In short: One of his four banks. Underweight and modestly trimming for several quarters, using the banks "as a source of cash." Still very high-quality franchises — the issue is purely price: forward P/E at or near all-time highs after a huge sentiment swing.
BMO is one of the four Canadian banks Aitken owns (with TD, Royal and Scotiabank), and they remain top-10 holdings — but he is underweight the group and has been modestly trimming for several quarters, using the banks as his source of cash to fund purchases elsewhere.
His objection is purely valuation, not the business. After a huge swing in sentiment, the banks trade at forward price-to-earnings multiples at or near all-time highs. "It's not really a concern about what's in front of the banks fundamentally. It's just what we're paying for it."
He read David Rosenberg's argument that "the banks are our AI bubble" and thinks there was "a lot of validity" to it. Long term the franchises are fine — but because the gains came from multiple expansion rather than earnings, the next several years of returns are likely to be harder.
9:41I would say that we're underweight banks and we've been using it at the margin as a source of cash. So our activity in banks in recent quarters has been to trim, albeit modestly trim the banks, and our view on the fundamentals, Amber, has been really pretty consistent here.
In short: Top of his "pecking order" within the group: "we've liked what Daryl White's done at BMO… we like the fact that he has exposure to US commercial." Buyback also raised on the last call.
Within the Canadian bank group, BMO sits at the top of his "pecking order." He likes what CEO Daryl White has done with the franchise and specifically likes that BMO has meaningful US commercial-banking exposure — a second engine that most of its domestic peers don't have to the same degree. Like the rest of the group, it raised its buyback on the most recent call, which shrinks the share count and lifts per-share earnings without needing the market to pay a higher multiple.
18:13they're going to take your money and in part they're going to buy themselves, right? So, so you're really fighting against a big tailwind, our pecking order. We've liked what Daryl White's done at Beimo. The we like the fact that he has exposure to US commercial, right? You got a new CEO at CIBC, Harry, who's going after this high net worth franchise.
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