IGM Financial Inc. (IGM.TO)

IGM-T vs. MIC-T. He would prefer MIC-T. He likes the underlying fundamentals, but has always worried about a real estate downturn and how it would affect it. He prefers it to IGM-T where he does not see how the fee structure would be sustainable in the long run.

Buy BAM instead? Nice up-channel, but faces resistance. Neutral for him. Yes, sell IGM and buy BAM.

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.