Manulife Financial (MFC.TO)

It has been frustrating, but he sees their earnings next year being 25% better than this year. They have been hit by their energy book, actuarial charges and lower rates. They are so much cheaper than SLF-T. The 4% dividend will grow 12% annually. Buy it on the US side if you have US cash.

This one has always had something come up and they stumble. He is warm toward the lifecos, especially as rates start to go up. He prefers SLF-T.

This has pulled back, a lot like US banks. Lifecos are all exposed to interest rates, and get squeezed when rates don’t go up. This has a lot of growth in Asia that is kind of non-interest rate exposed. They also have John Hancock in the US. He is showing 9X earnings and a discount to Book forward, which is as cheap as these things get. It will go back to $21-$22. Dividend yield of 4.03%.

(A Top Pick April 14/15. Down 13.61%.) This has been very disappointing. Energy exposure in their portfolio has hurt them. Very attractively valued, trading below BV. Longer term she likes their exposure in Asia. Despite a disappointing 4^th quarter in February, they raised their dividend by 9%.

With insurance, a lot of profitability comes from current interest rates, which are not going up as expected. We had a break of the trend early this year. The old support level is the new resistance level. If it breaks $19-20 it may go back to the old highs, but he would not buy it.

Ranks in the middle of the pack. He also likes to see some relative strength before making an investment, and this doesn’t have that yet. If you own, continue to hold. This is one that as the general market improves, you will see some improvement in the lifecos.

(Market Call Minute.) This was the only company that cut its dividend in 2009, so he wouldn’t own it.

From a seasonal perspective, this tends to peak at around May, but the best month by far is February, which has an 81% frequency of success over the past 16 years. In April and May, the frequency falls to 50%. This stock had a huge decline today of 5.27%, breaking below its major moving averages. It looks like it is on track to test the February low of $15.32. There could be further downside. There is nothing to suggest that the selling is over.

The insurance companies are held back by negative interest rates. They need rising interest rates. This has been a headwind. He would not look to this name right now. Banks can better sustain themselves in a low rate environment. Don’t sell and jump into a bank, though.

(A Top Pick Jan 30/15. Down 5.11%.) Picked this for its US exposure, and thought it would benefit from the FX and the growth there. Also, for its Asian operations with its growth. He is still very constructive and likes the name.

You have seen Canadian banks go up, but Canadian insurers got left behind. Insurance companies try to fund liabilities through their assets, and in a low interest rate environment, where you have equity market volatility, it becomes much more difficult to do that. Ideally you want interest rates and equities to go up. He likes the insurance companies here, but thinks you are going to be restrained by the direction of interest rates.

(Top Pick April 28/15, Down 13.71%) Management has done an extremely good job. They have re-aligned the commissions they pay. It is selling at a very good multiple, at basically book value. He would call it a buy today. It is a good insurance company to hold on to.

It has been a tough place to make money. They did a good job of getting into Asia, who are getting older and wealthier quickly. There are lots of good things going on. He never bought it because he finds more attractive places to be in the space. It has been in the penalty box since they cut their dividend. There are better places for capital.

A huge financial company. They reported recently and had a crushing top line miss. You cannot suckle on resources as long as we have and not expect some sort of blow back. Look beyond some of the big banks. He likes LB-T.

On fundamentals, the challenge is that there is a little bit more time to go in this low rate environment in Canada, and that is not good for their industry. The upward trend line was broken in 2015, and the chart is now showing a couple of lower lows.