Power Corp (POW.TO)

This is in a sector that has been somewhat bypassed, but it hasn’t had a bad performance for the last while. Has moved up with the market, and should continue to. Likely to be more sideways, as it is not a sector that money is flowing into right now. Power Financial is going to benefit in the next little while, because the financials are doing better. He owns Great West (GWO-T) for the yield and growth. If he owned, he wouldn’t be afraid to sell it. It is not in a sector that is attracting capital right now.

A value investor’s dream and nightmare at the same time. If it broke up and distributed all assets, you would get $42 a share. Everybody thinks Investors Group is no good, mutual fund fees are too high, etc., etc. That may be true, but at the end of the day, he doesn’t believe management are dummies. Thinks they are going to make some smart deals with the cash flow coming up. Perhaps they will diversify and reduce their exposure to mutual funds. Trading at a deep discount to breakup value, and you are getting a nice dividend, plus the exposure to Great West Life (GWO-T), which hopefully will turn around.

He likes it but does not own it directly. It is a play on the Investors Group and Great West Life. It is trading at a discount to NAV. The new transparently rules could impact their business. He believes they will be quite innovative.

He owns it primarily for its dividend paying capabilities. The underlying business, which is primarily insurance, has been under some pressure. If interest rates go up, insurance companies will benefit. The fund business is going to do okay as they have a good business in Canada. He expects the dividend will grow. A good one to own, especially for income investors. 4.4% dividend yield.

He likes the insurance business and the asset management business, which are both held inside this company. But he would go with a pure play today with something like a Manulife (MFC-T) or Sun Life (SLF-T) or Prudential (PRU-N) in the US.

A holding company and one of its major assets is Investors Group. There is incredible pressure on fees in the investment management industry. Investors Group used to have one of the highest expense ratios of the whole group, so they are struggling with that. They’ve been doing a lot of downsizing. Investors are being conditioned to believe that ETFS are no-brainers.

Long-term hold? Yes, most certainly. He sees about a 6% annualized growth rate over the next couple of years. Pretty decent visibility. Very low payout ratio. Power Financial (PWF-T) is the one he tends to buy more. It has a bigger dividend. It normally trades at about 10% discount, but is currently trading at about 19%. If it can get back to its normal 10% discount with its very rich dividend, combined with dividend growth, it is a good name to be owning here.

A stock that will definitely benefit from interest rates going up. Trading at what he thinks is about 75%-80% of its NAV, and generally trades at around 85%. Very attractive dividend yield of 5.1%. Following the passing of Paul Demarais, his children may decide to unwind parts of the company to realize some value. Dividend yield of 5.1%.

Power Financial (PWF-T) or Power Corp. (POW-T)? This one has a lot more internal holdings. Power Financial is basically a function of Investors Group, Mackenzie Financial and Great West Life. If you want a pure play, he feels you should go with Power Financial.

This hasn’t done anything this year, and all you are getting is pretty much the dividend. For the stock to go higher, interest rates have to go up. They are generating lots of free cash flow, and he wouldn’t put it past them to make a smart acquisition.

Sun Life (SLF-T) or Power Financial (POW-T)? This is more diversified. Sun Life is mostly insurance with a bit of money management, but this one has Investors Group, Great West Life, Canada Life. If you were to own one or the other, he would prefer this. If you really have to own an insurance company, the best in class for him is Great West Life (GWO-T).

He’d be tempted to go elsewhere where there is a little growth. Power Corp. and Power Financial (PWF-T) are holding corporations. In the end, you have to look at what are the underlying assets and are they growing. The mutual fund industry is in trouble. Another big asset is Great West Life (GWO-T), and the lifecos are facing a lot of issues right now because of low interest rates.

It has industries under them that he is not that keen on, but he holds it because of an expected shakeup to release value upon the death of one of the principles.

The bulk of this company is their investment in Power Financial (PWF-T). You could look at either one of these, but today with Power Financial you are getting a little bit of a premium in the yield. For longer-term investors, they are going to see dividend increases in both companies. Of the 2, he would prefer Power Financial which has a yield of 5.2% versus 4.8%.

A good company. Extremely well-managed. Has a lot of engines of growth. Relatively inexpensive and generally overlooked within the market. Trading at 10.5X forward earnings. About 4.75% dividend yield. Financials offer tremendous value. He can see 10%-12% upside in the next 8-10 months.