RE:RE:RE:RE:RE:RE:td So I met my friend today for dinner. Other things aside a very detailed discussion guys and i have tried my best to remember everything and write here.
Obviously he says there is a lot of noise right now and people are coming out saying etc etc but no one knows. He himself says that TD is keeping a very tight lid on everything so no one really knows. But he gave me an example. He says for instance if royal bank had some issue, whatever it was would I not use it as a buying opportunity. I said I would and he said he would also because overall these banks - royal, td, bmo, cibc (and he named these specifically) tend to do well long term. At this time he was saying to use this opportunity to buy. He himself has bought 200k of td stock around 75 and he was saying this is an excellent opportunity. Obviously if it gets cheaper then it would even be better but it's so cheap as is.
His opinion right now is that US regulators are trying to see if there was td management involvement in this. Obviously there were bribes and bad folks working in these branches but shouldn't the compliance team catch this when they see millions being deposited at these branches. Shouldn't they have flagged this or ask questions. So not sure what happened and how did the process failed so miserably. He thinks there were some managers involved like higher than branch level but definitely not executives. And for td ceo to come out and say straight away that td is not like this etc etc means he is holding his position that there were just some bad folks working at branches. Let's give him some benefit of doubt and board is also supporting him. My friend mentioned that even when you listen to conference call you can hear the sincerity in masrani voice. So he does care. At the end my friend thinks that US regulators will do everything to find who was really involved and if mgmt was involved then td could be in trouble meaning serious penalties + serious restrictions in US. In this scenario yes restrictions on growth for 5 years minimum and no acquisition or new branches. And he mentioned wells Fargo and hsbc being examples. In this scenario td could even go down to 50-55. Yes jaw drop. But even in this case he doesn't think td will cut dividend but definitely they will not raise dividend for 2-3 years. He was saying the chances of this is slim to none. Literally we are talking about the biggest scandal that td executives were involved and Mr Bharat reputation will be shot. He would most likely be dismissed if this were to happen. But if nothing comes off this investigation and if no mgmt involvement was there then he says only penalty and possibly some oversight/reporting but no restrictions. this penalty, whatever it may be, would be manageable and in a few years people would have wished that they had bought more. And we probably see a 10-15% recovery in td stock when it is announced so 85-90.
For now he thinks that td will resolve this most likely by September but max by year end and he bought td stock. I too obviously have td stock and if it gets cheaper I will buy more. Otherwise i hold. I will though not buy until td resolves AML issues and if it is bad news I will buy then. I have 20 years to retirement so no issues if I lose money on my existing 800 shares holding. either way I am ok