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Toronto-Dominion Bank (The) (TD)
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Sun Life Financial Inc. (SLF)
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National Bank of Canada (NA)
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goeasy Ltd. (GSY)
Q: Expanding on my recent question about my desire to reduce exposure in the Financial Services sector, today's article in the Globe & Mail is of concern:
"Non-prime lenders warn thousands of borrowers they could be cut off because of new maximum interest rates"
Should this cause me to rethink my strategy to reduce TD to raise the cash? As you pointed out in your answer, GSY is significantly riskier than the our other holdings in this sector.
We are seniors (75 & 80) and the stocks referred to are in a RRIF.
Your thoughts? Thanks!
"Non-prime lenders warn thousands of borrowers they could be cut off because of new maximum interest rates"
Should this cause me to rethink my strategy to reduce TD to raise the cash? As you pointed out in your answer, GSY is significantly riskier than the our other holdings in this sector.
We are seniors (75 & 80) and the stocks referred to are in a RRIF.
Your thoughts? Thanks!
5i Research Answer:
GSY has already adapted well to the new rules, and only a very small part of its business now is to clients paying the maximum ARR. In fact, the new rules likely benefit it more (being larger) as smaller players have less ability to compete and have higher costs of capital (thus lower margins). Thus, we would not 'react' to this news now (it is fairly dated news). But, regardless, we would still see GSY as riskier than TD overall. We think is has far greater potential, but if reducing the sector and one is conservative it may make more sense to reduce smaller companies first.