Toronto-Dominion Bank (TD.TO)

One of his largest positions. Still likes it. Trades at a bit of a gap to the rest of the banks because of those US problems. Constrained growth in US might not be a bad thing, as ROE there was a not-great 8-10%. Over-capitalized, so he's waiting for announcements on share buybacks or other projects.

Earnings growth has come from the capital markets and wealth management businesses, which benefit from the strong stock market. The core retail business for all Canadian banks is sluggish; mortgage demand is weak. TD and the other banks are using AI to reduce the workforce.

Put together an excellent team to address recent regulatory issues, and it's been upfront with investors on spending requirements. Still trades at discount to the group, yet it's a premium bank. Divisions are still very high quality. Despite runup, more to go. He's holding and buying, not selling.

His firm owns RY, BMO, and TD as cornerstone holdings in its dividend-growers mandate. Canadian banking is a stable, well-regulated oligopoly. Structurally profitable, heavy barriers to entry. Diversified by line of business and by geography. Its fee-based businesses should be very profitable this quarter.

One fly in ointment:  tepid loan growth demand, especially in mortgages, and to a lesser extent in commercial loans. Thinks the worst of credit loss provisions is behind the Canadian banks.

Some are concerned about growth cap in US. He likes it for the amount of cash on balance sheet, so it can withstand any weakness in the Canadian economy. Grows its dividend. Hold on, don't try to time the market. Well run. Intends to expand wealth management, with a much higher ROE.

Don't add at these levels. Last quarter was a beat, better on credit loss provisions. Still potential headwinds in US with US retail. Trading in line with the group, no longer at a discount. Decent growth of ~7%.

A great time to sell some calls on it. He wouldn't add to this one, but would to BMO and CM. 

Best-performing bank this year. (Let's ignore capital gains and tax losses for simplicity in answering the question.) Looking ahead, no longer at the compelling value it was before. Great job clearing up concerns over asset cap. 

Whole Canadian banking sector is fully valued, trading effectively at record highs on valuation. Not time to load up. Time to take some profits and invest in more defensive names, as Canadian economy is on a more fragile footing than other parts of the world.

He isn't a technical trader, so doesn't look at volumes. TD had a lot to catch up on after the money-laundering penalty, and changed the CEO. After a rally the valuation is realigning, which could account for lower volumes. Given the penalty, they are limited in expanding in the US. 

Partially back to reclaiming its old lustre. Continues to see good prospects and low double-digit total shareholder return.

Look at beginning of 2022 on the chart -- stock recently broke through that level. So you'll get some new buyers and less resistance. Historically, financials have some pretty big upside this time of year. If you own, no reason to sell. If you're overweight, look to trim (perhaps in December). 

Lots of concern for banks, but the market doesn't seem to see it. Follow the market and don't overthink it too much.

Prefers this one and remaining peers today to RY, just on valuation. Though RY is the best bank in Canada, this name trades at a far better multiple.

It is up 30 to 35% this year which is a phenomenal move for a Canadian bank. It is due for a breather.

Underperformed peers last 2 years, but has caught up some since US mess put to bed. New management seems really good. New strategy to be laid out on September 29th investor day. Despite cap, still lots of opportunity in US.

The Canadian bank charts look similar. TD has seen a nice bounce since April, despite being the bank with the most problems and cannot grow in the US. A rising tide lifts all boats/banks. He got rid of it to buy BMO, which is a much-better run bank, maybe a little too soon. He is bullish Canadian banks, overall as the economy picks up. The bargain price for TD is over, but it will take time to return to its premium valuation. Prefers Royal and National banks.

The question asked the guest to compare the two with a view to buying one of them. She prefers Royal Bank right now. It just delivered record results and is growing at 10% year over year. TD has gone through a rough patch and is re-structuring which is eating into profits. She doesn't think Royal Bank will split.