Canaccord Financial Inc (CF.TO)

(A Top Pick Dec 21/12. Up 13.31%.) This is a stock that is hard to get out of. When it doesn’t go up or down, it is hard to make a decision. He’ll probably get out of this, probably very soon. Very sensitive to the financial markets.

These brokerage specific companies are facing some pretty tough challenges. From the regulatory side and on the market for smaller cap issues, which has been dormant. This should be prone to pick up. If you are looking for a higher risk financial play, this is it. There is probably a lot of reward in it, but there is also a lot of risk. Thinks you can get the same exposure, but through the banks with a lot lower risk profile. Dividend yield of 2.77%.

(A Top Pick Jan 8/13. Down 1.51%.) Really didn’t get their act together this year. He was disappointed in management. These guys are stockbrokers and know what works. A lot of insider buying. This is a good leading indicator. Still very cheap. Didn’t participate in the capital market brokers’ led rally. Yield of 2.88%.

Has not been doing well because people are not buying a lot of Canadian issues. It has a decent balance sheet and several legs to stand on, but it is relatively volatile because it is a leveraged play on stock markets.

(A Top Pick Jan 8/13. Down 14.1%.) Still inexpensive. Management has done an underwhelming job of cutting their costs. Would seem that the fat cats at the broker have rewarded themselves, even through a thin time, which is really bad. He has bought more of this. Believes this will follow the Morgan Stanley (MS-N) model which has almost doubled over the past 6 months. Feels there is high potential here. What is weighing on this is its connection to commodities. This can be a $9-$10 stock.

Even though the Genuity acquisition made sense, and they’re well-positioned within the Canadian industry, there is a real squeeze on right now in the industry in terms of costs. Regulatory costs have gone through the roof. Distribution costs have gone insane. Feels this is squeezing the profitability of a lot of these companies, especially the midsize players. He would migrate more to the big banks.

Investment banking is where this type of company makes their profits. Feels they can hang on day to day on the brokerage operations but where they really make their money is on investment banking. He doesn’t see that coming back real quickly.

Short this stock but has been covering his Short. In a tough market like we are in and in a tough summer with resource sector melting down it is a hard for him to get really excited on this company. Towards the end of the summer, when things kind of stabilize, you might want to go into this as a trade.

(A Top Pick Jan 8/13. Down 13.71%.) Bought this because it was a very, very inexpensive stock, something like 40% below BV. Hadn’t realized how bad the resource side of the TSX was. Sticking with it because it is still too cheap. Would look to unload at around $9.

Not as familiar with this one as he is with some of the US investment banks. Has a lot of exposure to Toronto, which are mainly commodities. This is a smaller shop so they don’t get the bigger deals. Should be doing fine on the bond deals but there is concern about exposure to the commodity sector.

Top Pick Jan 07/13, 2.82%) Could see it going off $10 a share by end of year.

His outlook on this is negative. We have just left a decade where the whole natural resource complex was being financed by Canadian broker-dealers and this area has gone quiet right now. Feels the next decade will be relatively quiet. If this is the case, this company will have to reposition themselves, which is going to be a tough go.

Had been quite oversold in tax loss selling and had a nice bounce. BV is somewhere in the neighbourhood of $7 and has historically traded at a premium to BV. Went through a tough time last year because the financing window for junior resource market had dried up but seems to be open again.

Doubled his position from November on. US brokers were being hurt and trading at less than BV last year. Yield curve is starting to steepen, credit growth is happening again and brokers are starting to do better. This is a broker that is most associated with resources which was the worst performing sector. Currently they are just trading over BV. Reasonable dividend of just over 3%. Margins are compressed. Valuation compression is compelling here. Expects to see revenues grow at a faster clip than expenses.

More of a retail investment firm as well as research and investment banking. A very tough business right now and has suffered some financial difficulties. He typically sticks to the banks.