Intact Financial (IFC.TO)

Just acquired OneBeacon, the leading North American specialty provider, which will give them growth opportunities in the US. It is a highly fragmented space, so there are a lot of acquisitions upside. He models 18% EPS, and it is trading below its five-year average. OneBeacon is probably not accretive, but is probably neutral for 2017 earnings, and is really accretive over 24 months. Dividend yield of 2.7%. (Analysts’ price target is $103.)

(Top Pick Mar 31/16, Up 6%) The big fires in Fort McMurray hurt them. He sees growth continuing. It is trading at a discount. It can grow by acquisition. It has its best days still ahead of it. Rising yields in the US will help lifecos for sure. P&C won’t receive that material an impact on their business.

Analysts are calling for $6.92. They have enjoyed a really nice growth rate, but it is running up against powerful resistance at two times book value. He is optimistic, however.

(A Top Pick March 31/16. Up 2.87%.) At the time, it was cheap relative to its five-year average. It is not any more, because they had very poor earnings this year. Very conservative and highly resilient. He thinks it can go a lot further from here. Yield of 2.5%.

Industrial Alliance Group (IAG-T) or Intact Financial (IFC-T)? When you have a great business and there is a one-time event that is not replicable, and the company sells off in a material fashion, this is one of the best investment opportunities, and is the kind of opportunity that Intact Financial represents. It is hard to choose between these 2. They are both long-term holds and they both know how to manage risks.

A great business and management is 2^nd to none. They have structural advantages that enable them to earn ROE’s well in excess of the industry. If they are not making money, no one is making money. Not cheap, but he hopes to own more down the road.

He is modelling that they grow their earnings per share by 15% annualized over the next couple of years. Until recently, one of the concerns was that their BV had dropped due to preferred shares and weakness in the stock market. Last quarter that bounced back in a very big way, so their capital levels are very strong, meaning that they can boost their dividends. Also, they can grow by acquisition. Dividend yield of 2.55%.

Property and casualty insurance. What differentiates this from most other North American P&C’s is their investment shop bolted on to the insurance company. It is superb. A world class property/casualty company. This zigs when banks are zagging. An excellent company.

(A Top Pick Sept 19/14. Up 28.56%.) Had their earnings today and stumbled a little on underwriting profitability and lower Book Value due to some energy losses and preferred share losses. A buying opportunity over the next couple of days. Great company. Still trading below its 5-year average.

(A Top Pick Sept 16/14. Up 35.46%.) The largest property/casualty Company. The big thing he likes is that they actually make money on their insurance. Have been picking up smaller deals. They are very disciplined.

(Market Call Minute.) Not quite the growth he is looking for, but an extremely well-run property/casualty Company. He would say they are in the top 3 in North America. Doesn’t quite have the growth he is looking for, but an excellent business.

Manulife (MFC-T) or Intact Financial (IFC-T)? These are 2 different types of companies and can’t really be compared. This is a life company and the other is property/casualty. This one is brilliantly run and is the biggest apart from Fairfax (FFH-T). He likes this one endlessly. It can be aggressively buying other smaller companies.

He is not a fan of the casualty side of the insurance business. He prefers PWF-T and SLF-T. IFC-T has done well, but he considers this area to be subject to whatever happens. If you believe in climate change then the future is a little uncertain.

(Top Pick May 16/14, Up 25.95%) A leader in the property and casualty business. Growing through acquisition and using its scale. They just bought some business from Canadian Western Bank. They are a leader in a growing business space.

Resource money moving into non-resource stocks is making them over inflated in value.