Canadian Imperial Bank of Commerce (CM.TO)

Has always considered this to be the worst managed bank in Canada. Doesn’t see anything that really distinguishes this.

Buying before or after an upcoming split is a short term technical thing. From his perspective it really doesn’t matter. It is hard to get excited about the Canadian banks. The housing market is rock solid and the banks are strong businesses. The return on equity is really high. At this time you talk about best in class and CIBC has always had issues such as write-downs, so he has always tended toward TD-T and RY-T.

The only bank that has not made all time highs yet. It is his least favourite. He prefers TD-T, or BNS-T even more because of Latin American exposure. Reaching out to cheaper assets outside of North America has created the best growth profiles. ZWB-T is the better way to play banks right now.

Of all the banks this would not be his favourite. Operational earnings were up only 4% and pretax prevision came in with operational leverage. They are saying they are keeping their capital ratios at the levels they are at now even if they do acquisitions. Does not see a whole lot of upside, but you get paid the dividend. BNS-T is his favourite Canadian Bank. BNS-T beat on revenue growth.

This has been a good place to be. Stock has really performed well over the last 6 months. The environment continues to be a good place for them. Still slow, steady growth in the economy. If interest rates were higher they could make more money, and he doesn’t see how interest rates could go much lower. His biggest exposure is with Toronto Dominion (TD-T) as he likes their exposure to the US economy.

His model price is $112 giving it 13% upside. It is getting up there, so he would be cautious. He does see it going up to one of his structural levels of $102.49. He sees all Canadian banks doing well here. Dividend yield of 4.1%.

This is becoming a better company. Historically they were very volatile because of being very aggressive in the investment banking and loan sides, which blew up. Had one of the best retail franchises many years ago, and that was destroyed when they pushed aggressively into investment banking. Likes Canadian banks. They are well run and doing all the right things. They can certainly grow. At the high end of their range but they are good value. (See Top Picks.)

What a lot of people don’t realize is that this is actually one of the top 10 mutual fund groups in the US, with American Century. Domestic business is doing really well. Very nice wealth management business.

National Bank (NA-T) or CIBC (CM-T)? This bank relates to the more diversified income between the two and is very highly exposed to the Canadian consumer, which has been fine, up to this point. He would rather have more capital market exposure than retail exposure so his choice would be National Bank.

(Market Call Minute.) Likes Toronto Dominion (TD-T) better. Thinks they will split the stock at some point. Even though that shouldn’t make any difference, people get a bump out of a split.

Oct 10 to end of year and Jan 23 to mid-Apr is seasonal period. Watch out for summer when they have great runs and then sell off into earnings. Lighten upon banks.

Getting close to $100 again and he would not be surprised to see them split the stock if it goes through that. Doesn’t think they ever get the appreciation for how much it has been de-risked. Still has one of the best capital ratios and earns one of the highest returns on equity. Selling at a reasonable multiple compared to the other banks.

Has had a very good run. This is one where analysts have a tendency to underestimate earnings. Because they lost half of the Aeroplan deal to Toronto Dominion (TD-T), the earnings in the short term gives you a one-off situation. They lost one month earnings from Aeroplan in this quarter and will lose another 2 months in the next quarter, so this year is not very representative, but they are doing a very good job on the retail end and getting good loan growth and good mortgage penetration. This is the least risky of all the Canadian banks. They have been penalized because Americans have said you don’t want to invest in domestic Canadian banks because of the fear of the housing market.

He likes banks. Sees 5-8% capital appreciation plus dividend. There will be an interesting internal process with a retirement at the top.

You can’t go too wrong with banks over the long term. This is a solid business, although they don’t have the capital markets that others have. A good hold with nice dividend yield and some growth. He holds no banks.