IGM Financial Inc.

IGM-T

Have long been the highest cost provider but he does not know if that is still the case today. They have a lot more headwinds than tailwinds.

Banging its head against his EBV +3 level. Closed at $43.48, and he has a model price of $49.17, a 36% upside. However, the regulatory environment in Canada is really, really tough, and he doesn't see it changing anytime soon.

As an established Canadian company, this has one of the higher dividends, close to 6%. This has been under pressure from the move away from commission based products to EFT’s, etc. The company is now positioned and the stock has been washed out. Being in one of the great bull markets of history, it is going to help all stocks, and this company is going to do just fine.

It has issues. Its underlying mutual funds are generally high fees. It is more vulnerable to a sell off because the shares are expensive, 17 times PE. The mutual fund space is being hit with lower fees.

This has been a tremendous growth story over the years. Has some concerns about conventional mutual fund managers as a whole, including this company. Financial services, specifically mutual funds and asset management is a mature industry that is not growing at 2, 3, 5 or 6X GDP growth rates any more. It is becoming more fee competitive. There are costly and disruptive regulatory forces on the horizon. To the extent that management fees will be phased out over time by regulatory action, it is going to prompt a lot of disruption.

If you are coming into this as a new investment, he would prefer Power Financial (PWF-T) because you have investors group as well as Great West Life (GWO-T). While not as exciting, it would be a good hedge in that it would stand to benefit from a rising interest rate environment. However, IGM is at a low right now, so doesn’t think you will be hurt by continuing to own it.

Shares could suffer when the new regulations come into place on July 15. They will force brokers and mutual funds to fully disclose all embedded fees within the clients’ statements. Thinks there will be more passive investing.

It is a steady eddie. It is a good long term play. He would not own it right now. There is uncertainty with regulatory changes coming to the industry so he would not buy it right now.

Money has been coming out of equity mutual funds. Ironically this one has been doing very well relative to the industry over the last year. A tough business and could become even tougher on July 1 when CMR2 comes out, the new mandate of the OSC, where fees are going to be disclosed. Valuation is cheap, but there are too many headwinds. He would prefer Fiera Capital Corp (FSZ-T) which focuses on the institutional and US markets.

First preferred 5.9% noncumulative 1^st preferred series B? Wouldn’t classify this as a secure fixed income security, so it should be a very small portion of your fixed income portion. Wouldn’t be a buyer of the stock, but might consider this “preferred” as a Hold.

We have an improving stock market and people generally under-own equities. If he wanted exposure to companies that benefit if the market recovers, then he would want to look at investment management companies, and this company fits that bill. This has a lot of exposure to Canada and Canadian investors, so it will benefit. He would prefer something that will benefit more from the US market. You should do fine with this as it will rally with the market, but he would prefer Blackrock (BLK-N), a big manager of ETF’s. ETF’s are growing like wildfire. They will also benefit from management fees they get paid managing these ETF’s. Dividend yield of 6.4%.

Any mutual fund company in Canada is going to be very unpopular in this market. Despite the really good value, the stock has taken it on the chin. It has now fallen down to a level of about $31-$31.50, which is terrific support with huge upside potential. Has a wonderful yield 6.7%, and the yield is nicely covered.

All asset management companies have been hurt in the last year, partly because the markets haven’t done very much, and they get their fees on how their assets do. Also, there are new regulations coming into the mutual fund business that is putting pressure on fees, which are way too high. A well-run company. Owns this indirectly through Power Financial (PWF-T). Thinks the asset management companies are getting into a range here where they are decent investments. He would look at this one.

Chart shows it has had 2 little bottoms, and is positive that the downtrend has been broken. Financials in general have been pretty weak. Until this one breaks out of the downtrend channel, he would not start a new position. Rising interest rates help financials. Dividend yield of 6.3%.

The stock is at a very attractive level to Buy. The volume has been going up a little bit. There is no reason to think it is going any lower than it is right now.

(A Top Pick Jan 22/15. Up 13.22%.) This is an area that is hard to get representation in Canada. This segment of the market probably has good growth potential from here.

He has no reason to think the dividend is not safe. The growth in the industry is stagnating. The only way to grow is to acquire. Margins are coming down. He has CIX-T in this sector and recommends it instead.

An amazing sales machine. They have great margins. They will be subject to the transparency rules coming into force next year. Companies like this will figure it out.

It has come off a lot. The dividend is 6%. They have about 5000 consultants with Investors Group, who are increasing their assets. Having their own consultants should give them the ability to continue on.

59% owned by Power Financial (PWF-T). Has an attractive yield of 5.6%. Historically it increases its dividend every year or 2. The pace of increases has slowed more recently, but this is more a function that they are so large and they can’t grow as fast a pace as they could in the past. With the disclosure rules that are coming out for mutual fund fees, this is an overhang on mutual fund companies. Thinks the dividend is safe.

(Market Call Minute) 5% dividend. They have a strong franchise.

One of the solid Canadian mutual fund companies. It has done well and is probably towards the higher end of its valuation right now. He would call this a “soft buy” here.

You want to buy their stock and not their mutual funds. The industry had really consolidated. They had a lot of issues because a lot of funds are high priced. We are moving into a world where they have to take less and less money. They have some high MER products. Own other parts of the power group.

(Top Pick May 22/14, Down 9.17%) It was about turning around redemptions. Earnings have gone up but there was compression of their multiple because of pressure on their fees. His price target is down a little from last year.

Has a phenomenal franchise. Outperforming the industry with AUM growth. There are new regulations that come into effect over the next few years and there is the feeling that this will drive mutual fund fees down. This may not be good for IGM. They are a dual class share company and he is not a fan of that. They have outperformed and gained market share.

(Top Pick Jan 22/14, Up 12.14%) Benefited from currency fluctuations. The technology sector runs a bit with the economy. You need to get your US content up and this is a safe way to do it. Good expense ratio. A good solid way to participate in the US tech sector. Broad diversification.

The mutual fund industry is under pressure and is going to remain under pressure. There are new disclosure requirements coming out in July and he doesn’t know how that will impact it. Exchange traded funds are taking a bite. At the same time, this company has benefited from the stock market upsurge and it is a pretty good yielder. This is not an industry that he would like to be in right now.

Just announced they were cutting some of their fees, meaning their MERs will be lower and less income. This resulted in a drop in the stock price. If you want to be exposed to this company, he would do it through either Power Financial (PWF-T) or Power Corp. (POW-T).

Attractive 4.5% dividend yield. Business model has fat margins. It came from 20% overvalued to 5% undervalued. There is concern there will be a dramatic change once they reformat their statements.

61% owned by power financial. 4.2% dividend. Their assets will grow. She decided to hold Canadian banks. It is fine if you want a nice yield.

This is a good company. Very well-managed. Their fund performance is decent. He was hoping for a share buyback. 4% dividend yield. You will do well with the stock.

(Market Call Minute.) Not the top performer in the asset management group. He really likes the sector, and they’ll probably ultimately get this right. Going through a restructuring. He would like to see some positives on the numbers before buying.

A solid company. One of their advantages is that they have a proprietary network of advisors and have their own funds, which they basically recommend to their clients. A 4% plus dividend. Not a fast grower, but very steady.

Has 2 divisions, McKenzie and Investors Group and there has tended to be redemptions on the McKenzie side, but net additions on the Investors Group side so these 2 divisions tend to go in opposite directions. There hasn’t been a lot of earnings growth. Hasn’t gone anywhere for the last 5-6 years. Pays a nice dividend so you are being paid to be patient. The dividend is very well covered and the redemptions from McKenzie have slowed down considerably. New management is really focusing on distributions.

Asset management companies, in general, are a good spot to be in at the moment. They have the consulting group of about 4500 that are wealth advisors throughout the country and provide financial planning and a high level of service to the clientele. They also have Mackenzie Financial, which has had some tough times over the last few years in terms of redemptions and performance. Also, have an independent planning group. Thinks we are at a point now where things are kind of firing on all cylinders for the 1^st time in a while. Starting to see momentum turn up in sales. Markets are good and doing well. The management team is focused on reigniting growth.

Among the mutual fund companies, this is particularly vulnerable to the growth of ETFs. They have a huge number of investors who are served by an army of advisors and many of them are smaller investors. This is a high cost provider and many of those investors might be better served by ETFs. As they become more educated, they may learn that. Thinks they got hit today because they didn’t show the growth in assets under management when they reported.

Good solid company. Likely to be a beneficiary of a rebound in equity markets. Terrific marketing organization. An open question is do you play it by owning Investors, Power Financial which gives you Great West Life (GWO-T) as well.

(A Top Pick Jan 8/13. Up 39.06%.) He tends to buy on dips in a bull market, so wouldn’t be adding at this time. Wait for a pullback. With this, you are getting a dividend yield well over the market and as the market continues to go up, it is going to do better than the markets.

(Market Call Minute.) Much cheaper than a Gluskin Sheff (GS-T) and has gobs of cash. Wouldn’t be a buyer, but would Hold.

(A Top Pick Jan 8/13. Up 34.6%.) Getting the double leverage of an asset manager so they get the leverage of markets going up in their AUM growths and more fees come in as well with the leverage of people converting their bonds and cash into equities. Margins are going to expand because there is a rotation out of bonds and into equities.

(A Top Pick March 20/13. Up 13.23%.) (BNN said March 20 but we show it as April 29.-Bill.) Likes asset management companies. Felt that the exposure they had on the equity side will continue to take hold as people place more money in equities and less in bonds and other products. This is now a “wait-and-see” stock.

Benefiting from money rotating back into equities. Will benefit going forward.

(Top Pick Apr 29/13, Up 11.49%) It didn’t move in line with CI so he thought it would catch up and he got out at the highs.

(A Top Pick Jan 8/13. Up 15.66%.) There has been a dearth of interest in the equity side over the past 5-6 years. Most of the money being invested has been in bond funds and, in the last couple of years, in balanced funds. This company makes a lot of their money on the long-term product, i.e. equities. Still likes them. 4.5% yield.

(up 27.02% since June 5, 2012) He doesn't own anymore as the performance of their mutual funds especially the Mackenzie funds was bad. They were bleeding assets. It is a yield play of 4.5%. He did well while he owned it but didn't like the performance of underlying stock.

Seasonally the financials tend to be weak between now and late summer. Watch the lid around $47.50 and be prepared to take profits if it hits and does not to show signs of wanting to break it.

Likes the dividend yield and the cash flow being generated. Cheaper than number one in Canada (AGF) – valuation discrepancy. Positive trends in cash flow and growth. Expects continued good performance. 2.6 times book value.

(Top Pick Jan 07/13, Up 9.54%)

Has gone up in the last 3 weeks, which she feels is because of fund flows. As the market improves, the stock will reflect that, which accounts for a lot of the stock price movement. High-quality company. She has always played this through Power Financial (PWF-T) or Power Corp. (POW-T).

Big theme over the past 5 years has been outflows from equities to fixed income. Starting to see the thin edge of the wedge in reversal of attitudes towards equities. We are going to see a credit cycle default in front of us, where credit is going to be easy and will bleed into the economy and risk-taking will come back.

Has a very good position in the Canadian mutual fund industry with a proprietary sales force. Mutual funds, as an industry, has been stagnating. There is not as much room for consolidation. If your view on the market is positive, this could have some upside here but he doesn’t see a huge upside.

(Market Call Minute) Asset management is a tough space right now. Isn't a fan of any of them.

Controlled by power financial, which he owns. A great stock to own but a lousy one to buy their funds, which makes it a great stock to own in the long run.

5.7%. Market is saying it is safe yield for now. Chart is ugly and it is not a great business.

(A Top Pick Aug 24/11. Down 9.03%.) This is under review by him as he is becoming increasingly convinced that the whole mutual fund industry is going through a sea change. People are getting clued into fees being charged and more aware of ETF's.