Manulife Financial (MFC.TO)

Financials have recently been doing well in anticipation of an improving NA economy. Instead of a recession, looking like a soft landing with potential for upside. In Canada, the #1 ranked financial services company in his rankings. Its gain, which started about a year ago, has been very consistent and well supported. Yield is 3.6%.

CEO did a great job cleaning things up, and is retiring next year. Trimming aggressively in the last month or so. Sold it in his growth fund, bringing down the weight in his income fund. A lot of the gains have been made. Yield now is just 3.5%. Company's doing everything right, there just isn't the same upside as a year ago.

They turned around to regain investor confidence, but he's cautious buying it now. Is reasonably valued. Tricky. Pleased with it, but the company hasn't changed fundamentally.

Excellent company that would recommend buying. Trading at 9x multiple with rising earnings. Dividend very strong. Expecting share price to rise. 

After going nowhere for 10 years, MFC broke out. Are doing very well in Asia and wealth management. If they come close to hit their targets, there has room to run, though a pause in the stock may be due.

There is a long breakout on the one year chart. It is a little ahead of itself and may pull back which would be a buying opportunity.

Shares are near 2007 highs. Good balance sheet and managers. He likes the lifeco business, but he will start divesting MFC. MFC is no longer cheap.

"The longer the base, the bigger the time in space." Investors were patiently clipping coupons, and now there's been an upside breakout. Anyone who bought recently is in the green, and that's really positive. 

His contrarian view is that rates are actually going higher; pause for 6-9 months, but then inflation's coming back. If not interest rate increases, it will at least mean no more cutting. Higher rates are pretty positive tailwinds for insurance companies. So even if you've got a gain, keep holding.

Performance of stock has been excellent. Strong assets - very happy with price appreciation. God asset base with reliable management. Owns shares and will continue to hold.  

In financials, his biggest weight is insurance. His #1 position is FFH in P&C, but MFC is a significant position as well. He also has IFC. This group is behaving well. 

Ultimately, you're buying a giant investment portfolio. Capital markets look pretty good, Asian exposure is attractive.

Likes the breakout. His #2 choice in the space, behind FFH at #1, but ahead of SLF.

Stock spent a long time underwater if you bought before the financial crisis. All of a sudden, has become the belle of the ball. Took off after de-risked LTC and annuities businesses. On wheels ever since.

Business doesn't have opportunity to reinvest earnings. Dividend payout good, but would rather high rate of return on capital. Compared to a high quality business like Constellation Software - not as good a business. Company will benefit from lower interest rates, but believes there better options for investors out there. Also not founder led/owned. 

It is at its highest level in a year. It has 3 major features: top line growth, margin expansion and dividend growth. It is getting out of long term care which is a catalyst. Growing at 9.3% and trading at 9X it is still cheaper than its group. He considers it better than the banks. Lower rates will help with their charges.
Buy 12  Hold 5  Sell 0

Hard to buy at these prices. Has done all the right things. Overhang of LTC business is gone. Traditionally, benefits more in a rising, not falling, rate environment. Bigger story is focus on Asian growth of middle class and asset management.