Manulife Financial (MFC.TO)

Rotate out of this and into TD (TD-T)? He wouldn't. Because the banks have had such a wonderful move here, he expects there will be some catch up out of the lifecos. If you can see the Asian market improving, and he does, this company has a big exposure there. It should catch up in the next few quarters, and he thinks the banks will more or less go sideways. He owns both.

His FMV calculation should carry quite a bit higher, perhaps as high as $32. Ran into some overhead resistance at about $21.50. He has a fairly safe target of about $26. This is safe and can give you more from here.

It is trying to become less sensitive to rates. Remember that in the 2^nd half of the business cycle, rates tend to rise, which means financials make more money. Lifecos this year have really lagged and she thinks this is going to reverse and they’re going to do really well.

So dramatically turned itself around in terms of de-risking its balance sheet. It has one of the strongest capital ratios in the business. It has done a good job in growth of wealth management. Was hated because they cut their dividend.

Using a chart to compare this to its peers (XFN-T), it shows it has outperformed from mid-2012 until late 2013. We are now seeing a period of underperformance. If you are in this one, you should reduce.

(A Top Pick June 14/13. Up 36.23%.) Feels that a year from now, this could be $25-$26 pretty easily. (See Top Picks.)

Should be a core holding for a number of people. Hedge against rising rates. There is a great asset management angle to them and they get some strong fund flows. Okay dividend, but it won’t go up any time soon. If rates go up it will be a benefit.

All lifecos had a pretty good year last year, but have pulled back this year. They’ve kind of underperformed the financial services space. Valuations got a bit ahead of themselves. These companies typically do better when bond rates are rising. Rates have pulled back. On her Watch List. She sees better earnings and dividend growth momentum from Canadian banks.

They are levered to rising interest rates and stock prices. The move down in rates is going to hurt them in the next quarter but he is looking for a rise in interest rates longer term. Likes their global footprint and how they are growing. Would put them at the top of the list and you may want to start adding insurance companies back shortly.

(A Top Pick May 31/13. Up 27.01%.) Lifecos, because of the long-term bond yields last year, were big out performers having underperformed the banks for a long time.

(A Top Pick July 30/13. Up 14.66%.) Had thought interest rates would be a little higher than they are.

Had a pullback as bond yields continue to drift lower. Although bond yields may drift a little bit lower, she thinks they are going to turn around as we move into the back half of this year. The last couple of quarters have had decent growth in core earnings. On track to meet their 2016 target. The Asian business provides a good platform. Wealth management is a pretty big piece of about 40% of the underlying operating earnings. Yield of 2.59%.

Sensitive to higher interest rates so is definitely coming down a little bit with rates migrating lower. Bear in mind that insurance companies takes a lot of the premiums and have to deploy them so if they have to go into a lower interest rate environment, their underlying profitability is less. A dividend increase is not too, too far away. Sees good momentum in their John Hancock operations in the US. Also, have a good beachhead in Japan. Good Hold for the next 12-18 months.

Increase in rates and in equity markets is good for insurance companies. It is cheaper than some of the others. Operating earnings came over quite decently this quarter. This also gives you exposure into Asia, a higher growth areas. Not cheap. You are probably going to have lower ROE then you have had in the past because they have pulled back on some of their riskier business. A good holding.

Insurance is a great place to be. Trading at a high price to Book so he prefers AIG insurance, Power Corporation (POW-T) and Power Financial (PWF-T), where you are paying a cheaper price to get good quality assets.