Bank of Nova Scotia (BNS.TO)

(A Top Pick May 4/16. Up 28%.) Had felt this was the cheapest of the Canadian banks, had the best opportunity, and was less understood. It has very good growth. Emerging markets are turning.

A pretty good exposure in Latin America, where the growth rates are higher. Probably a little riskier, but probably will grow a little better. The regulatory environment in Canada has been so good for so long. In his career, all the US banks have gone bankrupt at some point.

(A Top Pick Feb 4/16. Up 43%.) Still one of his core holdings in the banks. Even though it has gone up so much, it is still earning around 3.8% in yield. It is internationally diversified. If the economy picks up, to what people are hoping, South America will begin to do very well.

This has global exposure, and is a good way to get exposure to global markets. In 2015, it was the worst performer amongst Canadian banks, and was tied with National Bank (NA-T) as the best performer in 2016. If you are thinking 5-10 years out, having this as part of your overall exposure to financials makes sense.

(A Top Pick March 4/16. Up 39.32%.) This falls in and out of favour, but you have to recognize that Canada is a little bit dull at the moment, so you want somebody that has got assets in faster growing areas, and this is what this bank has. (See Top Picks.)

The only bank he owns, and it is because he wants their exposure in the emerging markets, Latin America and Asia. Also, he wants a smaller exposure in Canada, because he thinks the housing market in many areas is overextended and the Canadian consumer is way overextended.

All Canadian banks are in a great position. They are in a very protected market in Canada. None are expensive and have all suffered from years of declining interest rates. We are now starting to see a trend toward higher rates in the US that will filter into Canada at some point. That net interest margin they will get exposure to, will start to grow, and profits will grow as a result. This bank has more exposure to emerging markets (Latin America), and there is a threat from the US because of the protectionist policies. Not a name he would be concerned about.

Affect of the trade war between the US and Mexico? Mexico’s earnings for this bank were between $350 million and $385 million over the last 4 years, so it was not as big as people might think. There are a lot of things working well for Canadian banks, and this bank is going to be a big benefactor from that.

(Market Call Minute.) You can always buy Canadian banks, but he prefers US banks.

About half the banks’ revenues and businesses are retail in Canada, which is a cash cow. This bank’s strategy is international retail in Mexico, South America, etc. International retail is a higher margin business than domestic retail, but it is also more volatile. This is a core holding for him. (See Top Picks.)

(A Top Pick Jan 4/16. Up 41.69%.) In 2015, this was the worst performer, the dog. Often, the ones that have outperformed, if they fix whatever the reason might be, which they usually do in Canadian banks, you can do well. It really had been lagging because the International side had been lagging.

It remains interesting even though it has been the best performing. They are trading at a discount multiple to two others in the group. They have an attractive Latin American footprint that is growing faster than business here. He likes it. It is not too expensive.

With all the banks reporting in December, there are not a lot of upside catalysts left. However, this one is still positive and the trend has not been broken yet. At this price of $74.50, there will probably be some buyers coming in, and if not, $73. If you have a longer-term perspective, you could probably buy here, but he doesn’t see a driver between now and mid-February. Buy half here and the rest in about 1.5 months.

The only Canadian bank he owns, as he prefers US banks and other financials. Owns this because it is the least Canadian of the major Canadian banks. He sees the domestic market is being riskier with lower growth than what is outside of Canada.

(A Top Pick Nov 20/15. Up 32.16%.) He bought this last year, because it was a value play. It was the worst performer of the Canadian banks in 2015. Any time you see Canadian banks, where their yields get close to 5% (indicating their price has dropped), it is a no-brainer. Buy it.