Australia has decided to add Virgin Money Uk Plc (ASX: VUK) to its equity fund instead. Virgin Money shares closed flat on Friday at 2.25.
Investment specialist Julian Morrison said Virgin Money, along with QBE Insurance Group Ltd (ASX: QBE) has been added to the portfolio "on weakness".
Morrison said Allan Gray Australia sold its last exposure to NAB shares in the September quarter.
Commenting on this decision in a September 2022 quarterly review, Morrison added:
Virgin Money faces some challenges – hence the depressed share price. But with the price reflecting around 0.5 times net tangible asset (NTA) value, the company is at a very material discount to other banks and factors in a significant margin of safety.
By comparison, CBA and NAB trade on a price-to-NTA multiple of around 2 and 1.7 times
respectively.
The Allan Gray Australia Equity Fund also includes exposure to Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corporation (ASX: WBC) and AMP Ltd (ASX: AMP). Morrison said:
Elsewhere in financials, AMP bucked the trend and contributed very strongly to outperformance. We also had positive contribution from exposures to ANZ and Westpac.
However, Macquarie analysts recently recommended investors buy the NAB share price. Analysts have placed a $32.25 price target on NAB shares. Out of all the big four banks, Macquarie sees NAB as the best bank to buy.
Share price snapshot
NAB shares have risen 9% in the past 12 months and the year to date. Meanwhile, Virgin Money shares have fallen 39% in the past year and 32% in the year to date.
In comparison, the ASX 200 has shed 10% in the past year and year to date.
