Bank of Nova Scotia (BNS.TO)

Financials are clearly sector leaders. Because several of the sectors that got hit in the market are not well represented, financials are carrying even at bigger part of the burden for Canadian investors. Cdn banks are performing remarkably well and for the 1^st time in about 18 months they are outperforming the US banks over the last 3 months. Their long-term strategy is very good. The only credit market that is having a tougher time are some of the South American countries where a lot of corporate debt was issued in US$ and as their currencies are having trouble, that raises a little bit of risk. Generally, the long-term strategy is good.

What is your assessment of the impact of new leadership on a large corporation like this? He is not a believer in the “great man” theory of corporate management, particularly for an organization as big as this one where there are multiple layers of management spread across 4 continents. The impact of a CEO is felt over time. It becomes a matter of setting a direction and setting his style. He would not buy a company based on a change at the top. He is comfortable with their strategy of being the most international of the Canadian banks.

Is there any more value in any of the Canadian banks and which would be a fair one? Feels there is more opportunity outside of Canada. Canadian banks are relatively fully valued. Likes the international scope of this one but fears it will run into a sharp object in South America at some point. If that happens, that will be the time to add this.

Likes the names where you know the dividends will grow, 8-9% in this case. Underperformed the others year to date but is turning around now. Have the most international exposure of the Canadian banks.

Continues to buy it today for new clients. People are worried about the Latin-American exposure so it is flat at the moment.

Canadian banks have had a great run since the financial crisis. Canadian housing sector, which has been a big driver of these companies, is slowing down somewhat. Wouldn’t be buying, but if he owned, he wouldn’t be selling here.

Very nice ROE. If he were projecting most of the banks out a year from now and looking at balance sheet growth, he would see 10%-15% in dividends across the board. If we get some valuation increase (price to book), the numbers could be better than that.

He is very positive on the banks. Thinks it will continue to increase the dividend and will experience increased capital growth.

Doesn’t know that we are going to run away with banks in the next few months so there is no rush to own. Has some resistance at about $60. If you want to buy some, your downside would be limited. It is above its 50 and 200 day moving averages on a yearly basis. He would rather add at $62 and above.

Toronto Dominion (TD-T) is up 90%, Bank of Nova Scotia (BNS-T) is up 54%, Canadian Imperial (CM-T) is up 14% and Bank of Montréal (BMO-T) is up 13% in the last 9 years. Why would TD and BNS rise that much more than the others? The 2 or 3 key points about these 2 banks is that they are the ones that are growing or expected to grow their dividends the quickest. TD is expected to grow by 10% per year over the next several years and Scotia is expected to grow by 9%-10%. Feels that TD is quite overbought at this point.

The only Canadian bank he owns. Has the smallest Canadian footprint of the 6 majors. Likes its international exposure, mostly Latin America and Asia. Thinks there are headwinds in the Canadian market. Has strong wealth management and trading business in Canada. Yield of 4.22%.

Canadian banks still occupy that space in the world where they are generally regarded as high quality, cautious, harmless and kept in check. In this bank’s case you’ve got the dynamics of a very, very big successful involvement and expertise in Latin American countries. This is a long-term hold.

Likes all the Canadian banks. Just reported beating earnings and just increased their dividends. If you want global exposure beyond the US, this is a way to go. If you want US exposure through Canadian banks, this would clearly be Toronto Dominion (TD-T) and Bank of Montréal (BMO-T). Royal Bank (RY-T) is also an interesting way to go. (See Top Picks.)

This is the only bank that he holds and he likes it for the international exposure. Longer-term, international areas is the place you want to be.

This is on a down swing. His feeling is that banks in general will swing down over the next month or two and in another month or 2 it might be a good entry point.