Canadian Western Bank (CWB.TO)

Doesn’t like. They don’t own any of the banks in Canada. It’s one he would avoid he doesn’t see good upside. Had a nice rebounce coming back from the energy issues that plagued the sector in 2015 and early 2016. If he owned, he would look at trimming and wouldn’t be picking up here. The oil environment has improved and gotten a lot better and thinks Canadian Western Bank is fully valued at this point. It’s a valuation issue, and also a broader issue around the banking sector with valuations, you are paying for the fundamentals, and thinks fundamentals are rather toppy in terms of the credit cycle.

Although located in the West, the company is not dependent on oil and gas. They’ve been doing well. Have broken into eastern Canada a little. It is probably worth holding. 2.7% dividend yield.

This has had a great recovery with both the oil recovery and housing worries abatement. He wouldn’t look at this in relation to other Canadian banks. Has a yield of under 3%, and you can get Bank of Nova Scotia or Royal Bank that is closer to 4%.

It has had a wonderful rally. He is more constructive now on energy than in quite some time. This is a help from western Canada. He prefers US banks to Canadian but certainly this one is acting great and he would not have a problem owning it.

This one is in the work out phase. He stays with the larger banks. You are takin on the Western economy with this one. He prefers BNS-T and TD-T.

*Short*. (Top Pick Jun 10’16, Up 9.11%) This is a paired trade for him. He has no specific target.

A levered way to play Canadian banks. When oil prices go down, this bank goes down more than it should. If you think oil prices are near their bottom, and he does, as they go up, this bank will catch up. This could be a really good levered play. Be careful, because if oil were to go back down to $40, this bank goes down.

The whole banking sector is quite positive. The chart shows a little head and shoulders. If it can break above $32, it would probably run away pretty nicely. He likes the whole financial sector. (See Top Picks.)

Compared to Oil prices over the last 5 years, you can see it is a big proxy. It is not a perfect correlation, but oil is a huge influence. CWB-T will be a range trader for the next 5 years.

Has a long term Short on this. Looking back to the last downturn in 2008-2009, it took 17 quarters for them to get back to pre-recession provisioning levels. The current downturn in Alberta has been a lot longer and more protracted, so thinks the time horizon for provisions will probably be even longer than 17 quarters and doesn’t think the street is factoring that in.

(Market Call Minute) Completely exposed to the West. Its loan book is not as bad as people thought. It is not going out of business.

This has most of its operations in Western Canada, and is very tied into the energy market. It will sink or swim with energy stocks. Its underperformed the other banks. If you are a big believer that the worst is over for energy, and that there is growth ahead, then this probably has some leverage. He wouldn’t hedge quite like this. If you want an energy stock, he would buy it, and if you want a bank, he would buy a regular bank.

This would be reward time for him. Stocks don’t behave this way. A good name and a good company, but anything with bank or financial, has had about a year’s move in 2 months.

It has lagged and the regional exposure is the reason for the lag. It is undiversified by geography and by line of business. His concern would be that although the oil commodity complex is picking up, he feels employment has a lagged effect. Loan losses and credit provisions would be a concern for some time.

Banks have been coming out with strong fourth quarter results and this one is about to report. Technically this is in an upward trend. It looks okay. Banks usually move higher from August until the end of November. This is usually the time to take money off the table. Look for such an opportunity to sell on strength over the next couple of weeks.