There is a reason Barron's started this article about British bank Barclays (BCS) with the sentence "it's too early to pronounce Barclays' stock cheap" and the reason is that no one really knows for sure just how many more subprime related write downs are going to occur as the banks "mark their portfolios to market".

However given Barclays globally diversified structure, strong business units and a remarkable dividend yield of over 7%, I think that Barclays may be a buy at these levels. There is obviously the risk that the rest of the financial sector may drag the stock lower in coming weeks or that Barclays may find out that its mortgage portfolio is worth less than it estimated. Hence I am going to start a small position in both the SINLetter model portfolio and my personal portfolio today and may add to it later based on how the stock and the sector behave.

I would have liked to expand on my reasons for buying Barclays but I only have a few hours before I catch a flight to India. While a lot has changed since I wrote about Barclays last December and when I sold it from the SINLetter model portfolio in August 2007 for a small profit, you can still read my original analysis of Barclays here.

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Asif Suria

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