Manulife Financial (MFC.TO)

(Top Pick Sep 15/14, Up 0.44%) International growth has been strong. They still lever somewhat to the market and are highly levered to higher interest rates, which have not increased. He still likes it. It looks fine to him.

It got beaten up pretty well. He predicts 18% growth. They say they are on track to meet their core expectations for the end of 2016.

If you own, would you averaged down on this? Dipped below $20 this week which is a decent price for it. It should have some measure of recovery. He would consider adding to this at $20 or below, in order to average down. Have very good growth prospects in Asia.

It is the only one of the three delivering good financial and operational results. But life insurance companies are not necessarily the best financials to be in. He has no lifecos because they have a difficult time in a low rate environment. He has banks.

(A Top Pick Sept 13/14. Down 6.3%.) This will benefit from higher rates. He would be a fairly aggressive buyer at this price.

This is a good time to upgrade your portfolio. Look for large cap stocks that have been beaten down significantly, for reasons that are maybe not justified. This company fits into that. This has been soft because of the link to the equity markets, but also because of the Asian part of their business, where people just automatically assume that is China. Actually very little of their business comes from mainland China. It is predominantly out of Japan and Hong Kong. Dividend yield of 3.36%.

Manulife (MFC-T) or Sun Life (SLF-T)? Likes Canadian lifecos better than Canadian banks or US lifecos. A lot of these Canadian lifecos have had very considerable exposure to the US$, so the massive depreciation in the Cdn$ is really filling things up nicely. If rates are headed higher, the spreads of the underlying of all the new businesses are pretty good. This one seems to be suffering a little bit more from the Asian market exposure, which could prove to be short-lived and a lot of worry about nothing. The lifecos space in Canada is a place that can do very well.

(Top Pick Sep 9/14, Down 4.16%) She still likes it. The decline is because of the general market and it has actually held in relatively well. They have done 3 transactions in the past year. They started to raise their dividend last year and that signals stabilization in earnings. ROE and Book value will continue to grow. They have good exposure in the US and in Asia.

Has good valuation and scores in the top 20% for him. Price momentum, despite its check back, is actually holding in pretty well. Scores in the top 70% for him. Reasonably valued and has a good yield. Will benefit from a rising rate environment. The kind of stock you can hold for the longer-term.

Canadian and Asian operations are about the same and their largest operation is in the US. Considering how weak and volatile the market has been, she is really not sure whether Yellen in the US will raise rates or not. At some point we will see higher rates in the US. (She is avoiding owning Canadian stocks going into the election, just in case the Cdn$ gets hit one more time.) Dividend yield of 3.34%.

(A Top Pick Sept 23/14. Up 1.11%.) Things are performing well on the operating side. They have the Asian unit which should do well. They are in the UK, in the US, and big in Canada.

Down 21.3% from its high, well beyond the decline of the TSX. Growth rate and consensus earnings per share is 19% this year, 16% next year and 13% the year after. A far greater discount than it should be. Its 3 major divisions are Asia, the US and Canada. Asia, 27% of its business, is up year-over-year at 23%. Wealth management, 33% of the business, is up 31%. Canadian business is 33% of its business and is up 31%. US is 36% of its business and is up only 1%. Dividend yield of 3.49%.

In general he likes the Lifecos, and a lot better than the banks. Prefers Sun Life (SLF-T). Doesn’t own this because the old Manulife was extremely highly levered towards markets, and now they have gone the complete opposite and deleveraged, so they don’t have much leverage any more. Their US operation is not as well run as one would hope. Long term their China exposure is going to be a good place to be. (See Top Picks.)

Just bought some today. When you look at insurance companies, particularly this one, it benefits from the series of things. 1.) A very strong asset management franchise. 2.) It has a very large International exposure, particularly in Asia, so it is growing fairly rapidly. The insurance industry is relatively new to many parts of Asia. A well-run company.

He takes the approach of buying a full basket. He thinks SLF and MFC are the best in the sector. He has been adding to it in the portfolio. Dividends can increase over time and hopefully share prices follow.