Opinions
Kash Pashootan
Power Financial Corp
PWF-T
COMMENT
May 13, 2016
Stock price when the opinion was issued
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PWF is a holding that she has for the income. PWF and POW are going to merge, which is driving up the value of both today. The merger is one way to close the gap between market valuations of the two. There is some thought the dividend will increase and the new entity plans to buy back shares. She will continue to hold as it an income stock. The yield is still over 5%.
Investors are quite happy with the recent news to merge this with POW-T which will drive the stock higher. He hopes they exit more businesses that aren't core, like in industrial.
It recently got re-amalgamated with the holding company. He prefers TD-T at these levels. He worries about the Great West Life part of PWF-T. TD-T has a bigger US presence.
You could sit and wait to do the share swop from Power Financial into Power Corp. The two companies have been performing the same. The WestJet acquisition fits into their other subsidiaries. WestJet will be a private company and it won't be posting numbers going forwards.
Doesn't like the merger with POW. Sell PWF and buy Aecon? Don't because Aecon has its own issues, and the merger makes sense. PWF/POW was an old-1980s structure and needed to consolidate to raise the overall value. Problem is, there's is little growth in the company's existing businesses. Mutual funds are getting crushed by ETFs, and low interest rates limit revenues. You can sell and buy something else, but not Aecon though to be fair he hasn't looked closely at it lately.
This is really an umbrella of other businesses. Feels the 5.5% dividend is safe. There are multiple revenue streams, so not only is the dividend safe, but there is some potential for modest dividend growth. This is what has been attracting some of the capital into the name. He is skeptical on where future growth is going to come from. McKenzie is in this umbrella, and mutual funds are going to be under a lot of pressure with the CRM tool that is rolling out, which will allow retail investors to fully understand what they are paying in fees. For share price appreciation, there are probably better places.