Mike VinokurLaurentian BankLB.TODON'T BUYJan 12, 2024

Does not own shares. Too regional for preferences. Has been a tough time for the business. Recent strategic process not going well. Would not recommend buying. Better options in sector. 

Small Canadian bank that has entered strategic review. No buyer for recent review process is a very bad sign. Concerns about debt levels and credit risk with rising interest rates. Will not recommend buying at this time. Better Canadian banks to buy.

It has a good presence in Quebec. They are interested in selling but he doesn't see who would buy them.

Not very attractive as a bank, otherwise it would have been snapped up. Hasn't invested in IT, not efficient, no scale. Not sure of a sale. Very interesting asset in the US, an inventory finance company. It's possible someone in the US will buy that part, while someone in Canada buys the banking part. 

Does not own shares.
Not a good deposit rate.
Cost of funding higher than competitors in sector.
Strategic review not generating prospects.
Not a good investment.
Holding as potential M&A target not a good strategy. 

Better banks to own with better assets, balance sheets, and management. Price popped, then dropped when 2 of the big banks took a pass on buying. If there are no buyers, you're left with a lower quality bank. Going with the biggest and best will provide defensiveness plus capital to grow.

Not able to predict whether company will sell.
Not investing enough in tech.
Weak company at the moment.
Not expecting a major premium if company sells. 

He's inclined to sit tight. Media negativity could have ulterior motives. Easy to slam without repercussions, as it's not a big investment banker. It only needs one buyer, and all assets have a price. Would be attractive for expanding scale or into Quebec.

The chart broke out. Though shares are higher, people bought at $45, and that is resistance. It's a gamble that it will merge with another bank.

A short-term, event-driven pick. For sale, a unique opportunity in Canada for competitors to increase market share, especially in Quebec. Book value is $60 per share. Sees takeout price at $54-60, so 25-40% upside from today's price. Yield is 4.36%.

They might sell LB and there's a good market for Canadian banks now, but regulatory issues could block it. If you're sitting on a 30% profit, yes, you can take profits. Yields more than 4%.

Thinks all big 6 Canadian banks would be interested in buying it. A purchase will be accretive and lower LB's cost of capital.

That is a good trade. At only 9X earnings (even after the pop) LB could still go for a higher price. There are very few bank assets for sale in Canada so it has scarcity value. BNS and TD might be very motivated buyers. We might take a little quick profit off the table but we think some can still be held to see what happens. 
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Quality defensive. Huge upside potential. Trading at a valuation that's tied for its all-time low. New CEO dedicated to improving profitability. If you don't buy it at these lows, when are you going to? Partially re-hiked dividend after previous cut. Yield is 5.75%.