Tuesday, October 21, 2014

Gluskin Sheff + Associates Inc. 2

On my other blog I am today writing about the presentations at the World Money Show in Toronto by Kim Githler and by Jim Jubak.

I do not own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

When I look at insider trading, I find $4.7M of insider selling with $4.2M of net insider selling. Net insider selling is not a lot as it is only 0.44% of market cap. There is some insider ownership with the CEO owing shares worth $58.4M and a couple of officers owning shares worth $24.9 and $57.7M. Also, the two founders of this company have retired from the board.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.47, 13.73 and 11.60. The 10 year corresponding ratios are 9.47, 14.46 and 17.58. The current P/E Ratio is 12.56 based on a stock price of $29.02 and 2014 EPS estimates of $2.31. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $12.68. The 10 year low, median and high median Price/Graham Price Ratios are 1.41, 2.01 and 2.44. The current P/GP Ratio is 2.29. This stock price test suggests that the stock price is relatively reasonable. However, these P/GP Ratios are rather high for this ratio.

The 10 year Price/Book Value per Share ratio is 6.29. The current P/B Ratio is 9.39 a value some 49% higher. This stock price test suggests that the stock price is relatively expensive.

The 5 year median Dividend Yield is 2.93 and the current Dividend yield of 3.10 is some 5.7% higher. The historical average Dividend yield is 3.51%, but the historical median dividend yield is lower at 2.84. This stock price test suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The most recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $35.50. This implies a total return of $25.43% with 3.10% from dividends and 22.33% from capital gains.

There is an article about this company on newswire which announces the first fiscal quarter of 2014 and the fact that the two founders are retiring from the board of this company.

Sound bit for Twitter and StockTwits is: Price reasonable, but founders have left. See my spreadsheet at gs.htm.

This is the second of two parts. The first part was posted on Monday, October 20, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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