CI Financial Corp (CIX.TO)

This stock fell because Bank of Nova Scotia (BNS-T) owned a large percentage of their holdings and were selling the stocks. Stock went up today because the deal was done. They have a great franchise. The mutual fund industry has come down to only 6 or 7 major players. No longer a high growth industry. With the stock market doing so well, these companies do well during that period. This company has had great performance.

Could Scotia’s (BNS-T) divestiture of its 37% stake impact their ability to sustain the dividend? This has nothing to do with CI’s paying its dividend because it pays its dividend out of the cash it generates from management fees from their funds they manage. Well-run company. Dividend is a little over 3% and is likely to rise. This is a good company and well run.

A terrific mutual fund company. Their assets have absolutely ballooned. Canadians love to pay high prices for mutual funds so the company will gladly sell you a mutual fund and take a 3% management fee. He is very bullish on financial investments over the long-term, especially in Canada.

Scotia disposition is an overhang on the stock and if they have to go into the general market to Sell their $3.8 billion asset, there is the potential that this will cause an overhang for a period of time because they may have to commit to a discount. However, the underlying business is very, very solid. 1-3 years down the road, this will be a longer-term Hold.

Canadian financials in particular have a period of seasonal strength from January all the way through to their earnings. This one reports May 7. The big 6 report closer to the end of May so you still have a bit of time. Chart shows consolidation for the past few months so it hasn’t really played out according to seasonal tendencies. There are better alternatives out there. Revisit financials in August.

One of the things that puzzle people when they look at Canada is that why are Canadians prepared to pay so much to own mutual funds. Highest management expense ratio in the developed world. Fund industry in Canada had a couple of lousy years when they couldn’t sell new product. People were traumatized after the stock market crash of 2008-2009. Now all of a sudden, people are buying new funds and not as worried about the stock market. A lot missed the class of “Buy Low and Sell High”. Doesn’t think it is an outrageous price right now.

Bank of Nova Scotia (BNS-T) have major holding. Do you think it will take it over completely? They would have to pay a premium to acquire a great company like this. This was their original premise, but there has been some friction initially between the 2 companies and nothing much has happened and he doesn’t really know what will happen. Fully valued and expensive, but it deserves a premium price. He has been buying AGF Management (AGF.B-T), which he feels has great value, but they still have some issues to iron out to return to growth before the market comes back into this.

Probably the best performer of the asset managers. He would encourage you to Buy if you saw a pullback. From a valuation and income standpoint, he prefers IGM Financial (IGM-T).

This company is in a very sweet spot right now. Really great asset growth and is trading at about 16-17 times earnings. Great dividend yield which should continue. Funds have been doing incredibly well through this period. A lot of international funds and overseas money. Thinks it will continue to increase their dividends.

High quality company. Asset management is a good spot. Feels it has the ability to continue to take market share. The knock has always been that it is expensive. It will probably always be expensive because it is such a high-quality operation. You could make an argument for holding it here. If the market continues to do well, they will do well.

Sector has been out of favour for a long time. New net buyers. Shares had a great year and there is lots of runway going forward. 3.41% yield and a strong dividend policy.

Had a terrific run. Just had their best quarter since Q3 2000. However, he took down his target price by $1 to $36 just because it had such a terrific run. Trading at 2 standard deviations above their 5-year average. Solid assets under administration with good sales momentum. Thinks AGF Management (AGF.B-T) has a lot more upside.

Very well run. Very good at managing and maintaining their costs. Have come out of a tough equity market with very good equity returns. Good asset growth. Have a very strong policy of returning capital to their shareholders.

(A Top Pick June 8/12. Up 54.83%.)

This, along with all the other asset managers, is benefiting from improving market returns which increases their assets. Also, there is a slight shift to equities from income products and equity funds generally garner a higher management fee. If you think the markets are going to continue to do fairly well, she would continue to Hold.