National Bank of Canada (NA.TO)

There is a very specific time to own banks. You want to own them in anticipation of very strong reports coming out for the 4^th quarter, like we saw for this one today. Banks have very strong seasonal ending points. Once the good news is released for the 4^th quarter results, these stocks sell off. This one had a fantastic earnings report today, did a 2-for-1 split, raised the dividend. Everything looks great except that this is the end of the seasonal strength. He took his profits last Thursday. Not a good time to own bank stocks.

(Market call minute.)

Series 28 preferred. 3.8% coupon. You probably have another 4 years to go on this one and then it gets taken out. This is a nice, short term preferred share that is being a nice yield over what you would get in GIC’s.

With its large concentration of assets in just one province, does this increase its risk profile relative to banks that are more spread out in terms of their retail banking footprint? This bank has had a wonderful run here and this question hits the negative, if there is a negative. It is deemed to be a regional bank even though it no longer is. It has moved mountains in trying to get away from this perception.

Banks have done really well, up 25% or so, year-over-year. Still pretty decent yields on them. Earnings growth is likely in the 8%-10% coming out in the next couple of weeks. He expects the ones that have an increase in dividends won’t do so this quarter. Earnings going forward will probably be 5% next year and probably the same in dividends. He is sticking with his banks. There is nothing wrong with this bank.

This has actually been the best performer over the last 5 years. Very well run. Has potential for more multiple expansion. Earnings should continue to surprise on the upside and he thinks there is a little more potential in this bank than some of the other banks, but not a huge difference. Has a target of $97. 3.7% yield.

This bank has narrowed the gap with the others, so it is essentially in the range, with the big 5. When it does that, he prefers the big 5. Every few years it tends to trade at a 10% discount which would be the time to Buy it. It had good growth, good dividend and is about to close the purchase of TD Waterhouse Institutional, which is a nice add-on for them.

Had a good move. Did a pretty good job in some of their recent acquisitions. He would be more interested in owning Bank of Nova Scotia (BNS-T) (his company), Royal Bank (RY-T) or Toronto Dominion (TD-T).

An attractive franchise. He has more US but now Canadian banks are benefiting from things being bad in other sectors. Suggests equal weighting banks. Thinks there is more upside with asset managers.

Very good Q3 results. Should continue to grow earnings in the high single digits over the next few years. There is also dividend growth. Extremely well run. Their long-term growth target is to increase earnings 10% a year. He can see 7%-8% earnings growth plus dividend growth.

Is a buy on valuation relative to peers. Good franchise, solely Canadian exposure, no foreign. It is a return of capital story, share buybacks of about 2%. Mid-single digits earning growth.

All banks are down. Good quality blue chip stock with over a 4% dividend. Good growth prospects. All Canadian banks are an absolute BUY right now.

(Market Call Minute) Would avoid most of the Canadian banks, preferring BMO. NA-T is too regional.

(Market Call Minute.) There are more attractive banks out there. This has a lack of geographic diversification. (See Top Picks.)

Recently looked at this as valuation is starting to look a little bit compelling, as are all the banks. Problem is that they don’t have all the levers that big banks have. May be affected more by net interest margin than the larger banks will be.