Tuesday, September 21, 2010

CI Financial Corp 2

I do not currently own this stock (TSX-CIX). This company is not on the dividend lists that I follow, but it is a dividend paying company. When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable, so dividends where decreased. They changed back to a corporation in 2009 and since that time, they have been increasing their dividends.

I looked at the Insiders Trading report. I find that there is about $2M of Insider Buying and $2M of Insider Selling over the past year. The other thing to note is that the company is buying back and cancelling shares. It is good to look at this report, but often it does not tell you much and this is the case here. Another thing to note is the Bank of Nova Scotia is a passive investor in this company.

When I look at the 5 year Median low P/E Ratio, I get one of 11.2 and the 5 year median high P/E ratio is 18.6. The current P/E ratio is 18, so this is a bit high. When I look at the Graham Price, I get one of $11.78. The current price of $20.20 is just over 70% off this. Except for the last couple of year, the stock price on this stock has never been close to the Graham Price. However, like the P/E ratio, it is a little high.

When I look at dividend yield, I get a 5 year average of 5.4%. However, removing the yields for when this company turn into an income trust, I get an average of 3.5%. This is a little lower than the current 3.8%. I must say that it is hard to determine an average or high yield for this company. The company’s dividends started off very low (below 1%) and then got quite high when it was an income trust and now they have been adjusted downward.

The last thing to look at is the Price/Book Value Ratio. Since this ratio has jumped around a lot, I am using the 5 year, rather than the 10 year average. The 5 year average is 4.25 and the current one is 3.67. The current one is some 87% of the 5 year average. This shows a relatively good price, but not a great one.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Reduce recommendations. The consensus will be a Hold recommendation. (See my site for information on analyst ratings.) I do not know the reason for the reduce recommendation, but the main reason for Hold recommendations is that the expected stock price within the next 12 months is not far off the current price. It is still felt that there is a lot of cash on the side waiting to be invested. When it is, mutual companies will benefit. Of course, no one knows when this will happen. There is also the possibility that the company will be bought out by Bank of Nova Scotia. However, that is currently off the table.

As I said yesterday, I am well exposed to the mutual fund business with the Life Insurance and Bank stocks, so I am not currently interested in this stock. However, when the Bank stocks increase their dividends and these stocks take off again, I will probably be selling some banks and then I can revisit this.

CI Financial Corp. is a diversified wealth management firm and one of Canada’s largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. CI became a public company in June 1994. It was then listed on the Toronto Stock Exchange. They because an Income Trust in 2006 and effective January 1, 2009, CI converted back to a corporation. Its web site is here CI Financial. See my spreadsheet at cix.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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