Manulife Financial (MFC.TO)

Recently sold his holdings. Compared to Sun Life (SLF-T) he thinks this is in the better space. Have had a drastically different management team since the Delasandro days, and basically made the company more conservative. On earnings calls, this is a core focus and then you have the investment side. They are pushing into Asia, which is certainly a driver. However, the bond yield side of things, over the past 4 months has definitely been an overhang. His preference would be this company over Sun Life. It is on his radar screen.

Has done a better job of shifting revenues from insurance to wealth management. He likes wealth management revenues because they are re-occurring and provide some stability in the income stream. They also did a nice acquisition last year, buying Standard Life, which deepens their group benefits exposure. Most importantly, this company is well positioned in China, and he feels the middle class in China will continue to grow.

Thinks insurers are going to do reasonably well. If you were to take your profits and move, he feels the smart trade would be to a bank. Watch the relative valuations until you see a moment where there is a bigger advantage to move. Both are good, long term values.

At this point in time, it is probably too early to know if the pullback is warranted or not. If this is just a midcourse correction, it has probably pulled back for no particular reason. This had a great turnaround over the last couple of years. Stronger equity markets have certainly helped them and if equity markets are heading south, then the stock price is probably going to follow suit.

Well diversified geographically, via their John Hancock holdings in the US and a very strong presence in Asia. The big issue over the years has been to de-risk, which he feels is largely completed. Looking at 12%-15% earnings growth going forward. They are really relying on their wealth management division as their key growth platform going forward. A fairly good bet that there will be dividend increases.

Manulife (MFC-T) or CM (CM-T)? Could the dividend be cut? He doesn’t see how banks are going to cut the dividends. The big concern for banks is if you have a cascading housing collapse or a deep recession. Demographics make sense. Canada’s population is growing. Interest rates are very low. You should own both of these in your portfolio.

When you are given an opportunity when a stock pulls back for you, you should take advantage of it. Has a good yield of 2.91%. Lifecos look better than banks at this time. If there is a lift in interest rates, there are a few stocks that might benefit from that, and this would be one of them. Has good exposure in Asia. He could see some dividend increases in the next little while. Have all the ingredients that he likes to see. A solid investment where you will be able to sleep at night.

Not cheap. Model $25.80, above now.

Continues to like this at these levels. Has totally transformed itself since the financial crisis when they had to cut their dividend. Since then they have de-risked their balance sheet, transformed their business and are selling less equity sensitive products. They are less dependent on insurance products and getting more and more into wealth product. Just before Christmas, they acquired the retirement plan services businesses from New York Life in return for New York Life re-insuring a portion of their book of insurance in the US. They are going more and more into wealth management, retirement planning and more fee-based businesses. Yield of 2.92%.

(A Top Pick Dec 9/13. Up 13.08%.) Still likes this. Thinks it is very linked to overall stock market performance. Insurance companies are a good place to be within Canada.

One issue he has with the sector is they are not as cheap as the banks and don’t pay as high a dividend. The low interest rates hurt these guys. Stay out because they are fully valued.

It has been in a trading range for the last while. You want to watch it and if it gets above the resistance level, it could indicate we are in for an up-leg. It is early from a seasonal point of view. Hold until Feb and then add at that time.

Just acquired some US assets and he is very bullish on the US. He likes any financial institution with a major US asset exposure. This is his favourite insurance company. Slightly overbought. The market could go sideways and work off the overbought position.

Trades at a slight discount to the banks. This is because most of the Canadian banks businesses are oligopolies, which means they are protected. This would explain the difference in valuations. His issue with businesses of this kind is that the growth rate just hasn’t been that great. Within financials, he would take banks over lifecos.

This is his top holding in financials right now. Their restructuring is working out well. Core earnings are closing in and are on target for 2016 to be better than $2 a share. Has a great international diversification. The hedging programs they have had in place have protected investors a little bit more from market moves. There is a benefit for all the lifecos, and that is if US interest rates are to go higher.