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CIBC shares rise as analyst boosts rating
by Guy Dixon - Thursday, November 11, 1999

Shares of Canadian Imperial Bank of Commerce rose yesterday on another
favourable report from industry analysts, this time from Nesbitt Burns Inc., which
raised its rating on the bank.

CIBC shares rose 95 cents, or 3 per cent, to $32.85 on the Toronto Stock
Exchange yesterday in heavy trading, with two million shares trading hands,
compared with the average daily volume of 1.1 million.

CIBC was a standout among the financial stocks yesterday, as the TSE financial
services index rose just 0.7 per cent on the day. It has also easily outpaced its peers
in recent sessions, rising 6.1 per cent over the past five days, compared with an
increase of less than 2 per cent by the financial services sector.

This time last year, CIBC shares were badly lagging those of other Canadian banks
and, throughout much of this year, the stock continued to underperform. The recent
uptick may be CIBC's stock playing some catch-up.

Yesterday's catalyst was a higher recommendation by Nesbitt Burns, which raised its
call for CIBC shares to a "strong buy" from its previous, slightly less emphatic "buy."
Nesbitt pegged this on the view that CIBC's current balance sheet will allow the bank
to pay for cost-cutting measures and perhaps enable it to repurchase some of its

"The bank is well positioned financially to take advantage of any investment
opportunities, including buying back its own shares," William Lazarakis, a
Toronto-based banking analyst at Nesbitt Burns, wrote in a report issued yesterday.

"We have upgraded the shares to a 5 rating [the only bank Nesbitt gives such a high
rating], with a revised price target of $38."

Nesbitt's previous 12-month target for CIBC shares had been $36. "CIBC is our top
pick in the sector," the Nesbitt report said.

This comes after a report last week by Standard & Poor's in New York, which
looked favourably on what it called Canadian banks' "hidden reserves." These include
real estate assets, which some of the banks are putting up for sale, including CIBC,
Bank of Nova Scotia and Royal Bank.

The report estimates CIBC's real estate assets to be $1.3-billion, although
depreciation could undermine some of the net gains from the sale.

However, the S&P report emphasized that CIBC had the "deepest pockets" with
$4.3-billion from its investment in telecommunications firm Global Crossing Ltd.
Nesbitt Burns estimates unrealized gains at more than $3-billion.

Nesbitt added that CIBC can begin to liquidate its investment in the company by
April, 2000.

"One of the strengths CIBC has is the potentially significant capital gain emanating
from Global Crossing," said Susan Cohen, an analyst who follows CIBC for Dundee
Securities in Montreal.

Y'all south o'the border take a look up here at our depressed financial sector.


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Standard & Poor looked favourably on what it called Canadian banks'
"hidden reserves."

I agree with Standard and Poor, if we can sell the real estate and our interest in Global Crossing we will have the capital to grow the bank from within. However, with the restrictions that were placed on the Global Crossing shares, I don't see how management will be able to get at this source of cash, short of a take over of Global Crossing.

The Kinross Deal

Did you see November 11th National Post? It seems that we, actual CIBC World Markets, lost our shirts on a bought deal involving $356 million in shares of Kinross Gold Corporation. The only constatation is that we were not alone, Merrill Lynch Canada and TD Securities were in the syndicate with us.

A Good Week

The markets seem to have dismissed the Kinross Deal and we have make some good gains. I hope it keeps up.

Fool on, eh!

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