Mary Throop and Kevin Elliott manage global portfolio investments for ultra high net worth investors. Teamed up at Summerhill Capital, the pair emphasizes conservative high-dividend-yielding Canadian equities and look for companies with significant advantages over their industry peers. In the Canadian financial sector, the stocks the portfolio managers “like and own are Bank of Nova Scotia (BNS), for its emerging market growth exposure and solid wealth management business; TD (NYSE:TD), best platform in the U.S.; and Royal (RY), best capital markets exposure.” In a recent interview, they picked Bank of Nova Scotia (BNS), or ScotiaBank, as their favored Canadian financial stock.
Elliott praises the exposure of BNS to international economies: “[BNS] has global exposure and it is expanding outside of Canada. The other banks in Canada are essentially competing within the Canadian market.” He says this competition and the relatively small size of the domestic Canadian market increase pricing pressures and lower margins.
Throop, formerly the Managing Director of International Equities for CIBC World Markets, encourages investors to see Canadian banks as “a great way to get exposure to both the Canadian market and the Canadian dollar, as the Canadian banks are some of the best capitalized and have some of the best ROEs in the world.”
Throop also cautions investors against several popular Canadian industry sectors: “Based on valuation, the ones that would concern us the most are the traditionally defensive sectors like the utilities and pipelines, because they’ve become very expensive by historical standards. People have been chasing income, so they’re buying the yield stocks indiscriminately.”
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