Sun Life Financial Inc (SLF.TO)

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.

Situation is a good one for this company. Good dividend yield and improving fundamentals to their business. Unfortunately for the insurers broadly, the regulator came down on them when things were at their worst and forced them to hedge away some of that exposure. This gives you a 5%+ dividend yield that can be maintained.

Has had a decent run, partially because they dumped some things like getting out of the US annuity business. Also, took over a Malaysian life insurance company, which is a faster growth area. Decent dividend. (See Top Picks.)

If interest rates start to go up, this will help one part of the valuation equation. If the stock market continues to go up, it will also help. You are getting a decent yield so if you own, continue to hold.

If you own Sunlife or Manulife you will get a decent dividend. Both companies have hedged their interest rate exposure.

His biggest lifeco exposure is AIG in the US. SLF’s sales trends are little better. Will benefit from higher long term bond yields. He doesn’t think you will see higher interest rates any time soon. It is not dependant on higher interest rates, however.

(A Top Pick April 26/12. Up 20.44%.) Bought this because he thought bond yields were ultimately going to go up and the lifecos are big beneficiaries when this happens.

This or one of the Canadian banks? He would prefer one of the banks. Has a very good yield but the difficulty in the insurance business is that interest rates remain relatively low and they are in a very difficult environment. Doesn’t expect there will be a lot of dividend increases.

(A Top Pick March 20/12. Up 32.03%.) He had bought this as his anti-bond holding. Lifecos do much better in general when interest rates are high or if they are rising and he expects interest rates to continue to rise in the bond market. Also they are a major factor in the money management business through Mass Financial in the US and that subsidiary is doing gangbusters.

Lifecos have done well, particularly this one. People are looking more and more at the opportunities this company has in China. Growth rates apparently are picking up substantially. China, over the next 5 years, could be very profitable for both this company and Manulife (MFC-T).

Lifecos have had quite a run over the last little while. They are a proxy for investors for interest rates going up and equity markets doing well. From a purely operational perspective, he feels they are probably ahead of themselves but they do benefit on the assumption side from interest rates plus their ability to reinvest. They all have asset management operations.

(Wrestling with the question as to whether he should take profits.) Thinks it is a little ahead of itself but if they manage to beat earnings targets it should be okay. One thing that seems to be supporting this stock has been the dividend yield. If you have a big position in this and have made a profit, he would recommend considering taking some off the table.

Numbers for the lifecos are just not that attractive for him. In his data banks, banks are screening better than lifecos.

Likes lifecos. Turn around stock. One of biggest money managers in the world. Recently announced buying money management firm in Asia. Dividend is safe and he believes lots of upside in stock.

(A Top Pick Feb 8/12. Up 48.74%.)