Monday, June 29, 2015

CI Financial Corp 2

On my other blog I am today writing about Assets under Management continue...

Sound bite for Twitter and StockTwits is: Stock price probably cheap. I worry a bit about what the Graham Price Test and P/B Ratio tests are saying, but the dividend yield tests are based more on facts and in my mind probably the best testing to do. See my spreadsheet at cix.htm.

I do not own this stock of CI Financial Corp (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In 2009, it lost its listing on my dividend lists because of a dividend cut. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

When I look at insider trading, I find minimal insider buying and insider selling of $12.9M and net insider selling of $12.8M. Insider selling is 0.13% of the market cap of the stock and is relatively high. However, it is less than options granted in 2014 which runs to $0.18% of outstanding shares. In 2014 outstanding shares were increased by around 493,000 or $0.18% of the outstanding shares.

There is insider ownership with the CEO owning shares worth around $30M, one director owning shares worth around $39M and another director owning shares worth around $147.2M. However, this all adds up to just less than 2% of the outstanding shares. The Chairman owns the most with shares worth around $303.5M and around 3.3% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share ratios are 16.57, 18.32 and 19.91. The 10 year corresponding P/E Ratios are close at 15.84, 17.55 and 19.90. The current P/E Ratio is 15.73 based on a stock price of $33.97 and 2015 EPS estimate of $2.16. This stock price test suggests that the stock price is relatively cheap.

I get a Graham Price of $18.19. The 10 year low, median and high median Price/Graham Price Ratio is 1.49, 1.69 and 1.95. The current P/GP Ratio is 1.87 based on a stock price of $33.97. This stock price test suggests that the stock price is relatively reasonable. However, the ratio is to the top end of reasonableness range and these P/GP Ratios are all rather high.

I get a 10 year Price/Book Value per Share ratio of 3.80. The current P/B Ratio is 4.99 based on a stock price of $33.97 and BVPS of $6.81. The current P/B Ratio is some 31% higher than the 10 year ratio. This stock price testing suggests that the stock is relatively expensive. Also a P/B Ratio of 4.99 is rather high.

The 5 year median dividend yield is 3.72%. The current dividend yield at 3.89% based on a stock price of $33.97 is some 4.4% higher. This stock price test suggests that the stock price is relatively reasonable. It is also good that the current dividend yield is above the 5 year median value.

In the past the dividend yield has gotten very high, especially when this stock had an unsustainably high dividend. There is a huge spread between the historical high and low at 17.62% and 0.20%. However the historical median is a viable test, with the historical median dividend yield at 2.93% and some 32.6% below the current dividend yield of $3.89% based on a stock price of $33.97. This final test suggests that the stock price is below the median and is relatively cheap.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price is $39.90. This implies a total return of 21.34% with 17.465 from capital gains and 3.89% from dividends.

A recent press release on Stockhouse talks about this company planning to buy back its shares. Another press release onStockhouse talks about current good growth in Assets under Management. This recent report from Dakota Financial News talks about seven brokerages giving this stock a Buy rating.

This is the second of two parts. The first part was posted on Friday, June 26, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI Financial.

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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