Bank of Montreal (BMO.TO)

Biggest bank weighting he has. Fits the bill for a long-term buy and hold, collect the dividend. Likes the expansion potential in the US. Some indigestion with BOTW, but kitchen-sinked the last quarter and stock surged. 

The provision for credit losses has finally peaked. The credit situation has turned the corner and should improve in 2025. Even though there was a big miss the stock started climbing a couple of months ago in the anticipation of a credit turn around,

Broken above resistance, a positive breakout. Also seeing higher lows, which is positive as well. Will probably target the high from 2022.

Q4 earnings results tomorrow at 6 am, he's expecting good things. Worst of the credit provisioning is likely behind them. Almost a national player in the US as well. Great capital markets and wealth management. Diversified geographically and by earnings mix. Integration of BOTW is going nicely.

Taking some profit in the past 2 days as a short-term call coming into earnings. Bank valuations are at high end of traditional range. Yet to see fruition from Bank of the West acquisition. Dividend's safe. Valuation is fine. 

Concerned about earnings growth going forward. Canadian economy has issues. US expansion may be more limited for a while.

Banks have been doing well. US banks have been doing well, so those Canadian banks with US exposure are benefiting too. Accumulating for a few months now, looking great. Resistance at $135, and we're approaching it. If it starts to break $135, technically it would look absolutely fantastic. Next resistance would be around $150. Previous support was around $115.

Note that he manages funds and ETFs for BMO Global Asset Management.

Not doing too much right now. Starting to trend higher, was $150 in 2022. Short term, nice upward trend; we're hitting breakeven on the year, outside of dividends. If it can get back up to $145-150, good possibility it could catch up to the better-performing banks. He owns CM and TD.

Rank #4 in terms of bank assets here, but they lag in the US. Maybe BMO can grow now that TD is capped. It's expensive, but still likes it. However, wait for their next earnings; there could be a further correction.

His preference on price and valuation. A laggard that's seeing its day in the sun. He's neutral on the Canadian banks as a whole. 

It's now cheap, and the bad news has been baked into it. They missed earnings three straight quarters, earlier. That said, the valuation and dividend doesn't make this a bad bet. He still prefers CIBC, but BMO is ownable and pays a decent dividend.

Credit cycles follow interest-rate cycles the way night follows day. Big commercial lending footprint, so credit losses have been larger than expected. Volatile share price. Reasonably pleased with performance. He's holding.

Traded at a premium for a long time. Three consecutive EPS misses, stock sold off, premium is gone. Provision for credit losses was higher than anticipated. More rate cuts will help health of consumer, but too many would cast doubt on underlying health of economy and that won't be good for banks.

Their problem is their loan-loss provision which increase a lot more than their peers. But there are no capital issues. You can buy on this pullback. Remember that banks understand their loan book much better than 20-30 years ago; if these provisions are not used, they go back into earnings. Buy it now; it's at book value.

He sold after their last quarter, based on problems with their US credit side with higher loan losses. They just completed a bank acquisition in recent years. They wonder if they have a handle on their new businesses. An analyst downgraded before the latest results, which are worse than expected. This will be in the penalty box for a couple of 2-3 quarters. Won't buy the dips. He bought TD instead.

Overall, quite constructive on banking sector in Canada. Valuations are reasonable, dividend yields quite high, capital bases very strong. So important to look at capital, as that determines what they can do. Well run. 

Hit hard last quarter because of its acquisition of a regional bank, which tend to be bigger lenders to commercial real estate. Investors may look at this as a show-me story. If you own it, just sit tight.

He tends to own RY, TD, and BNS.