Friday, November 28, 2008

Blackmont Capital's Brad Smith is One Tough Analyst to Surprise

• Brad Smith (BS) on National Bank's $237 million writedown for Q4 2008, as reported by Bloomberg on 26 November 2008

“The ABCP writedown comes as no surprise given recent credit market deterioration,” Blackmont Capital Inc. analyst Brad Smith wrote in a note to investors. Smith, who rates National Bank shares a “hold,” said that the preliminary results are 5 cents a share higher than he was expecting.

• BS on TD Bank's $500+ million writedown for Q4 2008, as reported by Bloomberg on 20 November 2008

"We're not surprised by any of this, and we think there's more to come from TD," said Blackmont Capital analyst Brad Smith.

• BS on Scotiabank's $890 million writedown for Q4 2008, as reported by Dow Jones Newswires on 18 November 2008

Brad Smith at Blackmont Capital said Scotia's fourth-quarter write-downs were "a relatively small amount of money" that probably will shave about 60 Canadian cents a share off its earnings in the period. "If that's all there is, then there's nothing to worry about."

He said he wasn't surprised to see the write-downs, as he expects Canadian banks to view 2008 as a "lost year' and enter 2009 with a cleaner slate.

• BS on CIBC's possible writedown from its exposure to SCA, as reported by Financial Post on 18 November 2008

CIBC has a net fair value exposure of US$1.2-billion to the bond insurer and a net notional exposure (excluding subprime) of US$2.6-billion, according to Blackmont Capital analyst Brad Smith.

He is not surprised by the recent developments at SCA despite the US$1.8-billion capital injection it got from Bermuda-based insurance firm XL Capital Ltd. in July. Mr. Smith said management’s concession that the future of SCA is in doubt will likely pressure other monoline credit default swap spreads and increase writedowns at CIBC.