While TD Bank accounted for around 7% of the portfolio of Montreal institutional investor Jarislowsky Fraser at the start of 2021, this position has been eradicated as of today. The now-owned firm of Scotiabank has since turned its attention to National Bank and… Scotia.
While TD Bank was at the start of the year one of the largest positions at Jarislowsky Fraser, National Bank and Scotia are now the two major Canadian banks on which the Montreal institutional investor is banking.
Jarislowsky Fraser first lowered his investment in TD by 50% during the first three months of 2021, before declining by another 20% during the months of April, May and June, and an additional 75% between 1er July and the end of September.
While TD accounted for around 7% of the core portfolio to start the year, that position has essentially been eradicated as of today.
“We needed cash to invest in other places and we chose to take part of TD to do so,” comments Bernard Gauthier, portfolio manager at Jarislowsky Fraser.
10% bonus
Becoming a subsidiary of Scotiabank in 2018, Jarislowsky Fraser has increased his equity investment in Scotia by 10% in recent months and acquired a significant position in National Bank earlier this year.
“We started to take a stand [dans la Nationale] at the start of the year, ”says Bernard Gauthier.
Jarislowsky Fraser is today one of the 25 largest shareholders of National Bank with a stake of around 1%.
National Bank has a simpler business model. She has no aspiration to become a [acteur] important in the United States and it is very strong in the niches in which it has established itself.
Bernard Gauthier
He adds that without having a flamboyant strategy, it is the National which has done the best for 25 years by looking at the appreciation of the title. “She is buying back stocks, not spending capital inappropriately and making sure she is very strong in the places she competes. ”
As for the bonus of investing in Scotia, the appeal is its valuation, he said.
“It traded at a discount compared to other banks whereas historically it trades at a premium. The main reason in our opinion is what is happening in Latin America with the delay in the evolution of the pandemic compared to the G7 countries. We think it’s a matter of time before it settles. It is certain that growth must resume in Latin American countries, but we took advantage of the weakness due to the perception related to COVID-19. We were seeing better expected returns than elsewhere for these reasons. “
Significant transactions
The large Quebec institutional investors increased their transactions during the months of July, August and September in order to position themselves for the fall. Here are some significant gestures.
PHOTO OLIVIER JEAN, ARCHIVES THE PRESS
Quebec’s largest institutional investor cut its investments in Royale, BMO and Scotia by around 35%.
Deposit box
Head of Liquid Markets: Vincent Delisle
Headquarters: Montreal
Highlight: Substantial reduction in TD position
Other significant actions in the third quarter of 2021:
Purchase of 6.7 million BCE shares
Sale of 4.8 million Manulife shares
Purchase of 1 million shares of Canada Goose
Quebec’s largest institutional investor cut its investments in Royale, BMO and Scotia by around 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) had been reduced by 85% in the previous quarter, it was completely eliminated between 1er July and the end of September. The Caisse also improved its position in video game producer Electronic Arts by 165% with the purchase of 2.5 million shares.
PSP Investments
PHOTO DADO RUVIC, REUTERS ARCHIVES
The Public Sector Pension Investment Board (PSP) – one of the largest fund managers for pension funds in the country – has acquired 870,000 shares of Snap, the social network’s parent company Snapchat.
Chief Investment Officer: Eduard van Gelderen
Headquarters: Ottawa (main office in Montreal)
Highlight: first participation in Snap
Other significant gestures in the third quarter of 2021:
Purchase of 7 million ironSource shares
Sale of 1.8 million shares of Scientific Games
Purchase of 1.3 million Bristol-Myers Squibb shares
The Public Sector Pension Investment Board (PSP) – one of the largest fund managers for pension funds in the country – has acquired 870,000 shares of Snap, the social network’s parent company Snapchat, to lay the foundations for a new placement. Significant positions were taken in US pharmaceutical companies Elanco Animal Health and Moderna during the quarter.
Fiera Capital
PHOTO CARLOS OSORIO, REUTERS ARCHIVES
Fiera Capital’s investment in Rogers Communications was slashed by more than 70% during the months of July, August and September with the sale of 1.3 million shares.
Chief Investment Officer, Canadian Division: Nicolas Papageorgiou
Headquarters: Montreal
Highlight: Significant reduction in investment in Rogers
Other significant actions in the third quarter of 2021:
Sale of 1 million shares of Carrier Global
Purchase of 1.2 million shares of Devon Energy
Purchase of 1.5 million shares of Ero Copper
The investment in Rogers Communications was cut by more than 70% during the months of July, August and September with the sale of 1.3 million shares. Fiera increased its investment in Canadian Pacific by nearly 20% following the purchase of more than 830,000 shares of the rail carrier. The stake in Restaurant Brands (Tim Hortons) was increased by 6% with the acquisition of a block of 200,000 shares.
Jarislowsky Fraser
PHOTO DANIEL ACKER, BLOOMBERG ARCHIVES
After selling 13.7 million shares of the Calgary pipeline giant in the previous quarter, Jarislowsky lowered his remaining stake in the Alberta company by 75% during the months of July, August and September.
Co-heads of actions: Charles Nadim and Kelly Patrick
Headquarters: Montreal
Highlight: Significant reduction in ownership in TD
Other significant actions in the third quarter of 2021:
Purchase of 2 million Restaurant Brands shares
Sale of 9.6 million Enbridge shares
Purchase of 1.6 million Scotia shares
The portfolio holdings in Enbridge continue to decline. After selling 13.7 million shares of the Calgary pipeline giant in the previous quarter, Jarislowsky lowered 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%.
Letko Brosseau
PHOTO BRENT LEWIN, BLOOMBERG ARCHIVES
Cenovus, Alberta facilities
Investment managers: Peter Letko and Daniel Brosseau
Headquarters: Montreal
Highlight: first investment in Bausch Health
Other significant actions in the third quarter of 2021:
Sale of 3.2 million Cenovus shares
Sale of 1.2 million Telus shares
After the sale of 3.4 million shares of Cenovus in the previous quarter, an additional block of 3.2 million shares of the Calgary power producer has just been sold by the asset manager Montrealers in July, August and September. Holdings in major Canadian banks such as Royale, Scotia, BMO, CIBC and TD have all been cut from 2% to 5%. The investment in car seat manufacturer Adient was eliminated following the sale of the 1.7 million shares held in the portfolio.
Hexavest
PHOTO EVA HAMBACH, AGENCE FRANCE-PRESSE ARCHIVES
Microsoft Offices, Maryland
Chief Investment Officer: Vital Proulx
Headquarters: Montreal
Highlight: elimination of the investment in IA Financial Group
Other significant actions in the third quarter of 2021:
Sale of 221,000 ExxonMobil shares
Sale of 200,000 Pfizer shares
Sale of 74,000 shares of Newmont Corp.
Exposure to stocks of large US companies in the technology sector continues to decline at Hexavest. Investments in Microsoft, Amazon, Alphabet (Google) and Apple fell 10-20%, depending on the title, for the second quarter in a row. The firm also cut its stakes in other large American 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 & Exchange Commission on a quarterly basis the contents of their portfolios of stocks that are sold in the US markets. The securities of many Canadian and Quebec companies are traded in the United States, which makes the documents filed by Quebec institutions interesting. These statements are monitored for signals that reveal where large investors are identifying stocks. The documents for the third quarter of 2021 were filed in the last few days, allowing to see how the big investors in the province have positioned themselves for the fall.