CI Financial Corp (CIX.TO)

Have had some weak mandates over the last 12-18 months, and some sizable institutional outflows. There are a lot of mutual fund headwinds, but thinks these are more than captured in the valuations. Trading around 13X versus its 18X five-year average. His analysts model 80% growth in 2017 over 2016. There is $1 billion of institutional commitment that could come on over the next two quarters. They have a buy back which helps them. Good 5.5% very well covered dividend yield. Cheap enough that you could write a Put and get paid premiums. This is good here for a nice little trade.

*Short* The new disclosure requirements about fees will crimp sales especially at companies where sales are weak like this one. It is still a very expensive stock.

*Short* (Top Pick July 5/16, Up 4.74%) They have been seeing redemptions over the past year. He is still short this stock. The valuation is still very expensive. It is a very tough business with the regulatory environment changing in Canada. Broadly, it is a very well managed company, however.

Well run / well managed. There were concerns of loss of institutional mandates and the strength of their sales. They have healthy profit margins. Management is good.

This has a fairly attractive dividend, so some people tend to own it for that reason. It is in the mutual fund business, and he worries that there are a lot of long-term pressures on that industry. Not a particularly cheap stock and has an OK dividend.

(Market Call Minute) All mutual fund companies will get hit by the upcoming discloser of fees. Funds should move to ETFs.

*Short* This fits in with the broader theme of being Short financials. Trades at an excessive valuation, 7% of its assets under management. Its peer group in the US would be 2%. Canadian regulatory environment is changing to the extent that investors will now actually see the mutual fund fees they pay in dollar terms. That is going to bring about more conversations about performance, and this company’s performance has lagged the peer group.

It meets his criteria, however the mutual fund space has been played out. He thinks they are struggling with fund outflows. He feels there are better opportunities.

(Market Call Minute.) The whole asset management sector is undervalued. He likes this.

This has been a really well managed company, and managed to do what most other independent mutual fund companies haven’t. They competed very effectively against the banks, who obviously have an advantageous position with their reach. Recently they’ve gone more into redemption, meaning that some of their unit holders are exiting. Some of their bigger franchises have had slightly less good returns. Also, there is a spotlight on fees, which is an issue. If you take a long term view that equity markets are going to do very, very well over the next number of years, this company will likely be okay. Technically it is close to a 52-week low. This is a bit of a wait and see.

Just acquired First Asset Capital which gives them a beachhead into the ETF space. A nice 4.6% dividend, which he sees growing at 10% over the next couple of years. However, he only sees about a 4.7% compound annual growth rate over the next couple of years. If you are really bullish about the market and you think it is going to go straight up, then this is not a bad play. If you think it is going to go sideways and be bouncy, he isn’t sure that this is the most exciting bet. There are headwinds and regulations coming for mutual funds.

Her preference is to be in the banks and financial services space. If you want more of a direct play on mutual funds, this is probably one of the better names to own. Given the valuation contraction that we have seen in the banking sector, her preference would be to own one of the big banks, or maybe a lifeco.

A “steady Eddie” company and a very good company in its area. If you are there for yield, it is slow and steady. If you have something better to buy, then this could be a Sell.

Because of high fees, and new transparency rules, they will have pressure on them. CIX-T is going to be a survivor. They have done a great job and will continue to do so.

This has been the class act in the mutual fund business. Mutual funds are in secular decline, but this one has done everything right. They have been getting market share.