Friday, October 8, 2010

Manulife Financial Corp

Today’s blog is very different from what I usually do. I own this stock (TSX-MFC). This stock has been plummeting lately. This is because investors in this stock seem very scared. The last few months have seen this stock go down over 40%. I first bought this stock in 2005 and made more purchases in 2006 and 2009. To date I have lost some 14% per year or just over 50% of my investment.

There is no doubt that this stock faces head winds in the near future. The 2nd quarterly results were particularly bad. No one thinks that Manulife will solve their problems soon. At the present, no one feels that this company is going to having any earnings this year either. Everyone expects the company to have a very tough year. However, no one thinks the company is going to bankrupt either.

So, have investors over reacted? Is this is stock sale? I think so. That is why I went into the market this morning and bought a few hundred more shares of this stock. Not a big investment, but I could not resist buying these shares at a price of $12.51. This stock has a forward P/E (that is based on next year earnings) of just over 7. The current stock price is also just 80% of the book value. (A stock selling below book value is a great buy signal.) The dividend yield is also about the highest it has ever been and this is in spite of the fact they recently lowered their dividends.

Now, I also must point out that this sort of investment is not for everybody. You should never invest in something that will disturb your sleep. No investment is worth sleep loss. This sort of investment is also is a bit of a gamble.

The analysts’ recommendations are interesting. This consensus recommendation would be a Hold. This is because there are a lot of analysts following this stock and an awful lot of them give this stock a Hold recommendation. However, there are also Strong Buy and Buy recommendations on this stock. There is no Sell recommendation nor is there even an Underperform recommendation. I know that Sell recommendations are hard to come by, but they do occur. (See my site for information on analyst ratings.)

I will return to discussing Finning International next week after the holiday. However, I just thought I would blog about what I was doing today.

This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife. See my spreadsheet at mfc.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.


  1. I have my eye on MFC. I'm a little leery though of buying shares in a company that just cut their dividend. Manulife was the bluest of blue chips, that's why it's hard not to grab some shares while it's so low. I'll have my mouse hovering over the buy button for the next little while.

  2. I think it's a good move Susan, especially since you already own a bunch, and, because you're highly diversified across other sectors.

    If you had all your eggs in this basket, well, I might say otherwise.

    Worse case scenario, somebody buys MFC.