Manulife Financial (MFC.TO)

(Top Pick Oct 28/11, Up 22.43%)

Preeminent insurance company both here and in the US. Has been having a tough time because of risks taken to increase earnings. They have been in a retrench process and until the process is completed we don’t know what the core earning power really is. Until we know that, it is difficult to put a valuation on it. However, it has been trading at or below Book for quite a while so this is a good place to start. Doesn’t see a lot of upside in the short term unless interest rates move sustainably higher or until they can show core earnings are a lot higher.

Won’t get back to the $20 level again for a while. In the short term, he would be looking for a $14 target. If it gets down to the $10 level, that is probably a fantastic buying opportunity if the market starts to gain some strength.

Low interest rates are a real penalty and they suffer when equity markets do not do well. This is really a leveraged play on the performance of the capital markets. However, their underlying sales, particularly outside of North America, are phenomenal and growth prospects are exceedingly good. Working their way through the sins of the past and the current problems. Likes the story longer-term and is on his Watch List. He will be a buyer at $10.

(Top Pick Oct 14/11, Down 4.73%) Fundamentals look good, technicals look good.

Don't hold more than 5% of your portfolio.

Doesn’t see this breaking out of the doldrums anytime soon. Had talked about selling his holdings, but given the fact that the markets may pleasantly surprise next year with housing continuing and Europe possibly making a comeback, he has decided to Hold.

Manulife (MFC-T) or Power Financial (PWF-T)? Big driver for these are the markets. He is cautiously optimistic and feels that in the short run, markets are okay. Low interest rates are also challenging for lifecos. Asian growth is attractive for Manulife but Asia is having some difficulties right now. Feels there are better sectors to focus on for either one.

Make money, but not as much as they used to. People want them to make a lot more money but it is just not possible when interest rates are so low in the insurance business. It is very hard for them to re-price their policies aggressively. Balance sheets for insurance companies are heavily weighted to interest rates. He has a very small position.

Still suffering from its financial crisis hangover but that is gradually working its way through the system. 2012 was this company’s return to real profitability. Hedged a lot of their exposure to equity markets. Low interest rates are hurting, but they are dealing with it. Expect they will return to $1.20 earnings range next year, which makes it a 10X earnings stock with a 4.5% dividend yield. Adequate capital ratios. Great growth in Asia, Japan, China and Indonesia.

(Market Call Minute.) No problem with sales. They are selling stuff like hotcakes. Loves the Asian experience. You have a capital markets and interest-rate problem. Would look at it at $10.

(Market Call Minute.) Cheap, but there is the overhang and concern of low interest-rate impact on earnings. Analysts are very bullish on earnings next year. If they are right, then the stock is cheap.

Very interestingly positioned. 2012 earnings have come out to about $.65 a share but this includes a lot of haircuts the company is taking in its balance sheet on account of regulatory issues regarding its variable annuity stream. Understands they could do about $1.50 next year so there could be upside to the name. Has a good presence in Asia. If you are looking at it from a tax loss perspective in December with a healthy dividend, it could be a good name.

She has this as a candidate for sale if she finds something more attractive. At this level, there is probably support for book value. Company is being influenced by none controllable events such as interest rates and general market sensitivity. Could be a sale for tax loss selling reasons for her.

A good Hold for 3 years or should they Sell? At the current levels, the valuation is quite good but you have to have a 2-3 year time horizon. Low interest rates and mediocre equity markets have not been good for insurance companies.