Sun Life Financial Inc (SLF.TO)

(A Top Pick August 29/12. Up 47.76%.) Has doubled up on positions in a lot of his clients’ accounts.

This is a sector that is going to benefit from rising interest rates. Just went through a pretty good quarter. Had better earnings visibility. Prefers Industrial Alliance (IAG-T).

CI Financial (CIX.UN-T) or Sun Life (SLF-T)? This is a fairly tough one, because the insurance sector tends to do well if interest rates rise. Insurance sector, and Sun Life in particular, have had a big move this year as people have transitioned their portfolio just in case interest rates go up. This quarter was really quite solid. CI Financial has great leverage if equity markets continue to rise. They keep raising their dividend. Bank of Nova Scotia (BNS-T) keeps hovering over their shoulder to take them over and the stock is at a 10-12 year high. Thinks CI is more likely to do well because he thinks the equity markets are going to do well. Nothing wrong with this one but he would choose CI.

Stock has done well. This is what he would call an anti-bond. Bond prices decline when yields go up. This one’s price has been going up as yields have been rising. Lifecos invest most of their premiums into bonds so as yields go up in bonds, so do their earnings.

All lifecos are going higher over time. This one is good and the dividend is safe. Core earnings are improving and are doing well in their mutual fund business. Some concerns on their new US strategies. Will it be successful or will they have weaker profitability there? Asian growth targets from these levels seems aggressive. Prefers Manulife (MFC-T).

Insurance stocks have done very, very well. Benefited from a number of things but interest rates rising are very good for insurance companies. Probably a little bit ahead of itself here. Taking a little bit of money off the table wouldn’t be a terrible thing. However, if interest rates keep moving up, the stock will stay ahead of the fundamentals for a while.

Cdn lifecos have had a nice run this year and he thinks this trend will continue.

(Market Call Minute.) Likes this. When you look at the insurers, higher stock markets do a whole bunch for them. Has one of the best asset managers going.

He has been wrong on the lifecos. When interest rates are rising these are more favorable than the banks. Having said that: He thought the story on interest rates was over. But if SLF breaks through the resistance over the last 4 years there is a possibility of going $2-5 higher. Wait for the markets to correct later this summer if you want to place new money and play it for the dividend.

(Market Call Minute) Has benefited from interest rates going up.

Thinks it has more upside from here. Earnings are going to grow for at least the next 2 or 3 years in the high single or low double digits. Would expect a dividend increase in 2014. The largest foreign insurer in India. It is not a profitable venture yet, but it is a hidden nugget with lots of opportunity for growth.

If you bought this in the last 6-12 months, you had a pretty good run. It’s at the higher end of its range and there are better values in the banks right now.

Interest rates are starting to come back up and he calls this the anti-bond holding. As interest rates go up, the lifecos are major beneficiaries of that. Dividend yield of 4.7%.

A pretty good company. Positioned well to benefit from rising rates. Have a hidden asset that they own a money management firm that many people don’t know about. He would prefer US financials to Canadian, however.

Paring back his clients’ holdings. It got up to a valuation level that he thought was pricey, his clients had done well, so he wanted to take something off the table. If you are patient with this stock and you believe that interest rates will continue oozing higher, it may well work out. He doesn’t believe that interest rates, in the shorter-term, are going to work higher.