Bank of Nova Scotia (BNS.TO)

Worst performer of all the banks for the year. They made two big acquisitions in the wealth management. He thinks it is a screaming buy here. You can’t be too pessimistic on the Canadian Economy. (Analysts’ price target is $86.46)

The caller asked him to compare investing in ScotiaBank with investing in large cap American banks. In his 40 years in this business, most US banks have been bankrupt at least once, whereas the Canadian banks have not. The difference is the stronger regulatory system up here. He does own Morgan Stanley, which is a large US bank. ScotiaBank has been weak this year because of a few acquisitions and because of exposure in South America. There are fears that this might not do as well as expected. He is continuing to buy the stock but thinks it might be a few more quarters before people feel comfortable investing in South America. Events in Venezuela, for example, are causing disruptions in nearby countries, if only from the flow of emigrants.

Investors hate it for buying money-management companies. BNS's managerment team is disciplined, grinding down costs (which upsets their employees). The new money management companies will mesh well to cross-sell other BNS products. (4.6% dividend, Analysts' price target: $85.46)

It has had a tougher go as of late. They are the most internationally exposed bank. They have theoretically greater risk, but they have been through multiple cycles like this and have been fine. It lacks the momentum he wants. He wants the share price to stabilize. They have been cutting costs and reconciling businesses and the fruits of this will come in the near future. We need to see them beat once or twice.

Stock is down 8% YTD. Maybe they overpaid in recent purchases--we'll see in a few years if it paid off. More pressure comes from the NAFTA talks, since BNS has operations in Mexico. There's also weakness in emerging markets, and BNS has more exposure there than the other big banks. However, their last quarter--core earnings and domestic retail was fine, with international retail better than expected. This will go from the worst to the best perfomer in this space. (4.5% dividend, Analysts' price target: $85.46)

Footprint across Mexico and Latin America. 14% ROE and grows earnings 7% a year. Dividend grower, too. They have excess capital and have closed five purchases in the past year including a Chilean one. 7% earnings growth which the dividends leads towards double-digit returns. It will continue to outperform the TSX. (4.5% dividend, Analysts' price target: $85.46)

This is down year to date and has lagged the group. This was the only one of the large Canadian banks that missed estimates last quarter. The bank did some big acquisitions and offered equity at the $76 level (close to the current price of $75.12) to fund acquisitions. She thinks the price is attractive--the bank is well managed, they’ve put money into the wealth management area, which she expects to be a long-term growth area. She owns some ScotiaBank. It has not been a core holding but she is buying now, viewing the current price as an entry point. Yield 4.5%.

MFC-T vs. BNS-T. He would say buy them both. BNS-T is building up their wealth management business after building Latin American banking. MFC-T has lagged quite a bit including lagging SLF-T. MFC-T has bounced around. They continue to grow outside of Canada and rising rates benefit them.

This is one of the banks he owns in the portfolio. There is nothing wrong with the company. They have increased the dividend recently. They are investing $3 billion on new technology to lead to cost savings down the road. He would be a buyer here.

He would not buy this because the stock has done incredibly well. A slowdown in housing in Canada will affect all the banks. There is not much negative to say about ScotiaBank. They have investments in emerging markets, especially Latin America, which could cause them a bit of pain, but this would create opportunities for investors rather than taking down the bank. Scotia has a strong retail presence in Canada. It will ride up and down a bit with the economy and currency. He sees this company as a well-balanced operation. He just wants a better entry point.

(Past Top Pick, August 22, 2017, Up 3%) People didn't like their earnigns, just released, though he doesn't think the results were that bad. He bought this to get exposure to markets outside Canada, namely Latin America and southeast Asia. Their dividend rose this quarter and likely will in 2019.

They have been an underperformer because of emerging market exposure. It is breaking a down trend and thinks it will catch up to the other banks. Technically it is breaking out. Yield = 4.2%. (Analysts’ price target is $86.43)

Clients are paying him to think outside of what is obvious. This one has not participated in the same way as the others in this rally. This is the most global Canadian bank. He likes it from a valuation perspective. It underperformed because of emerging markets. In the past we saw this one go from the worst performing Canadian bank to the best performing one in a year and we see the same thing playing out here. (Analysts’ target: $86.43).

Exposed to Latin America which is sensitive to commodities. Trading at a lower book multiple than its peers and have strengthened its franchise here and abroad. Balance sheet is healthy. They've invested a lot into IT. It's not too late to buy Canadian banks, and still a good time given likely dividend increases and the fact that they are off their all-time highs. (4% dividend, $86.43 analysts' price target)

It is split between Canada and international markets including Chile, Mexico and the Philippines. He likes that diversification. The stock price is still recovering from a recent $1.5 billion acquisition. He thinks it is a buying opportunity at a level less than $80.