Toronto-Dominion Bank (TD.TO)

In the news a lot, creating lots of noise and uncertainty. On straight valuation, trading at attractive levels of 9/10. Fundamentals are 8/10. She'd need to see a lot of turnaround. Regulatory compliance will take some time. Be cautious. Only 6-7% upside, risk/reward just not there.

Her preference is RY.

He'd still buy today. Trading at a discount to peers. Taking lots of steps to correct things.

He doesn't know what penalty they will pay over money-laundering charges in the US, but TD has a ton of free cash flow that they could use to buy more shares and operations are very good.

Regarding the money laundering scandal TD has booked $450 million in fines but most think there is more to come. The bigger picture is the growth in Canada by targeting immigrants with new products. It is at a good entry point.

The lapse in compliance is fixable. Lots of capital. The overhang on the stock is how big is the cheque for the fine going to be? Once that cheque's written, it should be fine. Will force them to be a better bank. Being prevented from acquiring means they can put $$ to use on strengthening what they have.

Added it a month or so ago. US money-laundering overhang, depressing the valuation to 8-9x from the gold standard in Canada of Royal Bank's 12-13x. Hoping for clarity in the fall of the monetary fine, which will clear the decks and provide room for multiple expansion.

Huge concern if they're told they can't purchase US assets for a time, but at least people will know where they stand. He's equally bullish on both names, for different reasons.

RY and CIBC are his favourite banks. Others never can topple RY. TD is facing legal troubles in the US. But all the Canadian banks were not doing well, but now bouncing, including TD. Their troubles aren't over.

Has probably recovered from the $75 range. Multiple interest rate cuts in Canada will be a nice sigh of relief, but doesn't solve the cockroach problem it currently has. No idea how big the fine will be or impacts. Clearly, management didn't have good control over assets, and that should be rectified.

How does it get its mojo back? Not sure. May be stopped from growing in the US. Valuation is, arguably, quite inexpensive. Not his favourite, wouldn't put $$ in. Prefers RY and NA.

She owns both. RY has far outperformed TD. RY remains her top Canadian bank. Likes the HSBC acquisition and its wealthy client base, integration has gone well. Though it's outperformed, still her preference.

We don't yet know what ultimate penalties in US will be for TD, its capital base can handle it. There may be a cap imposed on growth. Trading below 9x forward PE, lagged YOY. Stock price already reflecting the bad news. She'll continue to own. Substantial operations in Canada and outside US. Targeting immigration to Canada.

Broke down through support, mirroring support from 2019; the older the support, the less it matters. Could rally to around $80, and it would still be a sell. If it doesn't find some legs really soon, it's going to $60. He doesn't have faith.

He has only 2% exposure to banks.

In 2002, shares fell from $44 to $20 because they were stuck with $2 billion in writedowns from the Enron lending (and implosion). He bought more at $20, and the following year, shares hit $45. So, the money-laundering charges TD faces in his opinion are political grandstanding. Only 2 TD employees in different states allegedly opened accounts for money launderers, not systemic. In Europe, 10-15 years European banks were scrutinized for allegedly helping Russian oligarchs. TD pays a 5.5% dividend and shares will be stuck until there's a resolution/settlement of some sort. Wait and see. He isn't buying this now.

The ugly is the issue with money laundering, which stemmed from lax internal controls, will end up paying a nasty fine. Should have reasonable growth after that. Things will return to normal in a few years, and you'll own a rock-solid company. Two years ago, it was the best bank in Canada.

Will be blocked from making acquisitions for a while, which could preclude management's overpaying for something. Hefty dividend. Remains a spectacular retail bank. Always take the long view.

Solid balance sheet. Canadian retail banking generates 60% of revenues, US retail 25%. Expectations have increased for amount of the money-laundering fine, shareholders need to be patient. Cowan was a successful acquisition. Opening new US branches. 

He's holding through the storm. TD is in the penalty box, but the PE is very attraction. He would add at these levels. TD can rectify its current issues; they have the highest tier-one capital of all of the Big 5 banks. They can weather any storm then buyback shares. Their performance in the US has not been super, but it is in Canada