Equitable Group (EQB.TO)

He's a big fan of EQB. Phenomenal CEO, who'll take company to new heights. Will most likely outperform in next 3-5 years. Organic growth will be higher. A more agile and flexible organization. Digitally native, so it's built to adapt. Very conservative provisioning.

You buy RY for stability, its huge infrastructure, and capital markets business. Sufficient provisions for consumer credit issues. Very solid hold for the longer term.

Both are a Buy in his books. 

Saved a lot in costs by being digital. Recently bought PC Financial at a decent price, a fantastic acquisition -- synergies give it a whole new platform. Yield is 1.95%.

They struggled through loan-loss provisions, their CEO died suddenly, but they bought PC Financial (14 million hold PC Optimum cards) so they could break into the Canadian bank oligopoly.

Market really likes the news of it buying PC Financial. This is a trend in the alternative lending space. Within the credit cycle, we're not in a recovery phase right now. Instead we're in a cautious phase, so she prefers larger banks with more diversification. Actual earnings were not great and PCLs were higher than expected.

Is the bank most exposed to mortgages. Their most recent pullback is due to macroeconomics, the ability of mortgage holders to pay their mortgage holders to renew their loans at much higher rates. The valuation is too high for him.

Good operator, good job navigating mortgage market. Concerned we're still in midst of credit cycle in Canada. Bulk of business is residential, and this will be impacted by current state of the condo market and slowdown in both housing and economy. Unlike the 6 big banks, not sure it's diversified enough to weather the storm.

Wait for better entry point or for a point further along the curve of the credit cycle.

Financials are the strongest group globally. Period. Regional banks are having a harder time in the US, as well as some of the smaller, mortgage-oriented banks. Weakening relative strength versus the market and also against the group. Be cautious. Concern is that housing market in Canada continues to weaken.

Better places to go, move on. See his Top Picks.

Well-run. Are exposed to mortgages when real estate prices are coming down, so there's some risk. It looks like it will keep going down and eventually will find a buying opportunity. Doesn't like its exposure. 

EPS of $2.31 missed estimates of $2.60; revenue of $315.9M beat estimates of $311M. Raymond James  lowered its target from $121 to $108. The dividend was raised by 4%. The miss relates to larger provisions for credit losses as the company is taken a conservative approach to the economy. Non-interest revenue was also lower than expected. The outlook for the second half has deteriorated a bit. While disappointing, not overly surprising here. The stock's very low valuation (8X earnings) we think reflects the situation.
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Is Canada's 7th-largest bank, actually, including asset management. Is the best performer in bank stocks over 10 years with the fastest growth rate and the highest ROE of all the banks at over 15%. Shares have fallen 20%, now cheap, at 1.2x book value and under 8x PE. Pays a 2.18% dividend. Tey grow book value 10-15% annually and raise the dividend 15-20% annually like clockwork. They've been buying back shares.  Great to buy on their pullback. With few locations, it's really a digital bank with low costs. Are good at targeting the young consumer and small businesses. Are big in construction loans for apartment buildings.

Economic risks have increased, perhaps a lot, and this can impact banks. We generally do not like averaging down but are more comfortable with the strategy when 'everything' is down. We would be cautious on sizing as it is a smaller company, but at 8X earnings and a dividend that was increased in February we would be comfortable buying some into the current weakness.
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CEO's done a tremendous job building a Canadian bank that's different from the usual suspects. No branches, everything's online. Diversified funding sources. Strong balance sheet. Number of clients growing nicely. Fantastic job managing credit exposure. Cheap for what it is. High ROE. Best-performing bank in NA over last 10 years, looking at total shareholder return.

Canadian telcos may be bottoming, at least until more bad news shows up, if it does. We would consider EQB to have more upside, but it is still a fairly small company at $4B, and we would size accordingly. But we like it. We would be OK with adding selling some telco exposure and adding but would not suggest a wholesale swap out. 
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Tariffs shouldn't have any impact at all on this domestic lender. Raises $$ in the GIC market and lends it out. Very high quality. He has other first choices, but if he was going to own another, this would probably be it. Very steady performer, well run, but ROC at 15% is a bit lower than he likes.

See his Top Picks.

When companies buy back their own shares, the company can either cancel them or hold them as treasury shares. It is mostly just accounting terms, the primary purpose of the share buybacks are still the same - it is intended to reduce the total share outstanding and boost EPS in the near term.

A share buyback is a more tax-efficient alternative method to return capital to shareholders compared to raising dividends, potentially creating a compounder over time. Despite strong performance recently, EQB is trading at only 8.8x Forward P/E; we think EQB’s valuation is quite attractive as of today.
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