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

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BRIAN5000
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Post by BRIAN5000 »

http://www.powercorporation.com/index.p ... e=orgchart

I thought it was more diversified then it is. The link is to the organization chart. Looks like might as well buy PWF.
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Post by mpav »

Beek wrote:When GWO or IGM pays a dividend, how does that work tax-wise?

GWO earns money, pays tax. Then they pay a dividend.
PWF earns money from those dividends, and pays tax. Then they pay a dividend.
POW earns money from PWF's dividends, and pays tax. Then they pay a dividend.
Finally, the shareholder gets paid. Does the dividend tax credit make up for the fact that GWO's earnings have been taxed three times over? Or do I not understand the cashflow at all? I know nothing about corporate taxes, so some enlightenment would be helpful.
That is a very good question. My understanding was that they did pay tax, but as a holding company they paid a marignal tax level so the impact is fairly small. The question is specifically what is that impact.

Like you I am by no means an expert, but I hold a large chunck of this company, so I will send a note to their investor relations and report back any news.
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Post by Jo Anne »

Beek wrote:When GWO or IGM pays a dividend, how does that work tax-wise?

GWO earns money, pays tax. Then they pay a dividend.
PWF earns money from those dividends, and pays tax. Then they pay a dividend.
POW earns money from PWF's dividends, and pays tax. Then they pay a dividend.
Finally, the shareholder gets paid. Does the dividend tax credit make up for the fact that GWO's earnings have been taxed three times over? Or do I not understand the cashflow at all? I know nothing about corporate taxes, so some enlightenment would be helpful.
It's not income to PWF/POW. And there is no tax on these dividends.

Dividends are allowed to pass freely (i.e., without Part IV tax) between connected corporations because the money is not really leaving the "economic entity".
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Post by Beek »

Thanks Jo Anne!
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PWF ? Correct me if am wrong but

Post by SOLSTICE »

My portfolio is for dividend grower only, I already own PWF, and thinking of adding some more, if someone in a diversified portfolio, wants, a insurance company, a mutuel fund company, and a conglomerate, would it be best to only buy PWF for that purpose ?
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Post by BRIAN5000 »

I'm considering adding PWF for that reason. My only other conglomerate was BCE weighted towards telecomunications so PWF will most likely be its replacement weighted towards financial. I have a large position in financial already same as I have a large position in telecomunications as well.

I will trim Telus when its a good time(market time), BCE will be gone, will consider selling IGM to reduce the number of stocks and hold PWF. I am also considering MBT.
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Post by iluvnascar »

I'm no expert on PWF...........but I have heard it said on more than one occasion that an investor ought to buy POW instead of PWF.

POW (Power Corporation) owns a big chunk of PWF........and the way I've heard it pitched is that by buying POW, you're actually buying PWF cheaper than its listing. And you get the rest of POW's holdings for better diversification.
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Post by SOLSTICE »

I was wondering the same thing also please other members come to our rescue with explaination on this PWF OR POW ?
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Post by BRIAN5000 »

iluvnascar wrote:I'm no expert on PWF...........but I have heard it said on more than one occasion that an investor ought to buy POW instead of PWF.

POW (Power Corporation) owns a big chunk of PWF........and the way I've heard it pitched is that by buying POW, you're actually buying PWF cheaper than its listing. And you get the rest of POW's holdings for better diversification.
I thought you didn't get much more diversification by buying POW


http://www.powercorporation.com/index.p ... e=orgchart
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Post by mpav »

With POW you generally get a bigger discount, but with POW you do own the newspaper holdings etc. which many don't find that attractive.

I tend to like the PWF as it is a more of a pure play on financial services.
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Post by BRIAN5000 »

I already own the banks, I have small position in SLF, MFC and IGM is it really just overkill to add PWF at this time ?

SLF,PWF,MFC pay their dividends JAN, FEB, MAR which looks attractive.
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Post by JaydoubleU »

I think IGM is one of the best buys out there at this time.

I own both PWF and IGM, and I have noticed that several large dividend funds such as BMO Dividend also own more than one of the POWER family. PWF gets most of its revenue from GWO, with only a small stake in IGM. It also holds Pargesa which has all sorts of eclectic interests in Europe. Therefore, if IGM is a local player (the largest fund manager in Canada), PWF is an international holding company.

Every time I look at buying more of something, I take a look at these. The steady ROE and consistent dividend growth are second to none.
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Post by scampbell »

I have owned PWF for years and have added to it on dips, so have a bit of an overweight position right now. I'm wondering if the recent weakness might be investors concerned that insurance companies (like GWO) are huge holders of bonds, mortgage pools and related instruments-what cockroaches might come to light down the road?

That being said, I also own MFC.
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Post by scampbell »

Got one answer to my previously posted concern about the insurers and concerns with sub-prime debt, though I don’t believe this addresses all possibilities:

From Scotia this morning

■ The U.S. lifecos have about 3.4% of their invested assets in subprime, largely through mortgage-backed securities, with minimal CDO and CLO exposure. This is far more than Great-West Lifeco's 1.2% exposure, and Manulife's and Sun Life's 0.5% exposures.
■ The total write-down in Q4/07 was just 1.2% of U.S. lifecos' subprime exposure, or just $0.09 per share after-tax, and was in most cases related to tranches rated A or lower, or, in the case of Principal Financial Group, a significantly higher percentage of CDO and home equity loan exposure.
■ With 1/3 to 1/8 the exposure, and significantly much lower exposure to CDOs and tranches rated A and lower (GWO notes its subprime exposure is 99% rated AAA; Sun Life's is 97%; while Manulife is a little lower on the credit scale, describing its exposure as predominantly AA or A), we expect the Canadian lifecos to have well less than $0.05 "hits" to EPS related to subprime exposure when they report Q4/07 results this week.
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Post by BRIAN5000 »

Has anyone seen any news explaining why PWF is tanking this morning?
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Post by AltaRed »

BRIAN5000 wrote:Has anyone seen any news explaining why PWF is tanking this morning?
Noticed both IGM and GWO are way down. I would expect IGM to be tanking given the news of slowest economic growth in Canada in 4 years, but am suprised GWO would also tank (unless in sympathy).
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Post by scomac »

AltaRed wrote:
Noticed both IGM and GWO are way down. I would expect IGM to be tanking given the news of slowest economic growth in Canada in 4 years, but am suprised GWO would also tank (unless in sympathy).
Baby, bathwater, everything again....and we may have a ways to go yet. :(
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Post by Norbert Schlenker »

March 3 (Bloomberg) -- London Life Insurance policyholders, whose money was used to help finance the company's purchase by Great-West Lifeco Inc. in 1997, may sue as a group in an attempt to recover more than C$500 million ($505 million), a judge ruled.

Ontario Superior Court of Justice Regional Senior Judge Lynne Leitch certified the class-action lawsuit, which involves about 1.78 million people who held life-insurance policies since 1997, in a ruling released Feb. 29 in London, Ontario. ....
http://www.bloomberg.com/apps/news?pid= ... fer=canada
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Post by brad911 »

JaydoubleU wrote:We're off the track of Rogers here, but I might ask why you added PWF when you have IGM. I mean, yes, to get exposure to GWO, but then why not just GWO?
The initial thought was fairly straight-forward: IGM is cheap right now, I wanted to add more to lower my ACB and already having strong positions in SLF and MFC I wanted some indirect exposure to the last insurance stock in the space after GWO's strong results from the recent quarter.

Adding POW only gives me added exposure to Gesca (newspaper) which I don't really want in the first place. So by adding PWF I get 100% exposure to PWF, strong exposure to GWO and some added exposure to IGM which are all things I wanted to do in the first place and the percentages work out quite favourably in the ratio I hold MFC, SLF, IGM and now PWF/GWO.

How I worked it out was this...

I have a full position of MFC, say 1.00 (100% intended weighting).
I don't want as strong of a position in SLF so right now its 0.75 relative to MFC to represent that. I already had a position in IGM prior (0.75). I wanted more and I secured an initial position of PWF with the intention of adding a little more during a market decline or better valuation.

The great part of PWF is gaining exposure to all their European assets (which I lack at the moment overall). With PWF I get an equal relative weighting in GWO (0.75) to compliment my existing positions in SLF/MFC and if I buy more PWF shortly I won't worry too much on the IGM weighting if its slightly higher than my intention due to its historically strong dividend GR.

Confused? :D
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Post by JaydoubleU »

Not confused at all :wink:

Having studied the POW family rather closely, I can appreciate various strategies of owning one subsidiary, the head (POW), or some combination.

I posted some comments on PWF on the CB concerning the Pargesa assets. namely, often overlooked but very attractive.
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Post by JungleGuy »

For every dollar spent in PWF, how much is GWO, IGM or Pargesa?
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Post by JaydoubleU »

As a percent of operating earnings for 2007,

GWO contributed roughly 71%
IGM...............................23%
Pargesa...........................6%

I don't have the annual report in front of me, but I believe PWF has increased positions in Lafarge and Suez.
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Post by mpav »

They have also sold of Iberdola (spanish utility).

What I like is if you review the names in Pargesa, the stocks have similar traits to PWF - strong moats, good focus on dividends/div growth.

For me personally, when reviewing stocks I don't even consider GWO or IGM, as I just watch PWF and buy when it is in my range (which obviously implies the underlying holdings are discounted). It becomes a bit of apin for me to track exposures when holding various members of the family.

For my insurance exposure it really becomes two names - MFC and PWF that give me the coverage I need for that sector. I just scoop up more in each when I like the value I see.

Note I have recently bought both in the last few weeks.
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Post by JaydoubleU »

That's a good point.

All of the subsidiaries--meaning the companies under Pargesa--pay dividends and raise them regularly.

POW's annual report actually stated that its income was dependent on the upstream of dividends. Not that this is a surprise, but if you look at the dividend flow as the actual earnings, it's only a question of where you wish to dip in the ladle.

I would agree with brad that I'm not much interested in Gesca (La Presse).

What I would like to know, and what I haven't been able to see in the annual reports, is where Power Corp is getting its China exposure, and how, and how much? Is this through insurance, infrastructure, or ?
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Post by mpav »

They aown a piece of CITIC I believe...it is a classic conglomerate, with steel, real estate etc.

I believe it is part of POW, but I did a quick look at the annual report and didn't see mention of it, but I am almost certain.
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