The Successful Investor Hotline – Friday, January 11, 2008

Article Excerpt

CANADIAN IMPERIAL BANK OF COMMERCE $71.31, Toronto symbol CM; moved down this week due to growing uncertainty over hedges it purchased from troubled U.S. bond insurer ACA Financial Guaranty Corp. These hedges are intended to protect CIBC from U.S. subprime mortgage losses, but ACA may not be able to meet its obligations. CIBC has already written off about $1 billion of its U.S. subprime-related securities, and could face further charges of roughly $2 billion. CIBC earned $3.1 billion or $9.24 a share in the year ended October 31, 2007, excluding unusual charges. The bank remains well capitalized, which reduces the possibility it will have to issue new equity. It’s also selling its riskier operations, and doing a good job controlling costs. CIBC is a buy. TORONTO-DOMINION BANK $68.19, Toronto symbol TD, also moved down this week on U.S. subprime concerns. TD has little subprime exposure, but its plan to buy New Jersey-based Commerce Bancorp has raised investor fears of potential exposure to U.S. subprime…