Monday, August 15, 2011

Gluskin Sheff + Associates Inc 2

I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends. I sort of gave up after reviewing this stock. I started to review this stock yesterday and today I would talk about if it at a good price and what analysts say.

When I look at the insider trading report, I find lots of insider selling and little insider buying. The insider selling is of $12.8M, which is about 2.5% of the current market of this stock. Most insiders, except for the directors, have substantial shares in this company, but mostly of the multiple voting kind. It is only the directors that have more options than shares. There are 28 institutions that own just under 28% of this company’s outstanding shares. They have increased their holdings by 15% over the past 3 months.

I get a 5 year low median Price/Earnings Ratio of 11.35. The current P/E of 11.21 therefore shows a relatively good stock price. I get a Graham Price of $9.77 and the stock price of $17.37 is some 78% higher. The median difference between the Graham Price and stock price is 112%, so this shows a better than median stock price.

The current dividend yield is 3.2% and the 5 year median dividend yield is 2.2%. I get a 10 year median Price/Book Value Ratio of 9.96 and a current P/B ratio of 6.35. The current P/B ratio is some 63% below the 10 year median Ratio. Both these items also show a relatively good current stock price.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold recommendation. There are lots of Hold recommendations. (See my site for information on analyst ratings.) Some analysts seem to be negative because this is an investment firm and with the current market turmoil, they wonder where will money come from for investing purposes.

This is a small company and the risk rating would be high. There is also some concern about the fact that both the CEO (Gerald Sheff) and CFO (Valerie Barker) have recently stepped down these positions. The other co-founder, Ira Gluskin seems to have step away from his position as Chief Investment Officer before the end of 2010.

I am not currently interested in having this firm in my investment portfolio. As I said yesterday, they seem to have hit a high in 2006/7 that they have not yet come back too. They are also not growing their revenue. They do give dividends and special dividends that do account for 4% of the return on this company. The problem is that you may not have made any money or very little money over all if you had invested in the company over the past 5 years.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.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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