CI Financial Corp (CIX.TO)

It is a mutual fund company, one of the most successful. It suffered recently as have others with concerns of pressure from ETFs and regulation changes. The dividend is probably stable and safe.

He owns this personally. It's a portfolio manager, not insurance. They've stumbled a bit after buying some new assets. The Century deal is probably clearing. The yield is probably safe. But it's disappointed. It was $38 five years ago and been on a tobboggan run ever since.

This is another high-quality dividend-paying stock that has been hurt this year. They’ve had some net redemptions, but the selloff is overdone relative to that. From a valuation perspective, this is in the top 10% and it is a very stable stock. This is a great consolidator. However, active management has been declining relative to passive investment. There are no debt problems. He is happy to own it here but the negative price momentum stops him from recommending it for new money.

Great company. They have been the quality act in the funds business. He has a soft spot for them as they were the very first client when he started in business in 1993. ETFs are putting them under pressure. Fees are coming down. It is not a growth business anymore. Their writing is a little bit on the wall for them.

They are in a tough industry being in mutual funds and trying to transition out. Saw a big decline from 2015 until 2016 and now we’ve just moved sideways when they should have been moving up. We are in seasonal period and financial companies tends to get strong at this time of the year. From a seasonal perspective, look at April to be getting out if you’re in it. He doesn’t see an exciting opportunity here. If they break above the $30 level that might actually be a good thing. Technically it’s looking OK despite being flat for most of the year.

Sell this and buy Shaw Communications (SJR.B-T) or BCE (BCE-T)? He likes all 3. It really comes down to your portfolio and what else you own. These are 3 very different businesses. BCE is the most boring name and is the “Steady Eddie”. You’re getting a dividend of about 4.7%, and the stock is up about 6% this year giving you a 10% return. He would steer you more towards BCE.

(A Top Pick Sept 15/16. Down 22%.) *Short* He is still Short. The return represents the worst snapshot possible, but as he has held this for a long time, he is still profitable. Wealth management and mutual fund space in general has been a very tough spot. Feels the stock is still expensive.

Just bought Sentry, which looks accretive to him, in the upper single digits. Bought First Asset about a year ago, as well as an Australian asset manager. He is modelling 9% earnings per share growth with about a 3% annual dividend growth. Trades at around 12X, versus its five-year average of 16X. Even though their MER’s are coming down, the margins still are at 42%. 71% payout ratio on its 5%+ dividend.

Not his favourite space. There is tons of competition from everywhere. They made a recent acquisition and that is a positive. You have to get bigger in the business and then take costs out. Mutual funds have to disclose fees now. It is a tough grind for them. They are doing all the right things, but he does not see a ton of growth.

There has been a real knock at active management in the industry. These guys are the lowest cost provider of actively managed mutual funds. They have a 28% return on equity. This is quite a stable business. (Analysts’ target: $30.00).

Dividend yield of a little over 5%, and can grow this over the coming years. The entire mutual fund industry is struggling with commissions and the reduction of commissions as interest rates have come down. The industry has been hammered for the last 4-5 years with this problem, so their growth with the market hasn’t been as high. Feels it is largely priced in and the stock can gradually recover.

(A Top Pick July 5/16. Down 9.98%.) *Short* He’s been Short this for a couple of years and it has been good to him. The stock has rallied recently. A very expensive stock and margins are shrinking because of the management fees they are able to charge. Feels this is a long-term structural Short.

*Short* The competitive pressure has gotten worse. The stock price has risen, but that has been with the broader market in general, not because the business has improved. They still have very weak underlying net sales. Dividend yield of 5.1%. (Analysts’ price target is $29.50.)

They had 2.4 Billion in outflows due to industry headwinds. They have a 65% payout ratio so you are going to get that dividend. He forecasts 10% share growth over the next couple of years. It is cheap, 12 times, vs. its 7 year average. You will get a better exit later on. He has been writing puts to pick it up. Don’t have it as a big position or to hold for 50 years. You should exit if it reaches $32 over the next couple of years.

(A Top Pick July 5/16. Down 5%.) *Short* Still one of his largest short positions.