Power Financial (Symbol-PWF) [& 2020 PCC Re-organization]

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Re: Power Financial (Symbol-PWF)

Post by GWN789K »

I have held PWF since 2010 and i am up over 30% inc the dividends.

Looking back, I would have been ahead to just purchase shares in GWO and IGM instead (which I don't own).
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Re: Power Financial (Symbol-PWF)

Post by scomac »

JaydoubleU wrote: I've been tempted to sell, but part of me thinks that the moment I do, the group will then start dividend growth again and once again I'll tell myself, "what an impatient fool you are." (I made that mistake with JNJ: held it for five years and it did nothing; the minute I sell, it begins its upward trajectory :? ) So I am trying hard to be more patient, telling myself that I own shares of a very stable well-managed company with plenty of upside.
You're not going to get it right every time. That's the nature of this business. I wouldn't be too hard on yourself if you did sell and then things changed with the company. There's no point in beating yourself up about it because all that will end up doing is paralysing you with fear and you won't be to make timely decisions about anything. This is not a game of perfect. (Golfers will appreciate the analogy. :wink: )
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Re: Power Financial (Symbol-PWF)

Post by adrian2 »

Sensei wrote:My working thesis for Canadian insurance, or insurance anywhere for that matter, is that it is still a troubled sector. Since it is a float business, meaning they don't make money from selling insurance policies, they have to invest the float in low risk highly liquid securities something along the lines of short to medium term government bonds. Unlike the stock markets, insurance has to respond to fundamentals. And the fundamentals are reflected in low interest rates and the continuing QE program in the US which in turn reflects a fragile recovery at best. When interest rates start to rise, I think we'll see the insurance business come back to life. As it is, if price is a leading indicator, PWF is very near a 52-week high as is SLF. I'd expect a dividend increase in 2014.
My thesis is that insurance stocks are, more than anything else, the anti long bond.
So far, I think I've been proven right.
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Re: Power Financial (Symbol-PWF)

Post by parvus »

I would think that the drag on Power, as opposed to its insurance and wealth management subsidiaries, would be Gesca, which publishes La Presse, amongst others. Newspapers are not faring well these days.
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Re: Power Financial (Symbol-PWF)

Post by JaydoubleU »

Good article in the weekend Globe and Mail on Power Corp, its history and current challenges.

It's behind a wall, so I bought the paper to read the article. Not shockingly revealing, but at least it indicates that management at POW is aware of the last decade's underperformance. Unfortunately, the Desmarais boys do not seem inclined to take any outside shareholder advice on restructuring or to share control in order to unlock value.

https://www.theglobeandmail.com/report- ... e37165897/
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Re: Power Financial (Symbol-PWF)

Post by Taggart »

Thanks for the link JaydoubleU.

For those like myself who don't subscribe to the online G&M, here's the free link at Globeadvisor.

POWER PUZZLE
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Re: Power Financial (Symbol-PWF)

Post by Londoncalling »

Interesting read. Thanks Jdub and Taggart. As a recent purchaser of PWF I optimistic that rising interest rates will have a greater effect on this holding than the past 10 years. However, I would agree that the company has underperformed others in this sector because of the family monopoly.
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Re: Power Financial (Symbol-PWF)

Post by nisser »

This is super timely, and thank you for posting the article. I was a bit confused about the relationship between PWF/POW/IGM/GWO. I'm finalizing my buy decision rules for the "dogs of the tsx" and I've noticed that PWF/POW has been a regular dog for more than a decade and often more than 2 entity come up in the list. (N.B. Ignoring these companies gives a 0.3-0.5% yearly benefit over several timeframes).

It doesn't look like the family is too keen on making any changes in the short term, and the other stakeholders are getting fed up, so might be best to just ignore these companies.
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Re: Power Financial (Symbol-PWF)

Post by JaydoubleU »

The Desmarais fellahs probably read the comment by Parvus above and decided to act on LaPresse :)

David Baskin recently rated POW his Top Pick:
This is a family-owned empire. Control has changed and they have cut loose their newspaper and are talking about doing interesting new things with their assets, including consolidating their European assets which valued at $0 by the street. The stock trades at about 80% of its net asset value. It is inexpensive in absolute terms and in comparison to its historical valuation, and poised for growth. Rising bond yields will boost their earnings of the Power Financial companies. The dividend yield is high, with very little risk. (Analysts' price target is $33.69)
I am still holding but getting a little frustrated. With interest rates rising, you'd think POW/PWF would be hitting new highs, but NO.

Best value on the TSX, but is it a value trap, or is something going to happen?
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Re: Power Financial (Symbol-PWF)

Post by Shakespeare »

I gave up on POW/PWF years ago.

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Re: Power Financial (Symbol-PWF)

Post by JaydoubleU »

Perhaps it was not La Presse that was dragging down the shares, but "Transactions with Terrorists" :

http://www.globeadvisor.com/servlet/Art ... EDESMARAIS

Thinking to shift a few sheckles from Power(less) to Brookfield.....
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Re: Power Financial (Symbol-PWF)

Post by AltaRed »

I've mentioned before, perhaps on the Buy or Sell threads, that PWF is the next holding to be sold, probably when I need to fund our next travel adventure this Fall. It has really done very little for me except to pay me dividends and that is not good enough for a common equity. The GWL component should have done well but it has stumbled and well, the IG component is likely going nowhere despite shifting gears somewhat into robo-advising. It is hard to replace the lucrative fee revenue that IG has delivered over time.
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Re: Power Financial (Symbol-PWF)

Post by scomac »

I have owned POW since January 2016 for a small gain plus the dividend over that time. The linked article is quite damning of their stake in LaFarge, but one must believe in Demarais' statement that he knew nothing of the links to terrorism. I'm prepared to give it some more time, but if the story changes for the worse then it will have to go.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Re: Power Financial (Symbol-PWF)

Post by 2 yen »

Just like with oil stocks which have fallen out of favor because of uncertain politics and general disruption in that sector, some financials also need to viewed with clear lenses. As a holder, I take some solace from the fact that these big insurance companies and investment firms may well be better bets than some think because, unlike the members of this forum, 99.5% of the general public still buys whatever is shoved at them by promoters. This cold comfort is not a positive reason to own the stock, that's for sure. I do like the fact that PWF is fed by a variety of companies, not just one entity. For me, it's about the dividend and until something better comes along I'll hold.

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Re: Power Financial (Symbol-PWF)

Post by scomac »

2 yen wrote: 24 Jun 2018 06:41 Just like with oil stocks which have fallen out of favor because of uncertain politics and general disruption in that sector, some financials also need to viewed with clear lenses. As a holder, I take some solace from the fact that these big insurance companies and investment firms may well be better bets than some think because, unlike the members of this forum, 99.5% of the general public still buys whatever is shoved at them by promoters. This cold comfort is not a positive reason to own the stock, that's for sure. I do like the fact that PWF is fed by a variety of companies, not just one entity. For me, it's about the dividend and until something better comes along I'll hold.

2 yen
AS is the case with most value stocks there are more reasons not to own them than reasons to own them. ENB is a good example of one that has been discussed here at length.

BAM.A was mentioned as a possible alternative, but it is not without its issues. They also own assets in politically unstable parts of the world and with and even more convoluted capital structure with all the various spin-offs that they have done often in the form of limited partnerships.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Re: Power Financial (Symbol-PWF)

Post by ockham »

scomac wrote: 23 Jun 2018 12:07 I have owned POW since January 2016 for a small gain plus the dividend over that time..... I'm prepared to give it some more time,.........
I've owned PWF since 2002. Price appreciation of 70%, most of course occurring in the early years. Gauging when to give up on a dog is even cloudier when there's a gain from the better years yet to be booked.
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Re: Power Financial (Symbol-PWF)

Post by SQRT »

One of the first things I did when I took over managing my MIL portfolio was sell POW for a small loss. Always viewed this co as a dubious investment because of its complicated structure, dual class share structure and it’s less than transparent European investments. Investing in financial services might make some sense, but Cement company? Old man Demarais was a smart guy but not sure the sons are as sharp nor what value the parent company and the “boys” provide.
Last edited by SQRT on 25 Jun 2018 10:14, edited 1 time in total.
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Re: Power Financial (Symbol-PWF)

Post by JaydoubleU »

There was one thing that stuck in my mind from the linked article, and it was this,
In late February, 2017, Mr. Desmarais was on a ski holiday in St. Moritz in Switzerland when Mr. Hess, Mr. Lamarche and Ryan Fayhee, a Baker McKenzie partner, arrived to give him an update on the investigation. The conclusions were damning....
I get an image of an uber-wealthy heir, off on a skiing holiday in Switzerland (aren't we all??), while senior executives at one of his companies are up to no good. As a member of the Board of Directors, either a. he knew about the payments, in which case he's a criminal (and a liar), or b. he didn't know, in which case he's negligent, or perhaps just incompetent; too busy enjoying the old man's money to worry about "minor business matters."
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Re: Power Financial (Symbol-PWF)

Post by SQRT »

JaydoubleU wrote: 25 Jun 2018 05:57 There was one thing that stuck in my mind from the linked article, and it was this,
In late February, 2017, Mr. Desmarais was on a ski holiday in St. Moritz in Switzerland when Mr. Hess, Mr. Lamarche and Ryan Fayhee, a Baker McKenzie partner, arrived to give him an update on the investigation. The conclusions were damning....
I get an image of an uber-wealthy heir, off on a skiing holiday in Switzerland (aren't we all??), while senior executives at one of his companies are up to no good. As a member of the Board of Directors, either a. he knew about the payments, in which case he's a criminal (and a liar), or b. he didn't know, in which case he's negligent, or perhaps just incompetent; too busy enjoying the old man's money to worry about "minor business matters."
Yes, that’s the impression you get. What are the chances you could run a Cement Plant in Syria during a civil war without some pretty significant issues (including suspicious payments)? But this guy was apparently quite surprised?
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Re: Power Financial (Symbol-PWF)

Post by bpither »

Sometimes I just don't get why a stock languishes or drops ($29.75 today) when earnings point upward. Sure the Lafarge issue is a negative but PWF had record earnings in the last quarter = 6 months @ $1.74 and over $3/share during the past 12 months with multi year dividend increases.

What gives?
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Re: Power Financial (Symbol-PWF)

Post by ig17 »

POW, PWF and GWO all down 2% today. I don't see any news. Not every 2% move has an explanation. Maybe a large shareholder woke up today, read this article on Bloomberg, cursed, decided that he had had enough, and hit the sell button.

https://www.bloomberg.com/news/articles ... -farm-push
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Re: Power Financial (Symbol-PWF)

Post by kumquat »

Is M. Desmarais using his money or PWF's to finance this. If the latter, I'd be selling if I owned any.
I don't intend to offend anyone, that part is just a bonus.

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Re: Power Financial (Symbol-PWF)

Post by ig17 »

kumquat wrote: 04 Sep 2018 21:28 Is M. Desmarais using his money or PWF's to finance this. If the latter, I'd be selling if I owned any.
I bet he uses his own money but it's still not a good look. I got an impression of an absentee CEO who is more interested in his side hobbies. Has he ever given a similar full access interview about Power Corp? I can't recall seeing one.
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Re: Power Financial (Symbol-PWF)

Post by slim »

I've owned POW and PWF since 2005.
It is worth less than when I bought.
On INK insider trading, I see that in the last 12 months the CEO sold shares worth 21 million.
Each year I have seen the CEO selling a lot of shares.
Yet his balance doesn't seem to change.
I think there is lots of financial engineering in this company.
Bottom line....the shareholder seems to be the patsy.
I'm going to think about this company, and why I have been holding shares.....
These people are tight with the Laurentian Elite, including Justin Trudeau. Tainted money.
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Re: Power Financial (Symbol-PWF)

Post by Taggart »

I sort of had bad timing when I bought PWF in March 2011. A few months later the analysts were saying that it would probably be a few years before Canada's insurance companies started increasing their dividends again. I lost interest in continuing to hold this company, so sold all shares of PWF in December 2011. Give or take a few dollars, broke even on the transactions.

Since then I haven't bothered with Canadian insurance stocks, and now for the 15% target I invest in the financial sector, I just focus mostly on the major Canadian banks. Keeps things simple, the way I like it, with less headache.
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