Using UBS Quant Research Crowding Tracker to gauge investor positioning amidst macro and trade policy uncertainties, UBS notes that bank stocks have underperformed the Toronto Stock Exchange by ~500 bps year-to-date.

"In the context of a valuation pullback, our Crowding data suggests a notable shift in positioning and sentiment," notes UBS. The Big Six Bank group now skews on the long side with an average factor of 1.0 (net neutral factor is 0) after sitting in negative territory for most of 2024. Data suggests that investor positioning is long CIBC, RBC and Scotiabank, neutral for National Bank, and short for TD Bank and BMO.

CIBC, RBC & Scotiabank, which stand out with the highest net long crowding factor, have posted positive changes in their crowding factors over the past three months, reports UBS. CIBC screens as the most crowded long in the group. RBC screens as a net crowded long (second in the group after CIBC) with a current factor of 6.1 with month-over-month improvement of +0.9 and quarterly improvement of +6.7. "With uncertainty high, sentiment appears to continue to favor RY; positioned with revenue diversification, strong balance sheet and fundamentals and HSBC deal-related tailwinds," writes UBS. RBC's investor day may present a near-term positive catalyst as the analyst expects a detailed path to higher profitability.

While National Bank's crowding factor is neutral, BMO & TD's crowding factors suggest net short.

BMO ranks with the most negative absolute crowding factor in the peer group at -6.8. Its factor has been relatively range-bound in negative territory since mid-October.

TD screens as the second most crowded short in the group at a factor of -4.1. While TD's factor has improved recently, it still screens with amongst the lowest absolute crowding factor followed by BMO.

"We would note that TD has posted the strongest share performance, up 14%year-to-date and outperforming the group by 1700bps. BMO has also outperformed the peer average, up 1% year-to-date and outperforming peers by 400bps."