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CM/RY: Should the “Big 6” Canadian Banks Raise Capital Right Now?

April 8th, 2020

“Risk weighted assets for the Big 6 banks, and CM and RY in particular are massively understated in our view.  CM and RY are 26 and 23 times levered based on gross loan exposure to total Tier 1 capital.  Given their substantial...

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Canadian Banks/HCG.TO: Buy High, Sell Low; What Passes as Prudent Capital Allocation and Risk Management in the...

November 19th, 2019

“I think it's -- the work that's being done in our underwriting team to accurately price for risk. There's a lot of work that's going into the evaluation of business for self...

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Canadian Banks: Earnings Season Was a Disappointment, It Could Have and Should Have Been Much Worse; Take a Gander at...

June 6th, 2019

Heading into earnings season for the Big 6 Canadian banks, we were almost certain that a great deal of the discussion on the analyst conference calls would be centered around loan performance in...

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Where's the Bid? A New, More Troubling Era In Canadian Housing

April 10th, 2019

Over the past few weeks, we conducted a survey of more than 250 real estate agents across Canada. Click on the link below to view our presentation which outlines our research on the Canadian housing market at a high level and the critical findings from our...

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CM.TO/NA.TO/RY.TO: Bank EPS as Fiction – The Great “Remeasurement” Game Juiced EPS in 2018; Don’t Expect an...

January 17th, 2019

“In the case of the IFRS 9 guidance on performing, there's a lot of assumptions that go into what falls into the performing and it could be anything from your assessment of volatility to...

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Canadian Housing: Reflexivity Cuts Both Ways, Negative Feedback Loops Have Started to Emerge

March 29th, 2018

We hope you will consider this report for your weekend reading list. Over the past few weeks we surveyed more than 300 real estate agents in Canada. The attached presentation outlines the feedback we received from those agents...

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NA.TO/Canadian Housing: “Extend and Pretend” Is Alive and Well in the Prairies; How Well Capitalized Are the...

March 22nd, 2017

“Our customers have shown tremendous courage and we’re matching that by sticking with them to the best of our best ability. We believe that working with customers to help get them to a...

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Canadian Housing: Losses on the Ground Are Real; When Will the Banks Start Taking Provisions On Their Credit Exposure...

November 23rd, 2016

“As cooler weather starts driving up heating costs, Calgary distress centres are finding more people who once earned steady incomes are now struggling to pay their bills and seeking relief with...

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PAA Research's 2016 Canadian Mortgage Broker Survey: A New Era in the Canadian Housing Market

November 2nd, 2016

We recently conducted a survey of 148 mortgage brokers located across Canada. The key findings from our survey include: Home price weaknes is becoming more broad based The underlying bid for housing remains...

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Canadian Housing: The Wind of Change

October 4th, 2016

Will Monday, October 3, 2016 be remembered as the day that the housing market in Ontario peaked?  Maybe.  In a move that appears to have shaken the Canadian housing market to its core (or at least rattled a few branches), Minister of Finance, Bill Morneau announced a...

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NA.TO: Negative Variance Seems Inevitable, As Does another Capital Raise

June 2nd, 2016

The continued sharp decline in oil prices over the last couple of years has had a detrimental effect on the Alberta economy, resulting in several high-value provisions and writeoffs in our commercial portfolio, predominantly within the energy...

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Canadian Housing: A Tale of Four Markets, Foreign Buyers, and Fraud

May 24th, 2016

We recently conducted a survey of approximately 230 real estate agents in Canada.  The attached presentation summarizes our key findings from the survey.

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NA.TO: Hope Is Not a Risk Management Strategy

February 24th, 2016

"So let's talk about oil and gas. So, earlier Marianne mentioned our intention to increase our reserves for 2016 to reflect current market fundamentals. So, at the end of 2015 for the Commercial Bank, we held a 6% allowance as part of that effort we are going to – we...

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NA.TO: Taking a Closer Look at NA’s Commercial Loan Book as the Pitfalls of Recency Bias Come Front and Center;...

January 13th, 2016

Do you remember the late 1980’s and early 1990’s in Canada? It was a dark period in the country’s economic history as a combination of a collapse in crude oil prices in the mid-1980’s,...

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NA.TO/HCG.TO: Four Things I Learned in the Past Week about Canadian Financial Institutions – Rhetoric vs. Reality

December 7th, 2015

We spent much of last week reading, listening, and analyzing the slew of earnings releases, financial supplements, and conference calls from the largest banks across Canada.  Had we known the results and...

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Canadian Housing: The Demographic Crisis No One Seems to Talk About

October 5th, 2015

Let’s play a little game called “guess the country with a pending demographic crisis”. Here are some hints to start out with, for this country:   1) the median age has increased from 32.9 in 1990 to 40.5 in 2015, 2) the percentage of population...

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NA.TO: Surprising Capital Raise Could Spook Investors, It Might Not Be the Last…

October 1st, 2015

After the close, National Bank of Canada announced that it plans to raise $300MM through a common equity offering of 7.2MM shares at a price of $41.90. The deal is “bought” and is expected to close on 10/9/15.  Considering that much...

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Canadian Housing: The Pressure Point – MIC’s and Private Mortgages Have Become the Central Lynchpin Holding Up the...

July 16th, 2015

“The vulnerability associated with household indebtedness remains important and is edging higher, owing to an increase in the level of household debt and the ongoing negative impact on incomes from...

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NA.TO/HCG.TO/RON.TO: The Canadian Housing Market - Dancing on the Edge of a Razor Blade, Time to Get Short

March 10th, 2015

“Get busy with the facts, No zodiacs or almanacs, No maniacs in polyester slacks, Just the facts…. The small gets big, It’s a rig…. You better run homeboy, A fact’s a fact… Roll the...

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Current Ideas

EXPI

SELL/SHORT

$4

HUSQ.B

SELL

$50

UFPI

SELL/SHORT

$45

TREX

SHORT

$18

PRDO

SELL/SHORT

$5

STRA

SELL/SHORT

$42

CWH

LONG

$75

OSTK

LONG

$128

CM

SELL/SHORT

$50

RY

SELL/SHORT

$50

ARC

LONG

$5.50

AYI

SHORT

$50

BIG

SHORT

$28

WWE

LONG

$65

XOXO

LONG

$37

RLGY

PAIR TRADE

$10

RDFN

PAIR TRADE

$30

BCO

LONG

$35

ING.PA

SHORT

$35

TRUP

SELL/SHORT

$10

CTC

SHORT

$101

ATGE

SHORT

$15

HCG.TO

SHORT

$0

RON.TO

SHORT

$9

ESI

SHORT

$0

BGG

PAIR - LONG BGG/SHORT TTC

25%

TTC

PAIR - LONG BGG/SHORT TTC

25%

Z

SHORT

$14.00

NA.TO

SHORT

$22

ZU

SHORT

$15

TRLA

SHORT

$20

MCRS

SHORT

$31

APOL

SHORT

$35

OPEN

SHORT

$30

KNL

PAIR - LONG KNL/SHORT MLHR

25%

CSGP

SHORT

$100

GCA

LONG

$8

IPSU

LONG

$20

MLHR

SHORT

$22

LOOP

PAIR - LONG CSGP/SHORT LOOP

40%

THQI

LONG

$35

WPO

SHORT

$275

COCO

SHORT

$0

HNI

SIG

RGR