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Opinions Jason Donville
Canaccord Financial IncCF.TOCOMMENTFeb 05, 2015
Stock price when the opinion was issued
As of Jun 17, 2026. Market Open.
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Management wants to buy it out but there are two conflicting groups of shareholders. The employee shareholders want the lowest price possible while the outsider shareholders want the highest price possible. This type of conflict is not good. Value it as a whole, not on the split-up of parts.
The company is being taken out. Unhappy with that? Welcome to Canada. Why is management doing this when we're heading into the biggest bear market since 2008? CF wants to break it up; the asset management business would trade higher on its own. And the brokerage business is very cyclical in general. Has never owned this or talked to management. A curiosity.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The stock has been sliding since releasing results that were largely positive. They beat on both earnings and revenues. Revenues only grew 3.8% however. The valuation remains cheap. Management has noted facing headwinds from broader markets and recent weakness in markets have assisted with the selloff. Unlock Premium - Try 5i Free
Stockchase InsightsBilly Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Despite it being 90% up this year, it is still relatively cheap at 9x earnings. They also added to their dividends in the peak of the pandemic. They blew estimates away and the stock has seen some upgrades. Growth may slow but it has some more runway. Unlock Premium - Try 5i Free
Stockchase Insights
It has struggled. Investment banking last year drove this company; they also the rode and cannabis and blackchain wave. Not a cheap stock. Don't add here. They're in a tough world of small caps with limited capital. They've done
fantastically well with cannabis, so kudos for them.
There is a bit of a rounded look on the three year chart. Lately the highs are getting higher and the lows are getting higher. It is a cup and handle formation. This is the handle now. You get noise at this point. If it moves up from here then you have a pretty good looking chart. It is in the beginning stages and could end up looking very good.
This stock is breaking out. We’ve seen these levels before, but not for a couple of years. This stock has been a spotty trader, in terms of volume. There was a good consolidation at $6.50 and it looks to be coming off of that. The volume on the recent upside swing looks good. It might rise to $8 or 9 over the next 6 months. It pays a very small dividend. In terms of fundamentals, it looks like a bargain right now. For example it looks good in terms of earnings and in terms of industry relative value. If it does fall, start reducing at $6.40 or $6.50 and use $5.85 for a full exit.
Banks are doing well, but unfortunately it is at the expense of the independent brokers in Canada. This is certainly cheap, but the Canadian broker space in general is challenged, because you have the banks on the investment side of things and are doing smaller and smaller things.
Had a Short on this and just covered it in the last couple of days. His issue is that the ROE is really, really modest. They have a capital base of about $1.1 billion of equity and are on target to make $35 million. That is a 3.5% return. When you are doing this kind of return on that kind of capital, you won’t trade at BV. The rough rule of thumb in Canada is that if you have an 8% ROE, you will trade at Book, 16% ROE you will trade at 2X Book, etc. This company’s average is around 4%, so that should trade at around .5X Book, and their average is about .6X Book right now. They have to become much more capital efficient. If there is a little bit of a rally in this company and if you own, he would recommend that you Sell.