TD Bank (TD TSX)
Latest purchase December, 2024 at $75.03
TD has had a difficult couple of years, but it remains Canada’s second largest bank, and it remains among the largest banks in America as well. We believe the franchise has been tarnished by recent wrongdoings on both sides of the border, but not irreparably so. The pending CEO change announced late last year and the settlement of regulatory fines and sanctions in the United States brings closure to a difficult period for the bank but also paves the way for a strategy re-set. This will entail restructuring the balance sheet of the U.S. banking business. It may also entail divestiture of their $14 billion 10 per cent stake in discount broker Charles Schwab as well as the opportunity to lean in harder on its very competitive Canadian personal and commercial banking business and its market leading Canadian discount brokerage business. In the meantime, the opportunity at hand is to buy the shares at an unusually wide 15 per cent discount to the Big Six bank average price/earnings and price/book trading multiples and yielding 5.3 per cent - ahead of the full unveiling of the bank’s strategy re-set, likely to occur at an investor day planned for the second half of 2025.