Manulife Financial (MFC.TO)

(A Top Pick Dec 28/11. Up 44.44%.) This was a levered play on the economy. If the markets got better, they had tremendous leverage to the stock market. If the bond markets were to finally roll over, which was expected, they would benefit from that as well. Getting pretty fairly valued now.

In the early stages of a recovery. Stock has performed reasonably well in the last little while. From an earnings standpoint, have really re-engineered its business and gotten out of some of the riskier areas and focused again on growing in Asia and the US. Will return to some normal level of profitability this year, which more than covers the dividend and leaves room for growth. If interest rates start to rise, as he expects it will in 2014, all the lifecos will be huge beneficiaries.

Broader issues that are driving insurance companies are effectively interest rates. Until we see a rise in interest rates, they will constantly be under pressure and it will be hard for them to grow. Longer-term, in an environment where the US improves, more employment is secure, Canada stabilizes and there is growth in Asia, you will see higher earnings and this is a company to buy and hold. There are other alternatives.

Core earnings have been great for a very long time, held hostage by lower interest rates and choppy equity markets. If equity markets improve, that’s going to really help them with their legacy and if interest rates gently push their way up, it is going to make it much harder to roll into the bond market. 3.64% yield.

Doesn’t see any increase in dividends. They need interest rates and equity markets going up. Problem with insurance companies is that they are all leveraged to the upside but have now hedged a significant amount of their portfolios so they don’t have the leverage that the used to have.

Seasonal strength from Jan to April. Peruse this stock. It is already in an uptrend. Get into it at weakness. It is overbought right here. You want to hold it.

(Market Call Minute.) Still has some issues but it is working its way through and has a big opportunity in Asia. He moved from the insurers to the banks but is thinking about moving back.

This spring was a recognition point in a downtrend. He does not think you will make a big score, but be wants to see it go above $14 then you might be all right. If it fails to go up it will just drift down into the trading range.

Have some great businesses and a great Asian franchise. The stock has run up. Management has indicated that in 2016 they are going to get returns of equity of 13% and earnings of about $4 billion. Why would you want to be paying a higher multiple for that right now?

(A Top Pick Dec 19/11. Up 37.28%.) Have been getting out of products that are particularly vulnerable to fluctuations in the equity and fixed income markets that the old annuity type products where. Have a growing mutual fund segment. Particularly well-positioned in Asia. Good management.

(A Top Pick Dec 28/11. Up 31.81%.) You always have to buy these things when it is the darkest. Have a great growth profile outside of North America. Have really tightened up their hedging strategy last year. He has taken a little bit of money off recently.

Has been coming to life lately. Newman management has done a good job at trying to decrease the sensitivity to equity markets and interest rates, but the exposure is still there. Because the economy globally is not picking up, central banks have felt the need to keep interest rates lower than they should be. She prefers staying in banks.

He can see a bit of an attempt of a base being built. If it breaks up through $14 with volume and stays there for at least a week or so, he would be bullish, but until then you have to be very careful.

It is not moving up because of two things: equity prices and they are just not earnings the returns on the fixed income side of the portfolio. They are trying to do as much as they can to grow the business and are expanding there and it is becoming a much larger part of their earnings stream. He holds this rather than SLF, which he prefers.

Doesn’t like the insurers in general. The problem is they have real issue in the asset side. With rates so low and forecast so low for the future they have real headwinds and she would not put any money into it.