Commentary: HCAL

Canadian Banks: Q1-21 Takeaways – One Catalyst Down, Two to Go

In October 2020, we launched the Hamilton Canadian Bank 1.25x Leverage ETF (ticker: HCAL), a modestly levered version of our Canadian bank mean reversion strategy ETF (ticker: HCA), in anticipation of a credit-driven recovery for Canadian bank earnings and stocks. In our view, with its 25% leverage, HCAL offers investors an opportunity to benefit as the recovery gains traction (in the near-to-medium term), as well as…

Canadian Banks: Q4-2020 Takeaways – Recovery Has Started; What’s Next?

In late October, with earnings season approaching, we wrote an insight entitled, “Canadian Banks: Will Q4 Be a ‘Clean-up’ Quarter?”. In that note, we predicted the banks would take steps to accelerate their return to normalized earnings by: (i) building reserves against performing loans (by to $2-$3 bln, to ~$25 bln) in order to prepare for defaults coming in 2021, and (ii) pulling forward expenses, possibly…

Canadian Banks: Will Q4 be a ‘Clean-up’ Quarter?

Note to Reader: We are pleased to announce the launch of the Hamilton Canadian Bank 1.25x Leverage ETF (HCAL), which began trading on the TSX on Thursday, October 15th and has a current yield of ~6.5%. HCAL invests 125% of NAV into the Hamilton Canadian Bank Mean Reversion ETF (HCA) using cash borrowed from a Canadian financial institution. The underlying – and unlevered – HCA seeks…

Hamilton Canadian Bank 1.25x Leverage ETF (HCAL) – Get More from the Canadian Banks

We are excited to announce the launch of the Hamilton Canadian Bank 1.25x Leverage ETF, which will begin trading on the TSX under the ticker HCAL on Thursday, October 15th. HCAL will provide exposure to Canada’s ‘big 6’ banks, with enhanced yield and return potential, with distributions paid monthly. HCAL builds on our innovative Canadian Bank mean reversion strategy. Specifically, HCAL’s investment objective is to replicate, before…

Canadian Banks: Outperformance from Mean Reversion (in 7 Charts)

As all Canadian investors know, the stock prices of the Canadian banks are highly correlated, and the individual banks have generated similar returns over long periods of time. Over the past several decades, the Canadian banks that have underperformed tended to catch up to those that outperformed, and vice versa – i.e., their performance was “mean reverting”. In this Insight, we discuss these mean reversion tendencies…

Financials: Does COVID-19 Represent a Growth Scare, Credit Event or Crisis?

Since we launched our first ETF in January 2016, there have been four significant macro corrections in four years. None of those large and painful corrections represented a crisis, insofar as the declines did not represent a threat to the solvency of the financial sector, either from a lack of liquidity or the destruction of capital. Rather, they were related to the market rapidly (and, in…

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