Major Investors | TD Bank loses support

While TD Bank acquired about 7% of Montreal’s institutional investor Jarislowsky Fraser’s portfolio at the beginning of 2021, that position has been eliminated as of today. The now-owned Scotiabank has since turned its attention to National Bank and… Scotia.

Richard Dufour
Journalism

While TD Bank at the beginning of the year was one of Jarislowsky Fraser’s biggest positions, National Bank and Scotia are now the two major Canadian banks that the institutional investor operates in in Montreal.

Jarislowsky Fraser first cut his investment in TD by 50% during the first three months of 2021, before declining another 20% during the months of April, May and June, and an additional 75% between 1^{He is} July and end of September.

While TD acquired about 7% of the underlying portfolio to start the year, that position has essentially been eliminated as of today.

“We needed cash to invest elsewhere and chose to participate in TD to do so,” comments Bernard Gauthier, portfolio manager at Jarislowsky Fraser.

10% bonus

After becoming a Scotiabank subsidiary in 2018, Jarislowsky Fraser increased his equity investment in Scotia by 10% in recent months and acquired a significant position at National Bank earlier this year.

We started taking a stand [dans la Nationale] At the beginning of the year,” says Bernard Gaultier.

Today, Jarislowsky Fraser is one of the 25 largest shareholders of the National Bank, with a stake of about 1%.

National Bank has a simpler business model. She has no ambition to become [acteur] Important in the United States and very strong in the niches in which he established himself.

Bernard Gautier

Without a flamboyant strategy, he adds, it’s the National that have done the best for 25 years by looking at title recognition. “It buys back shares, doesn’t spend capital inappropriately and makes sure it’s very strong in the places it competes.”

As for the payoff from investing Scotia, the appeal is its evaluation, he says.

“They are trading at a discount compared to other banks while historically they are trading at a premium. The main reason we think is what is happening in Latin America with the development of the pandemic being delayed compared to the G7 countries. We think it is only a matter of time before it stabilizes. It is certain that growth should resume in Latin American countries. , but we benefited from weakness due to perception related to COVID-19. We have been seeing better expected returns than anywhere else for these reasons.”

Important Transactions

Large institutional investors in Quebec increased their transactions during the months of July, August and September in order to prepare themselves for the fall. Here are some important gestures.

deposit box

Head of Liquid Markets: Vincent Delisle
Headquarters: Montreal
Highlight: TD mode big reduction

Other important actions in the third quarter of 2021:
Purchase of 6.7 million shares BC
4.8 million shares sold in Manulife
Buy one million shares of Canada Goose

The largest institutional investor in Quebec has reduced its investment in Royale, BMO and Scotia by about 35%, but its investment in TD by 60%. The fund sold 6.5 million TD shares in the third quarter. While the stake in Restaurant Brands (Tim Hortons) was reduced by 85% in the previous quarter, it was eliminated entirely between 1^{He is} July and end of September. Caisse also improved his position in video game producer Electronic Arts by 165% by purchasing 2.5 million shares.

PSP . Investments

Chef des placements: Eduard van Gelderen
Headquarters: Ottawa (Head Office in Montreal)
Highlight: First Post on Snap

Other important gestures in the third quarter of 2021:
Purchase of 7 million shares of source iron
1.8 million shares sold for science games
Purchase of 1.3 million shares of Bristol-Myers Squibb stock

The Public Sector Pension Investment Board (PSP) – one of the largest fund managers of pension funds in the country – has acquired 870,000 shares in Snap, the parent company of social network Snapchat, to lay the foundations for a new position. Important positions were taken at US drugmakers Elanco Animal Health and Moderna during the quarter.

capital fair

Chief Investment Officer, Canadian Division: Nicholas Papagorgio
Headquarters: Montreal
Highlight: Significant drop in investment in Rogers

Other important actions in the third quarter of 2021:
Selling one million shares of Carrier Global
Purchase of 1.2 million shares of Devon Energy
Buy 1.5 million shares of Ero Copper

Investment in Rogers Communications was cut by more than 70% during the months of July, August and September with 1.3 million shares sold. Fiera increased its investment in Canadian Pacific by about 20% after purchasing more than 830,000 shares of the railroad company. The stake in Restaurant Brands (Tim Hortons) was increased by 6% with the acquisition of a block of 200,000 shares.

Jarislovsky Fraser

Co-chairs: Charles Nadim and Kelly Patrick
Headquarters: Montreal
Highlight: Significant decrease in ownership in TD

Other important actions in the third quarter of 2021:
Buy 2 million shares of branded restaurants
9.6 million Enbridge shares sold
Purchase of 1.6 million shares of Scotia

Portfolio holdings in Enbridge continue to decline. After selling 13.7 million shares of the Calgary pipeline giant in the previous quarter, Yarsilovsky reduced his remaining stake in the Alberta company by 75% during the months of July, August and September. The investment in Oracle was also reduced by 11%.

Litko Prosso

Investment directors: Peter Letko and Daniel Brusseau
Headquarters: Montreal
Highlight: First investment in Bausch Health

Other important actions in the third quarter of 2021:
Selling 3.2 million Cenovus shares
Selling 1.2 million shares of Telus

After selling 3.4 million shares of Cenovus in the previous quarter, an additional block of 3.2 million shares of energy producer Calgary was sold by asset manager Montrealers in July, August and September. The stakes of major Canadian banks such as Royale, Scotia, BMO, CIBC and TD have been reduced from 2% to 5%. The investment in car seat maker Adient was canceled after 1.7 million shares in the portfolio were sold.

Hexavest

Chief Investment Officer: Vital Prolux
Headquarters: Montreal
Highlight: Cancellation of investment in IA Financial Group

Other important actions in the third quarter of 2021:
Selling 221,000 shares of ExxonMobil stock
Selling 200,000 shares of Pfizer
Selling 74,000 shares of Newmont Corp.

Exposure to large US technology stocks continues to decline at Hexavest. Investments in Microsoft, Amazon, Alphabet (Google), and Apple are down 10-20%, depending on the title, for the second consecutive quarter. The company also reduced its stakes in other large US companies such as Johnson & Johnson, JP Morgan, Target and Procter & Gamble from 15% to 20%.

Large institutional investors are required to report to the Securities and Exchange Commission on a quarterly basis the contents of their portfolios of stocks being sold in US markets. The securities of many Canadian and Quebec companies are traded in the United States, which makes the documents submitted by Quebec institutions interesting. This data is monitored for clues that reveal where top investors are identifying stocks. Documents for the third quarter of 2021 have been submitted in the past few days, allowing to see how the county’s top investors positioned themselves in the fall.