Canadian Imperial Bank of Commerce (CM.TO)

Made a major acquisition in the US, in the wealth management area, which he thinks is positive. They are breaking out of the domestic mode, so he likes it. (See Top Picks.)

The difficulty has always been that it is a smallest of the big 5 banks, and has been the most accident prone. New management has done an excellent job in clearing things up. Have also sold their minority position in American Century Funds that hadn’t worked out. He would prefer one of the other banks.

(Market Call Minute.) Canadian banks are behaving pretty well. Financials, as a group, do well if rates are rising, so he wants exposure to these companies.

The TSX Financial Index broke to a new all-time high today. It did that because some bank stocks broke to all new highs. Seasonality is normally from around the end of August right through until the end of November. There is a pretty good chance this bank will join some of the others and move to an all-time high. The seasonal trade ends when 4^th quarter results come out at the end of November. That would be the time to take your profits.

One of Canada’s largest banks. A funny one in that it always seems to stub its toe. All Canadian banks have pulled back because of concerns about exposure to the energy space. This is one of the most exposed. Pays a pretty strong dividend. It will be able to fully participate in Canada’s growth, but they do have a tendency to have something happen to them. Expects there will be more volatility than many of the others, but less exposure to the energy sector. Not a bad choice.

This bank was growing their mortgage portfolio over the last 2 quarters at a rate much higher than other Canadian banks, so were clearly taking more risks. Believes that this is why this bank was hit harder. Also, this has “all Canadian” mortgages. Would prefer Power Financial (PWF-T) at this time.

They have done a really good job of making their domestic bank stronger. He likes it. It is a come-back-to-Canada bank investment.

Thinks an interest rate rise is as much as 2-3 years out and will be market driven rather than central bank driven. Believes the Canadian banking sector is probably priced for perfection. He doesn’t follow this bank.

After some troubles a number of years ago, this bank seems to have come back quite strongly. It is generally hard to go wrong on the Canadian banks. If you can get it a few dollars cheaper, and prepared to hold it, that is usually a good thing.

What metrics decide a good entry and exit point? You could probably walk in blind and buy any of the banks as they have all done really well. This one had a wonderful last quarter, so it is very strong. He feels that Royal (RY-T), National (NA-T) and Bank of Nova Scotia (BNS-T) screen a little better. He looks at earnings as well as net interest margins as well as some of the general macro things. This one is more Canadian focused than virtually all the others. Also, it is more heavily reliant on personal lending as well as being more highly weighted to Alberta.

(A Top Pick Sept 25/15. Up 14.05%.) Earnings this year will be about $10 a share. With PrivateBancorp included and accretive in 2019, he thinks they can get up to about $12 a share.

All the Canadian banks look good. The dividends are fine. Canadian banks are trying to expand out of Canada and do other things, and he has no qualms with this one.

The stock hasn’t done badly this year. They have executed well with their earnings. Has a very attractive dividend yield. They seem to have increased exposure to unsure mortgages in the last couple of quarters, but still well within the range of normal. Their purchase of the US Wealth Management Bank is a good thing. The biggest challenge, is how to get more growth.

This was the superstar of Q2. A lot of that has to do with the refreshing changes that Victor Dodig has been making good on. They really gained some serious market share in the Canadian personal banking space. They’ve gotten into the US. Most Canadian banks are trading relatively rich compared to their historical values.

(Market Call Minute.) At current levels, he would be hesitant to buy this.