We recently replaced a large-cap Canadian bank with Laurentian Bank (LB) in Hamilton Capital Global Bank ETF (HBG), in order to reduce the ETF’s exposure to energy lending. LB has a 4.9% dividend yield and at the time of writing, trades at 8.4x f2016 earnings, or a ~20% discount to the Big-6 average. Investors familiar with LB might question the switch, as most are aware that…
Insights: Canada
Reducing Energy Exposure; Going Modestly “Underweight” Canadian Banks
As explained in Hamilton Capital Global Bank ETF (HBG)’s prospectus, it is anticipated, over time, that HBG’s geographic mix will roughly represent: 50% North America, 25% Europe and 25% other countries. Although completely flexible, within the 50% allocation to North America, we generally aspire to a geographic mix of Canadian banks (15%) and U.S. banks (35%). Given our concerns over rising direct/indirect losses from energy lending,…
Part #2 of 2: Why the Canadian Investment Banks Largely Avoided the Painful Global Restructuring
In Part #1: Why the Global Investment Banking Model is Under Siege, we discussed why the global investment banking model is undergoing a painful restructuring. Hardly a day goes by without bad news of the challenges facing the global investment banks. In this Insight, we address the obvious question: “With their large investment banking operations, how have the Canadian banks largely avoided this painful global restructuring?”.
Notes from the Field: BofAML Insurance Conference 2016
We recently attended Bank of America Merrill Lynch’s 2016 Insurance Conference in New York, where we took in presentations by 27 insurance companies, with representatives from the life, property and casualty (P&C), reinsurance and mortgage insurance sub-sectors. Most of the companies presenting were U.S.-based (and listed), with several Bermuda and Europe-domiciled reinsurers, and a Canadian P&C insurer also in attendance. Notwithstanding the location of their headquarters,…
Global Growth – Economists vs. the Markets
In this comment, we discuss the seemingly large gap between economists’ growth expectations for the global economy and those of the market. The former is forecasting comfortably positive growth, while the latter’s worries have prompted a global sell-off in equities. We also address the most likely trigger of a global downturn, while reviewing the impact of the European sovereign debt crisis.
Why AGF Should Sell Itself in 2016
Since 2013, we have travelled throughout Canada giving a research presentation entitled “Canadian Banks – the End of an Era?”, which is based on an essay we wrote in 2011 (and reprinted in the Globe). In this presentation, we reviewed the evolution of the banks over the previous 20+ years and provided a 5 to 10 year outlook for sector.
In Person: The Future of Canadian Financial Services – A Mid-Cap Perspective
Today, we hosted “The Future of Canadian Financial Services – A Mid-Cap Perspective” at One King West’s Grand Banking Hall in Toronto. We held a fireside chat with three CEOs of Canadian financial services companies to discuss the most important fundamental and macro themes facing the financials and markets in Canada.
Canadian Banks: ~$1 bln in Restructuring Charges in Past Year; What it Means
On October 15th, National Bank announced an $85 mln pre-tax restructuring charge (among other things). What is interesting is that this was the sixth such charge announced by the Canadian banks since Q4 2014.
Canadian Banks: New Federal Government Not (Likely) Significant to Banks
Last week, the Canadian federal election ended with a majority victory for the Liberal party. Although a minority win for the Liberals or governing Conservatives was seen as the most likely outcome according to the polls, the preferred outcome for the market (and the banks), in our view, was a Conservative or Liberal majority government. The worst plausible election outcome would have been a minority Liberal government supported…
In Person: The Future of Canadian Financial Services
Today, we hosted “A Conversation on the Future of Canadian Financial Services” at the Royal York Hotel in Toronto. We presented and held a fireside chat with three current and former Canadian financial services CEOs to discuss the most important fundamental and macro themes facing the financials and markets.
In Person: Hamilton Capital’s Annual Outlook Presentation
Today, we hosted our annual outlook presentation at One King West in Toronto, where we discussed the most important fundamental and macro themes facing the financials and markets.
Why CIBC Needs a Visible Capital Allocation Strategy
Since the end of the credit crisis (i.e., 2009), CIBC has generated core cash EPS growth above its Canadian banking peers as well as a (much) higher ROE. Despite exceeding its peers over the past four years on these important growth/profitability metrics, CIBC continues to trade at a notable P/E discount. So, in light of this post-crisis performance, and a (perceived) below-average risk profile, why does…