Manulife Financial (MFC.TO)

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.

SLF is preferable because of a safety of dividend. Risk reward is quite appealing.

(Market Call Minute.) Probably a buy, particularly under $11 if you think we have bottomed in rates and we are going to go up a little. Very market sensitive so if you like the market Buy otherwise Hold.

Outlook in 12 months? He has added to his holdings recently. 2 things are big negatives for this company. Falling stock market and falling bond yields. Their hedging programs are protecting them much more than he used to. Operations are starting to do better. Core operating earnings are probably running around $1.20-$1.30 a share, which gives you less than a 10X multiple. Can see leverage upside from improvements in the market generally. Risk/reward is great. 4.6% dividend yield.

(Market Call Minute) if long term. Interest rates will lead this higher.

(Market Call Minute.) With very low long-term interest rates, it is hard for them to generate earnings on their investment portfolio. Volatile equity markets make it tough as well. He is Short this stock.

Thinks this would be a stock to own. Chart shows a double bottom. This company needs a rising interest-rate environment, or at least the rates to stop going down, and a good market.

If the economy recovers in the next 2 years, amongst the best performing sectors are going to be lifecos because this is a whole industry that has been viciously beaten down by low interest rates. If you have a long enough time rising, you can absolutely have a positive return on lifecos but this company would not be his favourite.

(Market Call Minute.) Just sold his holdings on this one.