Bank of Nova Scotia (BNS.TO)

The interesting thing about Canadian financial institutions is that the valuation ranges are not that wide. You have to remember that they are the one outside of Canada with holdings in Latin America and emerging markets. He prefers Toronto Dominion (TD-T), which trades at about the same valuation, but with a little faster earnings growth. There is nothing wrong with this.

This gotten beaten up a little bit more than the other banks recently. Feels there is too much concern about their earnings in central and south America. He still sees them as economically doing quite well. A conservative bank. Yield of 3.87%.

This is the most diversified international Canadian bank. They have operations in the Caribbean, South and Central America. Has always been a very well managed bank from a credit perspective. All of the banks have pulled back a little. 3.9% yield. Thinks earnings over the next couple of years are going to go over $6 a share. This is at a very reasonable price and he is expecting 10X future earnings in a couple of years.

It is probably fine to start picking at it now because it has had a pullback. The stock has actually lagged the other Canadian banks because of their Latin American exposure.

It’s hard to say how much further this correction will last. BNS-T has been the worst performing Canadian bank by quite a margin. He thinks it is a top tier Canadian Bank. It is in the top three in terms of business model and the second highest yield of the group.

Just about to enter a period of seasonal strength until the beginning of December in anticipation of Q4 results. It has done well until quite recently. It was in a long term upward trend. It tested the bottom of that trading range recently. If you own it, hold it, and you may have an opportunity to buy on weakness over the next couple of weeks.

(Top Pick Sep 3/13, Up 22.49%) The only Canadian bank he owns. Would rather own other things outside of Canada. BNS-T has the most outside of Canada and that is why he owns it.

He is not positive on Canadian banks in general and this one in particular. The problem is that in Canada we went through a mild recession in 2008 and so the consumer has been on this wave of spending and a wealth effect to their portfolio. The debt to income level is now about 160% and that is frightening. You need to proceed with a lot of caution. He prefers US banks. 40% of BNS is international, but it is more toward South America and emerging markets and he is not that positive on that space either.

The recent correction is a bit of a hiccup, but he is not going to sell his holdings. With these good companies, you just sit with them.

Would prefer the Canadian banks to the US. Recent results disappointed in terms of the mix of where the earnings came from. Expects 8-9% returns next year. TD-T management has impressed him the most over time, but RY-T have done very well also.

(Top Pick Sep 3/13, Up 27.92%) Has the least exposure to Canada as a percentage of its assets. Thinks the best earnings and dividend growth is behind the banks. Canadian banks are expensive. For new money he prefers to look elsewhere.

(A Top Pick Aug 15/13. Up 28.98%.) Still likes this. Last quarter numbers were in line while everybody else beat, so the stock was hit on that. International growth was a little slow. Have a great capital position and will be doing more acquisitions on the international side. More volatile, but a higher return business to be in.

Chart shows a little bit of a double top, which is not necessarily terrible. If the stock holds at around $71, it is probably going to visit $67. MACD is getting close to the zero line, so he is getting close to taking some off the table.

This is one of his larger bank holdings. The one reason to hold this is because of its international diversification. There may be worries about some pockets in South America, but they are also in some very good areas. He was not disappointed with their earnings. Trading at about 2X BV. 3.6% dividend yield. Not a bad place to be.

Has liked this for a long time. Likes its international exposure. They used to be just the Caribbean, but is now Mexico, Central America and into South America. The Canadian banking business is a tight market. They are all quite competitive. Quite a conservative bank. Have an excellent record of “not losing” money on the loan side. If it came off a little, he would add to his holdings.