Equitable Group (EQB-T)

Financials are the strongest group globally. Period. Regional banks are having a harder time in the US, as well as some of the smaller, mortgage-oriented banks. Weakening relative strength versus the market and also against the group. Be cautious. Concern is that housing market in Canada continues to weaken.

Better places to go, move on. See his Top Picks.

Well-run. Are exposed to mortgages when real estate prices are coming down, so there's some risk. It looks like it will keep going down and eventually will find a buying opportunity. Doesn't like its exposure. 

EPS of $2.31 missed estimates of $2.60; revenue of $315.9M beat estimates of $311M. Raymond James  lowered its target from $121 to $108. The dividend was raised by 4%. The miss relates to larger provisions for credit losses as the company is taken a conservative approach to the economy. Non-interest revenue was also lower than expected. The outlook for the second half has deteriorated a bit. While disappointing, not overly surprising here. The stock's very low valuation (8X earnings) we think reflects the situation.
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Is Canada's 7th-largest bank, actually, including asset management. Is the best performer in bank stocks over 10 years with the fastest growth rate and the highest ROE of all the banks at over 15%. Shares have fallen 20%, now cheap, at 1.2x book value and under 8x PE. Pays a 2.18% dividend. Tey grow book value 10-15% annually and raise the dividend 15-20% annually like clockwork. They've been buying back shares.  Great to buy on their pullback. With few locations, it's really a digital bank with low costs. Are good at targeting the young consumer and small businesses. Are big in construction loans for apartment buildings.

Economic risks have increased, perhaps a lot, and this can impact banks. We generally do not like averaging down but are more comfortable with the strategy when 'everything' is down. We would be cautious on sizing as it is a smaller company, but at 8X earnings and a dividend that was increased in February we would be comfortable buying some into the current weakness.
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CEO's done a tremendous job building a Canadian bank that's different from the usual suspects. No branches, everything's online. Diversified funding sources. Strong balance sheet. Number of clients growing nicely. Fantastic job managing credit exposure. Cheap for what it is. High ROE. Best-performing bank in NA over last 10 years, looking at total shareholder return.

Canadian telcos may be bottoming, at least until more bad news shows up, if it does. We would consider EQB to have more upside, but it is still a fairly small company at $4B, and we would size accordingly. But we like it. We would be OK with adding selling some telco exposure and adding but would not suggest a wholesale swap out. 
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Tariffs shouldn't have any impact at all on this domestic lender. Raises $$ in the GIC market and lends it out. Very high quality. He has other first choices, but if he was going to own another, this would probably be it. Very steady performer, well run, but ROC at 15% is a bit lower than he likes.

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When companies buy back their own shares, the company can either cancel them or hold them as treasury shares. It is mostly just accounting terms, the primary purpose of the share buybacks are still the same - it is intended to reduce the total share outstanding and boost EPS in the near term.

A share buyback is a more tax-efficient alternative method to return capital to shareholders compared to raising dividends, potentially creating a compounder over time. Despite strong performance recently, EQB is trading at only 8.8x Forward P/E; we think EQB’s valuation is quite attractive as of today.
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We cover EQB and we have also had it in our growth model portfolio for some time now. We are quite comfortable with the name - the management team is strong, the business is expanding into new product lines, and it is overall gaining market share. It will likely be more volatile than a large Canadian bank at times, but as a high-growth peer to the large banks, which is also trading at a discount to the Big 6, we feel it can complement the large banks nicely and add a growth component.
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It is a niche bank that specializes in Alt A lending. It lends a lot to the real estate industry, both personal and commercial, with mortgages on multi-family residential. It is also has an online component. He likes the bigger banks but the smaller ones could grow more.

That's right. They've been severely beaten up over the last few years. Massive outflow of funds out of Canada, and it hits the smaller stocks even more. A lot of retail investors put in fund redemptions last year, so that created many bargains.

Over the last 6 months, he added to many of his small- and mid-cap positions. Companies like QTRH, JWEL, and EQB.

Very good business for investors. Return on equity very high. Strong management team. Consistent growth for the past 20 years. Only concern is that credit cycle will tighten and make it harder to perform. 

Are very well-managed. Are exposed to insurance, too. He's been wanting to buy this for years, but the price keeps running away from him. Trades at 1.3x book and 9.5x PE. Doesn't pay a big dividend, because they reinvest into the company, which is good.

Good, but is less diversified than the Canadian banks. Also, he fears the real estate market will hit a bigger snag than many believe, and that would impact EQB earnings (through mortgages).