Toronto-Dominion Bank (TD.TO)

Seasonality for most of the banks in Canada is from approximately the beginning of September right through until the last week of November. They have a history of moving higher until reporting their 4^th quarter results, but then tend to sell off. The 2^nd period of seasonal strength is from approximately March through to May.

The main attraction, would be its growing US presence. He doesn’t own it, because he has no problem going to the US and buying US banks if he wants US bank exposure. However, this bank is fine.

Has been a favourable story this year. He is continuing to buy for new clients. The US portion is obviously benefiting from higher rates. If you can get it slightly cheaper, that would be good, perhaps in the new year.

Buy an “in the call money” with a $72 strike price, and going out as far as July? He looks at price, and what he wants to achieve when he does this option trade. Normally he is looking for income. July is a long way out, and doing something like that you are really going to be paying an awful lot for an option premium, which is why he likes selling options. He would rather have people give him the money. You need to think about this a little more, especially if you are thinking of “in the money” calls. That compresses the time value as option traders don’t like to pay too much for stuff. Remember options can expire worthless.

Analysts are looking for some upside. He would hit the sell button. He has no direct exposure to the Canadian banks. He thinks we’ll come back to the $62 level. Wait on the sidelines for a correction within the next year. There is nothing wrong with TD-T specifically.

They did extraordinarily well coming out of the financial crisis. So much of their direct lending was leveraged to the energy space but now prices are up to $55 for energy so they will not see the large defaults people were afraid of. His preference would be BNS-T. TD-T is probably the best to play the US. They took on a competitive US environment and did very well. No one in the US thinks of it as a Canadian Bank. You are betting on the strength of the US banking system doing well. He prefers BNS-T because of the international exposure.

This has been one of the best performing bank stocks over the last 25 years, and continues to do well. Most of the Canadian banks are just Buy, Hold and put them away. They have very good governance from the central bank in Ottawa. If we see higher interest rates, we’ll see a nice move with this bank.

Has owned this since 1997, which is why he doesn't own US banks. It is basically is a US bank, and when you include Waterhouse, you have almost 50% of revenue that is coming from the US. They are great at allocating their capital when using it. As a retail branch, they don't have to deal with the volatility of equity, fixed income, etc. Branch banking has higher margins. He is still buying for his clients.

Royal Bank (RY-T) or Toronto Dominion (TD-T)? Financials are a good place to be in the rally we are in. Doesn't think you can go wrong with any of the banks. Expects TD is going to have a little more upside, but it is really not going to matter between the 2. (See Top Picks.)

(A Top Pick Dec 2/16. Up 19%.) This was a laggard for a while. Bought this because they are just as big in the US and continue to grow fast there. 3.3% dividend yield.

Valuations are a little more compelling in the context of higher consumer and corporate loan growth. There is also more of a capital redeployment story in the US. This bank has the 5^th largest deposit base in North America. That deposit base, which is under leveraged, represents an opportunity for them to significantly increase loan growth. They should benefit from higher interest rates.

It broke out since he was on last. All the banks except CM-T did that. It is a little parabolic. It is probably a little overbought. If you saw a pullback it should not go below $70 and would be a great buying opportunity if it did pull back.

He loves the banks. This is Canada’s most efficient bank. They are doing a wonderful job in the US. If you are worried about the impact of the Canadian housing market on the banks, this one would be one with less exposure. Prefers National Bank (NA-T). Expects a 7%-8% dividend increase this year.

Has liked this for very long time. It has been the most farsighted and prescient with things that would be, including getting rid of all those mortgage-backed securities in 2007. It has lots of upside potential, as do all the banks. However, it has had a nice run. Technically it has an easy target of about $75-$76. Based on the last 10 years of trading, that is probably going to be it for the time being.

This has evolved. Back in 1997 when he first started owning this, they were very heavily into corporate banking and corporate lending. In 2002 they were part and parcel of the hit when Enron blew up, having been one of the biggest lenders. With their US holdings, it allows him not to have to own a US financial. 3.3% dividend yield.