Manulife Financial (MFC.TO)

This is an OK situation now. He prefers Sun Life (SLF-T) or Power Financial (PFC-T). A lot of their projections to future growth are built on continuing success in China. He has a bias against that type of situation. He has watched what has happened to other companies that are operating in China. If there is ever a political problem, you get nailed.

Over the last year he has built a good sized position. He focuses on wealth management. A big percentage of their earnings come out of the US. 19% growth there last year. It is hanging in like a champ in a down market.

(A Top Pick Oct 22/13. Up 19.31%.) Trading at under 1.5X Price to Book. We could see some rising interest rates, which is always good for insurance companies. This company has a strong base of operations in the US, Asia and Canada. The wind is at their back.

Part of her investment thesis on this is that interest-rates are going to go up, which will help this company’s investment portfolio. The fallout from the 2008-2009 collapse is largely behind them now. The new CEO seems to be relatively more conservative than the previous one. Increased their dividend by 19% last quarter. Acquired Standard Life which will expand their presence in the low volatility business and gives him a good share in Québec. There will be some cross-selling of product later this year or early next year. Dividend yield of 2.92%.

Their recent acquisition of Standard Life to gain a foothold in Québec wasn’t a blow out acquisition and was a little expensive. With these types of companies, you are always going to get a little volatility when markets go down. He owns a bit of this company, and is somewhat constructive on it, really relating to their insurance. If you can, factor out the equity and the fixed income components and focus on what the CEO has been talking about as core, how well they are selling insurance. They seem to be doing quite well.

Likes it. Just raised the dividend. Next increase late 2015. They are beneficiaries of high rates, but have the best growth in Asia (30-35%). Prefers this to any others. Standard Life acquisition was good even if they paid a lot.

Would prefer SLF-T. This one was over leveraged at the wrong time toward stocks in 2007/8. They are now deleveraging themselves against interest rates at the wrong time.

Finds the banks very boring. They just came out with earnings. Would prefer an insurer to the banks and thinks MFC-T purchase of Standard Life does a lot for them. It is a fantastic purchase.

(A Top Pick Oct 22/13. Up 22.8%.) This pick has quite a bit to do with the expectation of higher interest rates. They are making money now and firing on all cylinders. This is a company where if you get a normalized yield curve, it doesn’t hurt them, but actually helps them. It should continue to do very well. Has a big Asian operation, which could do very, very well. Yield of 2.85%.

Just recently bought it. Sees rates going higher. He also sees a higher stock market. The core business has growth potential. The stock is not expensive. The life companies have lagged the banks. He would own both over the long term.

Manulife (MFC-T) or Sun Life (SLF-T)? These are equal as to which one he likes. This one has a model price of $25.72, a 16% upside. You have got to love the insurance companies. 2.5 years ago they were both coming out of the blue (his strategy). He has been holding both and they are both great. Thinks they will do well.

Receipts are being offered because of the Standard Life acquisition. If the deal falls through, you will get your money back. She would buy the receipts, and upon the deal closing, you turn it into the stocks. She likes lifecos in this environment. Rate increases tend to be very good for them.

With its most recent move to buy Standard Life’s Canadian business, it raised its dividend for the first time since it halved it in 2009. Very encouraging sign. Still likely to have further dividend increases.

He added some on in that equity deal last week. The valuations on life companies are a little better than banks right now. Standard Life acquisition: he thinks they are underplaying the earnings accretion. They’ve really turned the corner.

Seasonal strength tends to run from about March through until June and is positive about 80% of the time. Through the end of the year, it can be variable. If you see some weakness here, that would be an opportunity to Buy. Chart is showing a bit of consolidation at around $22.50. If it breaks out above $22.50, that would be a Buy. He expects there will be a bit of consolidation lower than it is here. The peak period of seasonal strength is from March through to June.