Friday, February 7, 2014

AGF Management Ltd. 2

I do not own this stock of AGF Management Ltd. (TSX-AGF.B, OTC- AGFMF), but I used to. I bought it in 2001 and sold half in 2006 and the rest in 2008. It used to be a dividend growth stock, but has not been one for some time now. I sold because I did not see that the stock would improve any time soon. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It has yet to recover.

When I look at insider trading, I find some $21.4M of insider selling and net insider selling at $21.4M. There is a minor amount of insider buying. Not only do insiders have options, but there are option like vehicles called Performance Share Units, Restricted Share Units and Common Shares Deferred Share Units. In 2013 389,000 shares were issued re stock options with a book value of 3.4M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.82, 14.52 and 17.22. The current P/E Ratio is 21.51 based on EPS estimate for 2014 of $.053 and a stock price of $11.40. This stock price test says that the stock price is relatively expensive.

I get a Graham price of $11.50 and the 10 year low, median and high median Price/Graham price Ratios are 0.88, 1.17 and 1.46. The current P/GP Ratio is 0.99 based on a stock price of $11.40. This stock price test says that the stock price is relatively reasonable. However, on an absolute basis, the P/GP Ratio of 0.99 says that the stock is cheap as any P/GP Ratio of 1.00 or lower points to an undervalued stock.

I get a current Price/Book Value per Share Ratio of 1.03. The 10 year median P/B Ratio is 1.35. This stock test says that the stock price is relatively cheap. This is because the current P/B Ratio is just 72% of the 10 year Median P/B Ratio.

The 5 year median dividend yield is 8.31% and the current dividend yield 9.47%. The current dividend yield is based on the dividend of $1.08 and the current stock price of $11.40. The current dividend yield is some 14% higher than the 5 year median yield. This stock price test says that the stock price is cheap to reasonable.

When I look at analysts' recommendations, I find Buy, Hold, Underperform and Sell recommendations. The consensus recommendation would be a Hold. The 12 month stock price consensus is $12.10. This implies a total return of 15.61% with 6.14% from capital gains and 9.47% from dividends.

This stock is still on the S&P/TSX Canadian Dividend Aristocrats Index and the Dividend blogger talks about problem companies on this list, including AGF. The Guru Focus blogger talks about The High Dividend Yield Trap and includes this stock on his list of stocks to avoid.

I feel that buying this stock is bottom feeding, except it is not that cheap and I do not see that it has turned any corner. Sometimes stocks are out of favour for good reason. I started to worry about this company in 2003 and that is over 10 years ago. I sold my shares a number of years ago and I do not regret this. The shares of this company are still way below where I bought and sold this stock. If I had kept it, I would not have made any money. See my spreadsheet at agf.htm.

This is the second of two parts. The first part was posted on Thursday, February 06, 2014 and is available here.

AGF Management Limited is an integrated, global wealth management company, whose principal subsidiaries provide investment management for mutual funds, institutions and corporations, as well as high-net-worth clients; and trust products and services. They sell their products in Canada. Its web site is here AGF.

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 or StockTwits.

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