Stockchase Opinions

Andrey Omelchak Guardian Capital Group GCG-T BUY ON WEAKNESS Apr 01, 2025

High quality. Can remain dormant for a while, but when you get paid you really get paid well. Diligent capital allocators. Nice dividend, buying back stock. Acquisitions are accretive. Quite illiquid. Exposed to equity markets.

$41.600

Stock price when the opinion was issued

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BUY
Strong balance sheet. Selling at book value. A defensive holding.
BUY
Good management. A top rate fund although he prefers owning individual income trusts.
TRADE
If you own it, hold it.
DON'T BUY
Sold off their retail funds to Bank of Montréal (BMO-T). Not excited about this company because the story has always been the same and there is not a catalyst. The value of the company is largely the stake they have in Bank of Montréal. The asset management business’s that are left over are not particularly great.
COMMENT

Has 2 main assets, the core asset management business which has been improving and making acquisitions in the business and has been getting better. Also, have a very large portfolio of corporate investments on their balance sheet, the largest of which by far is a stake in the Bank of Montréal (BMO-T) and every time this moves up, this company becomes more valuable. As their asset management business improves, they can hopefully grow and make acquisitions in their core business and maybe sell down some of their BMO stake. He thinks the outlook is positive. Thinly traded, so you could look at CI Financial (CIX-T) or Gluskin Sheff (GS-T) instead.

COMMENT

He has been Long Guardian Capital (GCG.A-T) and Short the Bank of Montréal (BMO-T) since April/09. There is about $2.50 left on the stub for this company. It is a very solid business and has been growing and firing on all 4 cylinders for the last 48 months. They have started to sell some of the BMO shares, using some of the capital for strategic acquisitions. It will take some time for some of those investments to pan out. Feels their perspective on this is a great one. Expects that at some point this company will get taken out.

BUY

Sold its mutual fund business to BMO. This is his way of playing BMO indirectly. They are expanding internationally. They are currently buying back shares at $18.

HOLD
Long-term holders of it. Really like it. Excellent track record in investment management returns. Acquiring assets to diversify out of Canada. Distribution business for mutual funds and insurance, which is extremely profitable. His valuation is in the low 30s. Rock solid balance sheet. No debt. One of the asset managers that's performed the best in this market.
PAST TOP PICK
(A Top Pick Jun 23/21, Up 4%) Has held stock for 15 years. Large dividend increases and 400% return for holding period. Well managed company with solid balance sheet. Growing organically and through M&A. Trading at 40% discount to intrinsic value.