Bank of Montreal (BMO-T)

Rank #4 in terms of bank assets here, but they lag in the US. Maybe BMO can grow now that TD is capped. It's expensive, but still likes it. However, wait for their next earnings; there could be a further correction.

His preference on price and valuation. A laggard that's seeing its day in the sun. He's neutral on the Canadian banks as a whole. 

It's now cheap, and the bad news has been baked into it. They missed earnings three straight quarters, earlier. That said, the valuation and dividend doesn't make this a bad bet. He still prefers CIBC, but BMO is ownable and pays a decent dividend.

Credit cycles follow interest-rate cycles the way night follows day. Big commercial lending footprint, so credit losses have been larger than expected. Volatile share price. Reasonably pleased with performance. He's holding.

Traded at a premium for a long time. Three consecutive EPS misses, stock sold off, premium is gone. Provision for credit losses was higher than anticipated. More rate cuts will help health of consumer, but too many would cast doubt on underlying health of economy and that won't be good for banks.

Their problem is their loan-loss provision which increase a lot more than their peers. But there are no capital issues. You can buy on this pullback. Remember that banks understand their loan book much better than 20-30 years ago; if these provisions are not used, they go back into earnings. Buy it now; it's at book value.

He sold after their last quarter, based on problems with their US credit side with higher loan losses. They just completed a bank acquisition in recent years. They wonder if they have a handle on their new businesses. An analyst downgraded before the latest results, which are worse than expected. This will be in the penalty box for a couple of 2-3 quarters. Won't buy the dips. He bought TD instead.

Overall, quite constructive on banking sector in Canada. Valuations are reasonable, dividend yields quite high, capital bases very strong. So important to look at capital, as that determines what they can do. Well run. 

Hit hard last quarter because of its acquisition of a regional bank, which tend to be bigger lenders to commercial real estate. Investors may look at this as a show-me story. If you own it, just sit tight.

He tends to own RY, TD, and BNS.

He lightened shares recently amid disappointing earnings in recent quarters, plus they made more credit provisions. Buying the bank of the west was huge. It now ranks at the bottom of Canadian banks, but tailwinds are developing for the long terms for Canadian banks.

He'd pick BMO. All Canadian banks are in solid financial position for the most part, attractive yields, stable earnings. Would love to see higher revenue growth, better-managed credit risk, and resilience in face of current headwinds. If BMO could do that, he'd raise it from Buy to Strong Buy.

He's a long-term investor. BMO will weather the short-term noise about credit quality in the US.

Relatively cheap. Great dividend yield. Opportunity to buy. As interest rates come down, they'll do better. Issue of credit quality in US, but it has built in reserves and has lots of capital. Remember that Canadian banking operates in an incredible regulatory environment.

A lot of the US banks are growing around 10-15% and trading at lower valuations. Liked the Bank of the West purchase. Credit problems in its US business more than US competitors, concerning. Doesn't see growth in Canadian banks yet, economic headwinds, meeting ROE targets will be tough.

At some point, it gets too cheap. At $114, he'd be more a buyer than a seller.

Choppy since 2022. Broke the downtrend, but looks like that's failing. Chart's a 4/10. Potential for finding support at a recent low, but he wouldn't buy.

A very good bank. Doesn't understand why it's priced so cheaply. Would buy it right here.

He's very, very underweight the Canadian banking industry. Much prefers US banks in this environment. Canadian economy is going to underperform for a while, as we just don't have the oomph and the growth capacity that the US does. Plus, we have more of a housing issue. 

Banks had a 40-year run as interest rates fell. They sold credit, and credit's going to get tough as interest rates rise. So, being a seller of credit isn't quite as good as it used to be. With interest rates in Canada coming down, the spread opportunities just aren't what they were.