Tuesday, September 20, 2011

AGF Management Ltd 2

I was asked if there was a theme at the Money Show I recently attended. Yes there was, as many mentioned that they were worried that we will have another financial crisis and this will come from Europe. They are worried that EU is just postponing what they must do to handle EU debt. They were worried about a messy Greek default and French banks crashing because of it.

Now back to the stock I was reviewing, AGF Management Ltd (TSX-AGF.B), which is a stock I currently do not own. I bought it over several months in 2001 and sold some in 2006 and the rest in 2008. I made a return of 2% per year on this stock. I sold because I did not think that it was going anywhere.

When I look at the insider trading report, I find a bit of insider selling and a bit of insider buying with a net of insider selling. However, there is no significant insider buying or selling. There are some 61 institutions that hold some 36% of the shares of this company. In the last 4 months they have sold 4% of their holdings. The other complication is that there are “A” multiple voting shares and “B” single voting shares. The Goldring Family owns the multiple “A” shares and therefore control the company.

I get a 5 year median low Price/Earnings Ratio of 13.0 and a 5 year high P/E Ratio of 20.2. The current P/E Ratio of 10.8 would show a good current stock price. I get a Graham Price of $21.08 and this is some 24% higher than the current stock price of $15.97. The 10 year median difference is 0, so this also shows a good current stock price.

I get a 10 year median Price/Book Value Ratio of 1.75 and a current one of 1.20. The current one is around 68% of the 10 year median P/B Ratio and points to a good stock price. The last thing to look at is the dividend yield and at 6.64%, it is higher than the 5 year median dividend yield of 4.83%. All the above, of course, point to a good current stock price.

When I look at what the analysts’ recommendations are, I see Buy, Hold and Underperform. The consensus recommendation would be a Hold. Analysts that say “Don’t Buy” this company admit it is cheap, but they do not see that it is a good buy.

Some analysts comments on its good dividend and the fact is it one of the largest Mutual Fund companies in North America, while others are worried about it lack of growth revenue wise. I think that it is interesting that here are no sell recommendations. I must admit that it was recovering just before the recent 2008 crisis.

My main objection to this stock is that it increases it dividend at the expense of the Dividend Payout Ratios and I do not like this in a dividend paying company. I only found one analyst that mentioned this.

AGF is a Mutual Fund company. It owns AGF Trust Company. The company has a diversified group of products designed to meet a variety of investment objectives including GICs, term deposits, real estate secured loans, investment loans and home equity lines of credits. They sell their products in Canada. Its web site is here AGF. See my spreadsheet at agf.htm.

I have taken some steps to rationalize my portfolio to have fewer stocks with bigger holdings. I sold all my shares in IGM Financial (TSX-IGM) and Canadian Pacific (TSX-CP) and bought more shares in Power Financial (TSX-PWF) and Canadian National Railway (TSX-CNR).

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.

No comments:

Post a Comment