Manulife Financial (MFC.TO)

The stock has been choppy. She's spoken to the CEO and thinks he's good. They're dealing with legacy products (long-term ones that are typical in insurance), and many of these were not priced correctly. That's an overhang. MFC had a good Q1. It enjoys 30% of its operations in Asia. It's increased its dividend. As they distance themselves from legacy products, their core earnings will grow. She expects the stock to hit high-$20s by end-2018.

It went through its struggles during the financial crisis. They have been one of the more successful companies expanding into Asia. Their ratios are in great shape and earnings are growing in double digits. It has become a well run business once again.

There are some concerns with its legacy portfolios. Nice growth in Asia. Trading at 8.5 times. Cheap sector at 9.5. Dividend of 3.7%. (Analysts’ price target is $30.04)

When the economy improves and interest rates go up, insurance companies should see earnings improve. He far prefers Sun Life (SLF-T) as MFC-T had to cut dividends during the financial crisis, but SLF-T did not. There are some issues about the guaranteed contracts they sold, leaving speculation that higher liabilities than expected. The dividend is okay and it has started to rise again. It is an okay company

He's long MFC. He likes the story and is pleased by today's earnings report. The core earnings see decent growth and earnings. They are great beneficiaries of interest rates rising. They have better international diversification than other
Canadian lifecos, which enjoy attractive vauations overall.

It'll be range-bound. Doesn't see it moving much. Sooner or later, it'll rise up to its topside, which is 5-7% higher from now. A good stock for dividend collectors. Don't expect big moves or big returns.

Large life insurance in Canada. The Asian business is growing very nicely. The Hancock business in the US is not doing so well and, in his view, that is affecting the price of the stock. Still not very expensive. There is an opportunity to own this.

It has had a bit of a pull back. Lifecos do a bit better in a rising rate environment. They should start to do better. The balance sheet is in line and there is no problem there. It is fine in here.

They just changed management from a gentleman that 'steadied the ship'. The new one comes from managing operations in Asia. He expects new management looking at legacy assets that have held the company back. It is one of his primary holdings in the financial group. He thinks they will do well in a rising interest rate environment. They are much more present in Asia than any of the others. It is well capitalized.

Several months ago they brought in a new CEO and has yet to see a substantive change. He would prefer Sunlife or Great West Life instead.

Sees little or no impact on life insurance, including MFC's Asian operations, from a US trade war. Interest rate rise will help them. They have a good international growth profile, because of Asia. Generally, the Canadian lifecos look good. MFC is one of the few Canadian financials he owns.

A good company, but the stock price has been frustrating as it's stuck in a range given the John Hancock hangover in the U.S. MFC is trying to figure out what to do with it. When interest rates rise, MFC's stock will rise. Their Asian business is another tailwind.

He sees them as a black box in terms of how they price their contracts. They have complicated accounting and legacy-related challenges (such as the contracts written by John Hancock.) They have a new CEO and the new strategy is not yet clear. He prefers Intact Financial.

Manulife (MFC-T) versus Sunlife (SLF.T). He is not sure what the issue with Manulife might be. He holds Manulife in his RRSP and would buy more if it pulled back to $22.65. Sunlife is doing a good job and is way over-performing Manulife.

He owns SLF-T as well. He would more likely move from SLF-T into MFC-T rather than the other way. He is surprised it is performing a badly as it is. This is a good level to get into MFC-T and they are growing the dividend. It is good to hold them both in this rising rate environment.