Manulife Financial (MFC.TO)

It was fairly unloved for some time and he took a position. He bought it looking for a rising rate environment. He started seeing technical indicators showing a resistance level about where it is now. He decided to harvest the profits and move on to greater opportunities even though it seemed just to be forming a base.

Would prefer the Canadian banks. Lifecos are difficult to analyse. This has gotten so big that is time for them to prune some assets, so selling off their US assets may be a smart idea. He is not so sure this is going to benefit much from rising rates.

There are unconfirmed reports that it is going to spin off or sell the John Hancock unit in the US. Seasonality is from mid-September until the end of the year. It has gone sideways ever since. It has recently been testing its all time high. It is outperforming the market and trading above the 20 & 50 day moving overages. This will probably go down with the market. It is a good time to take money off the table if you are a trader.

There was a report today that they are considering spinning off their John Hancock division in the US. He has a tough time with the insurance industry. Even though rates are going up, they are going up very slowly, which is the difficult part about this business. On a multiple basis they are relatively cheap. Their core insurance business is going to take a long time to get to the kind of rate of returns they are talking about. They have a great undervalued franchise in Asia, which is where there is going to be a lot of growth. Spends a lot of time and money in growing the asset management business, an area where you could see really good growth.

He likes this. It has traded in a sort of sideways trade since the US election. Thinks investors have taken the view that this is sympathetic to the interest rates trade. It has been in a bit of a holding pattern since December until quite recently. With the bond market in a bit of a selloff mode and the recent rate hikes, their macro tailwind is in force once again. This is increasingly a play on Asia, and they are a dominant player in many of their markets there. Not expensive at 11.5X earnings and yielding 3.5%.

A great global franchise, and has made some very good strides since the financial crisis. Part of the reason the stock has not gone up is because of a lot of noise, a lot of moving pieces in their earnings. Their core franchise, especially outside of North America, is very impressive. If interest rates were to go up a little, it would help them make a lot more money. He is bullish on this company.

Sell and Buy back in the fall? If you are going to own something as large as this, he wouldn’t bother trying to trade around it. The direction of interest rates seems to be pointing up. This is worth Buying and Holding.

This goes up and down with the daily thought about rates. The company is doing a good job and has lots of growth in Asia. Expects there is 10%-12% in earnings growth, and the chance of a dividend increase in early 2018.

(A Top Pick June 3/16. Up 30.3%.) At that time, it had better growth than its peers and was trading at a discount. Also, insurers do well in a rising interest rate environment. Even though this is reasonably valued, it has lost its price momentum. He sold his holdings.

(A Top Pick July 25/16. Up 35.38%.) He is seeing more short-term opportunities in long-term stocks because of some sort of sideways event going on in the market.

They’ve been doing much better. His big objection is that they have so much focus in the far East. He would rather have more European/North American focus. Prefers Canada Life. Dividend yield of 3.5%.

(Market Call Minute) It would be one he would add for financial exposure. He is expecting a turn in financials for an insurance company. He would go for RY-T for a bank.

The 10 year US bond yields hit 2.6% and went back down to about 2.15%. Lower interest rates are not good for this company and they also have some energy exposure. What is good, is that it is trading at about 5% lower than its peers. Also, has a good growth rate of about 8% and has US$ tailwinds. If you can get this at $23, you should be good.

He does like the insurance space. It is going to be challenged. Life expectancies are extending and the higher interest rate liabilities are extending. He thinks rates stay low for the next decade or two.

He respects their business and what they are doing in terms of being global, especially with their exposure in China. It also pays a dividend. All of that is positive. The issue he has is that it is a hard stock to make money on. They recently reported earnings having a strong quarter. With their dividend of about 3.3% and trading at 11 or 12 times, that yield and Price to earnings valuation is very much in line with where Canadian banks are right now, and he would rather own Canadian banks.