David Ellison, the fund manager and Peter Lynch disciple who sidestepped much of the financial sector meltdown and then turned bullish on the sector shortly before the March 2009 low, is keying on stable, deposit-taking banks.

“I am looking for companies that have stable deposit franchises,” Ellison, whose funds focus on the financial sector, tells Financial Planning magazine. “They have the ability to fund themselves cheaply and with stability.” He adds, “Of course we want to pay as little as possible for a stock. We just came through a period where these stocks were trading at two times book.” Ellison has no interest in complex financial-services “supermarkets” that feature proprietary trading desks and hedge funds, Financial Planning reports.

Ellison also says that his strategy involves being patient in order to get the stocks he wants at the right price. “It’s all about playing the cycles,” he says. “Those cycles last three or four years.”

Ellison’s approach is also heavily influenced by Lynch, who became his mentor while they both worked at Fidelity. According to Financial Planner, Lynch advised Ellison to “protect shareholders above all else”, advice that led Ellison to retreat from financials as he grew worried about the housing market and rising unemployment.

A number of financials currently are catching Ellison’s eye, from smaller regional firms to some of the industry’s biggest players. Read the full article for insight into his holdings.