I first bought this stock (TSX-PWF) in 2001 and then some more in 2004. My total return has been 8.14% per year. The dividend portion of this total return would around 4%. This company used to have a good record of increasing it dividend each year and it used to be on the dividend lists that I follow.
However, as with other Canadian Life Insurance companies, this company has not raised their dividends since 2009. The growth in dividends over the past 5 and 10 years is still high at 10% and 14.5%. I can find no indication when they might raise dividends again. Their Payout ratios based on earnings and cash flow are coming back down to levels that are more reasonable.
The total return for this company over the past 5 and 10 years has been at 2.2% and 9.8% per year. The dividend portion of this total return would be around 3.9% per year. The 5 year total return has been lousy, but all Canadian Life Insurance companies have had a rough time of it during this past recession. The best that can be said is that at least the 5 year return is positive.
The growth figures for this company have not been great over the past 5 years but the 10 year growth figures have mostly been fine. Take the cash flow; the growth over the past 5 years is at 4.7% per year. My spreadsheet shows the 10 year growth at 30% per year, but that is only because 10 year ago was a poor year. The real growth is closer to 19% per year, which is still a very good growth rate.
Growth in revenues over the past 5 and 10 year is quite low at 4.3% and 6.8% per year. However, analysts seem to feel that there will be much better revenue growth for 2011 and 2012. As far as I can see, revenues for the first quarter of 2011 are down from those of the first quarter of 2010.
The Asset/Liability Ratio is lower for the first quarter of 2011 at 1.10 than it has been for sometime. What is complicating matters is that this company is now reporting using the IFRS accounting rules, in place of the Canadian GAAP accounting rules. Under these new rules, Leverage Ratio has doubled between 2010 and the 1st quarter of 2011, from 12.81 to 22.89. The same thing has happened to Debt/Equity Ratio, which has gone from 10.83 to 20.31. This is quite a change and it is hard to know the real effect of these accounting rule changes being made.
I am pleased with my investment in this company and believe it will be a good long term investment for me.
This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.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.
Friday, May 13, 2011
Sun Life Financial Inc 2
This is yesterday post. I will do today's post shortly.
I first bought this stock (TSX-SLF) in 2000 and then some more 2001, 2003 and 2006. I have made a total return to date of 4.4% per year on this stock. Of this total return, probably 3% per year is from dividends. Most Canadian insurance companies have been hit hard by this recent recession and they have yet to fully recover.
As with a lot of stocks today that give out stock options freely, the insiders of this company have lots more stock options than shares, and there is lots of insider selling. The CEO has sold $7M of shares and the officers of the company have sold $12M shares. This totals $18M of shares sold and this selling has all occurred since the beginning of this year.
It is only the directors that have more shares than options and there has been some minimal buying by directors, but this is too small to even bother with. There are 353 Institutions that own some 55% of this stock. Over the past 3 months there has been net buyers of just over 5M shares by institutions. (See my site for information on Insider Trading.)
When I look at 5 year median Price/Earnings ratios, I find the low at 12.4 and the high at 14.4. The current P/E at 11 is therefore at a relative low and is also absolutely at a relative low. P/Es at 10 or below are generally considered low. I get a Graham Price for this stock of $39.12 and a stock price of $30.46. The stock price is some 22% below the Graham Price. When looking at the median difference between the Graham price and low stock price over the past 10 years, I get a difference of 20%. So this also points to a low stock price.
I get a 10 year median Price/Book Value Ratio of 1.52 and a current P/B Ratio 1.25. The current P/B Ratio is some 82% of the 10 year median P/B Ratio and points to a current low stock price. The last thing is the dividend yield. The dividend yield at 4.7% is higher than the 5 year median dividend yield of 3.9%. So, in summary, every thing is pointing to a low current price.
A low current relative stock price, of course, can mean a lot of different things. It can be low because it is not expected to do well in the near future. And, this would appear to be the case here looking at what the analysts are recommending.
There are quite a number of analysts following this stock. The recommendations vary from Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold. (See my site for information on analyst ratings.) Analysts’ recommendations can vary also because some look at short term investing and some long term investing.
Many analysts talk about the dividend being safe. It is not expected to raise it dividend in the short term, but it is expected to be a good investment in the long term. Analysts with buy recommendations say that it is a good company at a cheap price. Buy recommendations come with a 12 month stock price of around $35.00 and Hold recommendations come with a 12 month stock price of around $33.00.
I plan to hold on to what stock I have in this company. I will not be buying more because I have enough invested in this company. If you are a long term investor like me, you do not sell good companies because they are going through a rough patch.
I note that bloggers My Own Advisor and The Loonie Bin both have Sun Life stock.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.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.
I first bought this stock (TSX-SLF) in 2000 and then some more 2001, 2003 and 2006. I have made a total return to date of 4.4% per year on this stock. Of this total return, probably 3% per year is from dividends. Most Canadian insurance companies have been hit hard by this recent recession and they have yet to fully recover.
As with a lot of stocks today that give out stock options freely, the insiders of this company have lots more stock options than shares, and there is lots of insider selling. The CEO has sold $7M of shares and the officers of the company have sold $12M shares. This totals $18M of shares sold and this selling has all occurred since the beginning of this year.
It is only the directors that have more shares than options and there has been some minimal buying by directors, but this is too small to even bother with. There are 353 Institutions that own some 55% of this stock. Over the past 3 months there has been net buyers of just over 5M shares by institutions. (See my site for information on Insider Trading.)
When I look at 5 year median Price/Earnings ratios, I find the low at 12.4 and the high at 14.4. The current P/E at 11 is therefore at a relative low and is also absolutely at a relative low. P/Es at 10 or below are generally considered low. I get a Graham Price for this stock of $39.12 and a stock price of $30.46. The stock price is some 22% below the Graham Price. When looking at the median difference between the Graham price and low stock price over the past 10 years, I get a difference of 20%. So this also points to a low stock price.
I get a 10 year median Price/Book Value Ratio of 1.52 and a current P/B Ratio 1.25. The current P/B Ratio is some 82% of the 10 year median P/B Ratio and points to a current low stock price. The last thing is the dividend yield. The dividend yield at 4.7% is higher than the 5 year median dividend yield of 3.9%. So, in summary, every thing is pointing to a low current price.
A low current relative stock price, of course, can mean a lot of different things. It can be low because it is not expected to do well in the near future. And, this would appear to be the case here looking at what the analysts are recommending.
There are quite a number of analysts following this stock. The recommendations vary from Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold. (See my site for information on analyst ratings.) Analysts’ recommendations can vary also because some look at short term investing and some long term investing.
Many analysts talk about the dividend being safe. It is not expected to raise it dividend in the short term, but it is expected to be a good investment in the long term. Analysts with buy recommendations say that it is a good company at a cheap price. Buy recommendations come with a 12 month stock price of around $35.00 and Hold recommendations come with a 12 month stock price of around $33.00.
I plan to hold on to what stock I have in this company. I will not be buying more because I have enough invested in this company. If you are a long term investor like me, you do not sell good companies because they are going through a rough patch.
I note that bloggers My Own Advisor and The Loonie Bin both have Sun Life stock.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.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.
Wednesday, May 11, 2011
Sun Life Financial Inc
I first bought this stock (TSX-SLF) in 2000 and then some more 2001, 2003 and 2006. I have made a total return to date of 4.4% per year on this stock. Of this total return, probably 3% per year is from dividends. Of course, part of the reason I have done so well, comparatively, is because I bought in 2000 before the price rose that year. Most insurance companies have been hit hard by this recent recession and they have yet to fully recover.
The only growth figures that are any good are for dividend increases, with the 5 and 10 year growth at 7.8% and 11.6% per year, respectively. The other thing to mention, of course, is that this company has not raised it dividend rates since 2008. Their payout ratios are getting much better and it is expected that they will start to raise their dividends again over the next few years.
Most of the other growth figures are low or non-existent. However, some of the 10 year growth figures are low, but not terrible. For example, the growth in earnings over the past 10 years is 6.4% per year and the growth in book value over the past 10 years is 6% per year. Also, the growth in revenue over the past 10 years is 4.3%. The 5 year growth for both revenue and book value is around 2%, and therefore very low. The growth in earnings is negative over the past 5 years.
The growth in cash flow for both the last 5 years and 10 years is negative. Also, total return growth is negative for the past 5 years and just under 2% (less than the dividend payments) over the past 10 years. This has not been a very profitable company recently. However, I am a long term investor, and it is expected that insurance company, and in particular, this one, will recover over the next few years.
I plan to continue to how the stock I have in this company at the present time. As I had said, the last recession hit insurance companies quite hard, but they will recover. I think that this will be a good long term investment for me. It just will take sometime before I make some decent money from it. In the meantime, I am collecting dividends, with a yield of 4.7%.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.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.
The only growth figures that are any good are for dividend increases, with the 5 and 10 year growth at 7.8% and 11.6% per year, respectively. The other thing to mention, of course, is that this company has not raised it dividend rates since 2008. Their payout ratios are getting much better and it is expected that they will start to raise their dividends again over the next few years.
Most of the other growth figures are low or non-existent. However, some of the 10 year growth figures are low, but not terrible. For example, the growth in earnings over the past 10 years is 6.4% per year and the growth in book value over the past 10 years is 6% per year. Also, the growth in revenue over the past 10 years is 4.3%. The 5 year growth for both revenue and book value is around 2%, and therefore very low. The growth in earnings is negative over the past 5 years.
The growth in cash flow for both the last 5 years and 10 years is negative. Also, total return growth is negative for the past 5 years and just under 2% (less than the dividend payments) over the past 10 years. This has not been a very profitable company recently. However, I am a long term investor, and it is expected that insurance company, and in particular, this one, will recover over the next few years.
I plan to continue to how the stock I have in this company at the present time. As I had said, the last recession hit insurance companies quite hard, but they will recover. I think that this will be a good long term investment for me. It just will take sometime before I make some decent money from it. In the meantime, I am collecting dividends, with a yield of 4.7%.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.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.
Tuesday, May 10, 2011
Enghouse Systems Ltd 2
This company (TSX-ESL) is another small tech firm. This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend. For their website, see Keystone Publishing. As far as I can see, Keystone Publishing tends to recommend stocks for the short term, rather than for long term buy and hold investors.
What I see in the Insider Trading report is some $.84M of net Insider Buying. There is a minimum of Insider Selling. There seems to be a number of insiders who has 2-3% of the company’s outstanding shares in stock options. Also, a couple of insider own almost 35% of this company. Insiders seem to be holding on to their stock options recently and this is a good sign.
The company has just raised their dividend by 25%. This is also a sign that the management is confident in the future earnings and cash flow of the company. There are also some 8 institutions that own just over 25% of this company. Over the past 3 months, there have been 2 institutional buyers and 2 institutional sellers with a net increase in shares owned. (See my site for information on Insider Trading.)
When I look at 5 year median Price/Earnings Ratios, I find the low P/E to be 18 and the high to be 28.5. That puts 19.4 closer to the low, relatively speaking. However, the P/E ratios of this stock are on the high side. I get a current Graham Price of $7.53. The current stock price of $10.09 is some 34% higher. The median difference between the Graham Price and stock price is 21% and the high difference is 54%. So the current difference is towards the high side. (See my site for information on calculating Graham Price.)
I get a 10 year median Price/Book Value Ratio of 1.76. The current P/B Ratio is 2.08, which is some 18% higher and this points to a relatively high stock price. The last thing to look at is yield. The current yield is 1.98% and the 5 year median yield is 1.87%. This points a relatively low stock price. If you take everything together, you get a price that is pretty average on a relative basis for this stock.
It is hard to know if there is one or two analysts following this stock. However, the only recommendation I can find is a Buy recommendation for this stock. So, the consensus recommendation would be a buy. (See my site for information on analyst ratings.) The 12 month stock price given is $11, so the 12 month total return on this stock would be around 12%. This company is thought to be well-run and the CEO, Stephen Sadler, is well-respected.
I find a blog entry about small cap stocks talking about this stock, Enghouse. This stock seems to be a well managed tech small cap stock and might be a good investment for those who can afford the risk of investing in a small cap.
Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse. See my spreadsheet at esl.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.
What I see in the Insider Trading report is some $.84M of net Insider Buying. There is a minimum of Insider Selling. There seems to be a number of insiders who has 2-3% of the company’s outstanding shares in stock options. Also, a couple of insider own almost 35% of this company. Insiders seem to be holding on to their stock options recently and this is a good sign.
The company has just raised their dividend by 25%. This is also a sign that the management is confident in the future earnings and cash flow of the company. There are also some 8 institutions that own just over 25% of this company. Over the past 3 months, there have been 2 institutional buyers and 2 institutional sellers with a net increase in shares owned. (See my site for information on Insider Trading.)
When I look at 5 year median Price/Earnings Ratios, I find the low P/E to be 18 and the high to be 28.5. That puts 19.4 closer to the low, relatively speaking. However, the P/E ratios of this stock are on the high side. I get a current Graham Price of $7.53. The current stock price of $10.09 is some 34% higher. The median difference between the Graham Price and stock price is 21% and the high difference is 54%. So the current difference is towards the high side. (See my site for information on calculating Graham Price.)
I get a 10 year median Price/Book Value Ratio of 1.76. The current P/B Ratio is 2.08, which is some 18% higher and this points to a relatively high stock price. The last thing to look at is yield. The current yield is 1.98% and the 5 year median yield is 1.87%. This points a relatively low stock price. If you take everything together, you get a price that is pretty average on a relative basis for this stock.
It is hard to know if there is one or two analysts following this stock. However, the only recommendation I can find is a Buy recommendation for this stock. So, the consensus recommendation would be a buy. (See my site for information on analyst ratings.) The 12 month stock price given is $11, so the 12 month total return on this stock would be around 12%. This company is thought to be well-run and the CEO, Stephen Sadler, is well-respected.
I find a blog entry about small cap stocks talking about this stock, Enghouse. This stock seems to be a well managed tech small cap stock and might be a good investment for those who can afford the risk of investing in a small cap.
Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse. See my spreadsheet at esl.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.
Monday, May 9, 2011
Enghouse Systems Ltd
This company (TSX-ESL) is another small tech firm. This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend. For their website, see Keystone Publishing. As far as I can see, Keystone Publishing tends to recommend stocks for the short term, rather than for long term buy and hold investors.
This company has just started to pay dividends in 2008 and the yield is quite low at 1.98%. This is the highest yield so far for this stock. The other thing to say about the dividends is that they have increased them quite nicely so far. The latest increase, which was in 2011, was for 25%. The other good thing about the dividends is the payout ratios. The Payout Ratio on Earnings has been around 37.5% and the Payout Ratio on Cash Flow has been around 17.3%. Both these ratios are low and therefore quite good.
The best growth for this company is in revenues and cash flow. The 5 and 10 year growth in revenue per share is 14.5% and 11% per year, respectively. The 5 and 10 year growth in cash flow has been 13% and 8% per year, respectively. Both these are important for the company’s long term growth.
However, other growth has not been as good. The 5 and 10 year growth in EPS is 13% and 2.6%. The 5 year growth is good, but the 10 year growth is quite low. The 5 and 10 year growth in Book Value is 3.2% and 6.7%. Most importantly, this stock has not earned its investors much money. The 5 and 10 year growth in total return is 2.4% and 5% per year, respectively. I do not expect much for the last 5 years, but I would think that over the past 10 years the return would be better than 5% per year. Dividends would be less than 1% of the total return, so they do not factor into this much.
The one area that this stock shines is in debt ratios. The current Liquidity Ratio and Asset/Liability Ratio are very good at 2.28 and 2.92 respectively. For these ratios, a good ratio is 1.50 and above. The other debt ratios of Leverage and Debt/Equity are also good, and currently are at 1.52 and 0.52. The company does not have much debt.
I guess the last thing to talk about is the Return on Equity. The ROE has been quite low over the past few years and has recently increased to a decent 8.5% at the end of the last financial year end at October 2010. The ROE over the past 12 months, ending in the first quarter of 2011 in January 2011, is a bit better at 8.7%. The 5 year median ROE is rather low at 5.8%.
This also looks like an interesting stock. Tomorrow, I will look and see what the analysts say about it.
Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse. See my spreadsheet at esl.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.
This company has just started to pay dividends in 2008 and the yield is quite low at 1.98%. This is the highest yield so far for this stock. The other thing to say about the dividends is that they have increased them quite nicely so far. The latest increase, which was in 2011, was for 25%. The other good thing about the dividends is the payout ratios. The Payout Ratio on Earnings has been around 37.5% and the Payout Ratio on Cash Flow has been around 17.3%. Both these ratios are low and therefore quite good.
The best growth for this company is in revenues and cash flow. The 5 and 10 year growth in revenue per share is 14.5% and 11% per year, respectively. The 5 and 10 year growth in cash flow has been 13% and 8% per year, respectively. Both these are important for the company’s long term growth.
However, other growth has not been as good. The 5 and 10 year growth in EPS is 13% and 2.6%. The 5 year growth is good, but the 10 year growth is quite low. The 5 and 10 year growth in Book Value is 3.2% and 6.7%. Most importantly, this stock has not earned its investors much money. The 5 and 10 year growth in total return is 2.4% and 5% per year, respectively. I do not expect much for the last 5 years, but I would think that over the past 10 years the return would be better than 5% per year. Dividends would be less than 1% of the total return, so they do not factor into this much.
The one area that this stock shines is in debt ratios. The current Liquidity Ratio and Asset/Liability Ratio are very good at 2.28 and 2.92 respectively. For these ratios, a good ratio is 1.50 and above. The other debt ratios of Leverage and Debt/Equity are also good, and currently are at 1.52 and 0.52. The company does not have much debt.
I guess the last thing to talk about is the Return on Equity. The ROE has been quite low over the past few years and has recently increased to a decent 8.5% at the end of the last financial year end at October 2010. The ROE over the past 12 months, ending in the first quarter of 2011 in January 2011, is a bit better at 8.7%. The 5 year median ROE is rather low at 5.8%.
This also looks like an interesting stock. Tomorrow, I will look and see what the analysts say about it.
Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse. See my spreadsheet at esl.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.
Friday, May 6, 2011
Leon's Furniture Ltd 2
This is a company (TSX-LNF) that I own. I first bought Leon’s in 2006 and have bought more in 2008, 2009 and 2010. My total return is 7.7% to April 30, 2011. The portion of my return from dividends is probably around 3%. Therefore, the portion from capital gains would be around 4.7%.
On the Insider Trading report, there is a bit of Insider Buying and $1.1M of Insider Selling. The Net Insider Selling is just under $1M. However, this selling does not materially affect the number of shares owned by insiders. Insiders do not have options. However, it would seem that the Leon family owns just under 75% of the shares. According to Reuters, 10 institutions hold just over 12% of the outstanding shares. Over the past 3 months, there have been 3 institutional buyers and 2 institutional sellers. There was a net decrease in shares of around 110,000. In other words, not much is happening.
The company raised the dividend in 2010 by 28%, so this shows management’s faith in the company to produce earnings and cash flow to cover the dividend increase. The Payout from earnings has a 5 year median of 44% and the Payout from cash flow has a 5 year median of 32%. Both these payout ratios were lower in 2010.
When I look at the 5 year median Price/Earnings Ratios, I find a low P/E of 12 and a high P/E of 17. The current P/E of 15 is close, but just above, average for this stock. I get a Graham Price of $10.95 and the current stock price of $13.63 is some 24.5% above this. However, this company’s stock price has seldom been at or below the Graham Price. It is on average some 20% above the Graham Price and the 10 year median difference between the Graham Price and Stock Price is 37.5%.
I get a 10 year median Price/Book Value Ratio of 2.49 and a current P/B Ratio of 2.33. The current Ratio is some 93% of the 10 year median ratio. The Dividend Yield is currently at 2.64% and the 5 year median dividend yield is 2.53%. So, all this shows a good, but not great currently price. Also, the current price is lower because the company did not meet the EPS estimates. When this happens, you often get a good buying period for a stock.
When I look at analysts’ recommendations, there appears to be only one analyst that follows this stock. The current recommendation is a Hold. (See my site for information on analyst ratings.) I know a number of people like this stock because of the low debt and decent dividends. However, this stock is heavily owned by the Leon family. This stock has often been pushed by the Investment Reporter of MPL Communications. Their website is at Leons. They like this stock for its growth and income potential.
I certainly plan to hold on to the shares I have. I believe this is a good investment for me.
This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is here Leons. See my spreadsheet at lnf.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.
On the Insider Trading report, there is a bit of Insider Buying and $1.1M of Insider Selling. The Net Insider Selling is just under $1M. However, this selling does not materially affect the number of shares owned by insiders. Insiders do not have options. However, it would seem that the Leon family owns just under 75% of the shares. According to Reuters, 10 institutions hold just over 12% of the outstanding shares. Over the past 3 months, there have been 3 institutional buyers and 2 institutional sellers. There was a net decrease in shares of around 110,000. In other words, not much is happening.
The company raised the dividend in 2010 by 28%, so this shows management’s faith in the company to produce earnings and cash flow to cover the dividend increase. The Payout from earnings has a 5 year median of 44% and the Payout from cash flow has a 5 year median of 32%. Both these payout ratios were lower in 2010.
When I look at the 5 year median Price/Earnings Ratios, I find a low P/E of 12 and a high P/E of 17. The current P/E of 15 is close, but just above, average for this stock. I get a Graham Price of $10.95 and the current stock price of $13.63 is some 24.5% above this. However, this company’s stock price has seldom been at or below the Graham Price. It is on average some 20% above the Graham Price and the 10 year median difference between the Graham Price and Stock Price is 37.5%.
I get a 10 year median Price/Book Value Ratio of 2.49 and a current P/B Ratio of 2.33. The current Ratio is some 93% of the 10 year median ratio. The Dividend Yield is currently at 2.64% and the 5 year median dividend yield is 2.53%. So, all this shows a good, but not great currently price. Also, the current price is lower because the company did not meet the EPS estimates. When this happens, you often get a good buying period for a stock.
When I look at analysts’ recommendations, there appears to be only one analyst that follows this stock. The current recommendation is a Hold. (See my site for information on analyst ratings.) I know a number of people like this stock because of the low debt and decent dividends. However, this stock is heavily owned by the Leon family. This stock has often been pushed by the Investment Reporter of MPL Communications. Their website is at Leons. They like this stock for its growth and income potential.
I certainly plan to hold on to the shares I have. I believe this is a good investment for me.
This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is here Leons. See my spreadsheet at lnf.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.
Thursday, May 5, 2011
Leon's Furniture Ltd
This is a company (TSX-LNF) that I own. I first bought Leon’s in 2006 and have bought more in 2008, 2009 and 2010. My total return is 7.7% to April 30, 2011. The portion of my return from dividends is probably around 3%. Therefore, the portion from capital gains would be around 4.7%. This is not a great performance, but the 5 year performance of the TSX over the 5 years to the end of April 30, 2011 is just 2.7%.
This is a small, family owned company with little debt and a reasonable dividend. The current dividend yeidl is 2.64% and the 5 year average yeild is 2.53%. The company also gives out special dividends as they can afford to. The 5 and 10 year growth in dividends is 9.8% and 12% per year, respectively. They have a fairly good record of raising their dividend. The last time they did not raise the dividend was 2009, but instead they gave out a special dividend that year.
I noticed on the chart for Leon’s that the stock price fell just after the annual report came out. This is probably because revenues fell for the second year in a row. Leon’s had already said that they expected head winds in the later part of 2010 because of the HST. They also did not make the earnings estimate of $.90 and EPS came in at $.87. Companies tend to be punished for missing estimates.
However, estimates can be a real crap shoot. Estimates are future predictions and humans are really bad at predicting the future. I know I use estimates, but you have to use something. People tend to think that what when on in the past will continue. Not a particularly bad idea, and there is a certainly amount of inertia occurring. Things tend to go on as they have until things change. The stock market seems to punish companies that do not meet the estimates or do not surprise on this upside. This is just the way things are.
For this company, growth is mainly good but not great. Earnings growth over the past 5 and 10 year was 6% and 7% per year, respectively. Cash Flow growth over the past 5 and 10 year was 6% and 8% per year, respectively. The best growth was for the Book Value over the past 5 and 10 years at 9.75% and 8.9% per year, respectively. The Return on Equity has also been good, with ROE at the end of 2010 at 15.4% and the 5 year median at 17.9%.
We should also talk about debt ratios. The best are the Liquidity Ratio and Asset/Liability Ratio currently at 2.62 and 3.62. It is good if these ratios are at 1.50 and above. For other two ratios of Leverage and Debt/Equity lower is better; and it is best to compare with companies in the same business. However, they are both low at 1.38 and 0.38, respectively. The last one of Debt/Equity is especially low and being below 0.50 is very good.
I am pleased with my investment and I will continue to have an investment in this company. I believe Leon’s has been a good investment for me.
This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is here Leons. See my spreadsheet at lnf.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.
This is a small, family owned company with little debt and a reasonable dividend. The current dividend yeidl is 2.64% and the 5 year average yeild is 2.53%. The company also gives out special dividends as they can afford to. The 5 and 10 year growth in dividends is 9.8% and 12% per year, respectively. They have a fairly good record of raising their dividend. The last time they did not raise the dividend was 2009, but instead they gave out a special dividend that year.
I noticed on the chart for Leon’s that the stock price fell just after the annual report came out. This is probably because revenues fell for the second year in a row. Leon’s had already said that they expected head winds in the later part of 2010 because of the HST. They also did not make the earnings estimate of $.90 and EPS came in at $.87. Companies tend to be punished for missing estimates.
However, estimates can be a real crap shoot. Estimates are future predictions and humans are really bad at predicting the future. I know I use estimates, but you have to use something. People tend to think that what when on in the past will continue. Not a particularly bad idea, and there is a certainly amount of inertia occurring. Things tend to go on as they have until things change. The stock market seems to punish companies that do not meet the estimates or do not surprise on this upside. This is just the way things are.
For this company, growth is mainly good but not great. Earnings growth over the past 5 and 10 year was 6% and 7% per year, respectively. Cash Flow growth over the past 5 and 10 year was 6% and 8% per year, respectively. The best growth was for the Book Value over the past 5 and 10 years at 9.75% and 8.9% per year, respectively. The Return on Equity has also been good, with ROE at the end of 2010 at 15.4% and the 5 year median at 17.9%.
We should also talk about debt ratios. The best are the Liquidity Ratio and Asset/Liability Ratio currently at 2.62 and 3.62. It is good if these ratios are at 1.50 and above. For other two ratios of Leverage and Debt/Equity lower is better; and it is best to compare with companies in the same business. However, they are both low at 1.38 and 0.38, respectively. The last one of Debt/Equity is especially low and being below 0.50 is very good.
I am pleased with my investment and I will continue to have an investment in this company. I believe Leon’s has been a good investment for me.
This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is here Leons. See my spreadsheet at lnf.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.
Wednesday, May 4, 2011
Calian Technologies Ltd 2
This is an interesting small cap company (TSX-CTY) with a very nice dividend. As I said yesterday, this stock was on a Globe Investor Number Cruncher is an investment column. See column called Where ‘debt’ is a dirty word . The Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list.
On the Insider Trading report, you can see several things. First, there has been, over the past year some $3.5M of insider selling. Most of the selling is by one officer who holds just under 3% of the shares of this company. No other insider holds anywhere near this amount of shares. Recent stock options granted have been retained mostly. The company is buying back shares and over the past 3 years has reduced outstanding shares by just under 8% and just under 3% per year.
In looking at this report, I see that insiders have more shares than options and I like this. Another interesting thing is that just under 40% of the shares of this company are held by 7 institutions. Over the past 3 months, institutions have been net buyers of just over 3,000 shares. See Reuters.
When I look at the 5 year median Price/Earnings Ratios, I find them in a very narrow band. The 5 year low median P/E is 9.5 and the 5 year median high is 10.9. The current P/E Ratio at 11 is relatively high, but is not high in absolute terms. The 5 year median trailing P/E Ratios are from a low of 8.8 to a high of 12.2. The current trailing P/E Ratio is 10.8.
I get a current Graham Price of $17.43. The stock price of $18.86 is some 8.2% above this. Over the past 10 years, the median difference between the Graham Price and the stock price is the stock price being from 21% below the Graham Price to 11.1% above. The current difference is a bit closer to the high difference.
I get a 10 year median Price/Book Value Ratio of 2.21 and a current one of 2.27. The current one is almost 9% higher than the median ratio. The best indicator is the dividend yield. The current dividend yield is 5.3% and the 5 year median yield is 4.24. This is the one indicator that shows a relatively good current price. However, the company has just raised the dividend to get it above 5%.
As far as I can tell there is only one analyst that is following this stock and this analyst has a Buy recommendation on it and has had a Buy recommendation on it for sometime. The expected stock price in one year is $22.00. (See my site for information on analyst ratings.) Calian is considered a solid, stable, high-quality company that will grow slowly. This company has a lot of government contracts.
The TSI Network blog talks about Calian on April 11th 2011. This article points out that this company has lots of cash and no debt. There is also a discussion on this stock at Canadian Money Form. In the forum, people mainly talk about how illiquid the stock is. That is there are few buyers and sellers. And, there is an article on this company at Ottawa Business Journal. This article noted that government cost cutting could affect the company’s future revenue. Even Wikipedia has an entry for Calian.
This would be the sort of company you would buy for a decent dividend and decent future growth.
Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.
On the Insider Trading report, you can see several things. First, there has been, over the past year some $3.5M of insider selling. Most of the selling is by one officer who holds just under 3% of the shares of this company. No other insider holds anywhere near this amount of shares. Recent stock options granted have been retained mostly. The company is buying back shares and over the past 3 years has reduced outstanding shares by just under 8% and just under 3% per year.
In looking at this report, I see that insiders have more shares than options and I like this. Another interesting thing is that just under 40% of the shares of this company are held by 7 institutions. Over the past 3 months, institutions have been net buyers of just over 3,000 shares. See Reuters.
When I look at the 5 year median Price/Earnings Ratios, I find them in a very narrow band. The 5 year low median P/E is 9.5 and the 5 year median high is 10.9. The current P/E Ratio at 11 is relatively high, but is not high in absolute terms. The 5 year median trailing P/E Ratios are from a low of 8.8 to a high of 12.2. The current trailing P/E Ratio is 10.8.
I get a current Graham Price of $17.43. The stock price of $18.86 is some 8.2% above this. Over the past 10 years, the median difference between the Graham Price and the stock price is the stock price being from 21% below the Graham Price to 11.1% above. The current difference is a bit closer to the high difference.
I get a 10 year median Price/Book Value Ratio of 2.21 and a current one of 2.27. The current one is almost 9% higher than the median ratio. The best indicator is the dividend yield. The current dividend yield is 5.3% and the 5 year median yield is 4.24. This is the one indicator that shows a relatively good current price. However, the company has just raised the dividend to get it above 5%.
As far as I can tell there is only one analyst that is following this stock and this analyst has a Buy recommendation on it and has had a Buy recommendation on it for sometime. The expected stock price in one year is $22.00. (See my site for information on analyst ratings.) Calian is considered a solid, stable, high-quality company that will grow slowly. This company has a lot of government contracts.
The TSI Network blog talks about Calian on April 11th 2011. This article points out that this company has lots of cash and no debt. There is also a discussion on this stock at Canadian Money Form. In the forum, people mainly talk about how illiquid the stock is. That is there are few buyers and sellers. And, there is an article on this company at Ottawa Business Journal. This article noted that government cost cutting could affect the company’s future revenue. Even Wikipedia has an entry for Calian.
This would be the sort of company you would buy for a decent dividend and decent future growth.
Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.
Tuesday, May 3, 2011
Calian Technologies Ltd
This is an interesting small cap company (TSX-CTY) with a very nice dividend. This stock came up on a Globe Investor site. The Globe Investor Number Cruncher is an investment column about screening for stocks and funds. They did one on companies with little to no debt. See column called Where ‘debt’ is a dirty word . I also noted that the Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list. These are certainly good reasons to investigate this stock further and do a spreadsheet on it.
First, let’s talk about dividends. This company just started to pay dividends in 2003. The growth in dividends since then, over some 7 years, is a great 25% per year. The growth is a little lower for the last 5 years, but still at a great 20% per year. The last increase came just recently at 13% this year. Some years they have raised the dividends twice. (Also note that this companies financial year runs to September 30th each year, so when I am talking about years, I am talking about a year ending at September 30th.)
I can only find one analyst looking at this company and he gives a potential EPS at $1.72 in 2011. The company says that they expect to earn between $1.50 and $1.80. However, you slice and dice these figures, they still put the dividend at a potential payout from earnings a little high, from 65% to 56% to 54%. The payout from cash flow could also be quite high with a potential of being around 52%.
This is what the CEO says about the increase in dividends. "Based on our earnings to date, our future outlook and our healthy cash position we have increased our quarterly dividend to $0.25 per share; an increase of over 13%. Our annualized dividend of $1.00 per share represents a yield in excess of 5% relative to recent share prices. We continue to maintain a strong balance sheet that provides not only the basis for future growth and the ability to weather any future downturns, but also the added customer confidence in our ability to execute". He certainly seems confident in the company’s ability to pay the increase dividend.
The total return on this stock has certainly been very good over the past 5 and 10 years. The compounded growth for the last 5 and 10 years has been at 12% and 15% per year, respectively. The compounded growth in stock price for the last 5 and 10 years has been at 7.5% and 12% per year. Compare this to the compounded growth of the TSX index at for the last 5 and 10 years a 4% per year and this company does look very good.
I like to see good growth in revenue, because good growth in revenue bodes well for future gains in earnings and cash flow. However, the 5 and 10 year growth in revenue is ok rather than great at 6% and 8% per year, respectively. Part of the reason is that revenue fell about 5% in 2010 from revenues earned in 2009. Cash flow, excluding changes to current Assets and Liabilities, is the cash flow now thought to be the one to track. This company has done quite well in this category as the growth in this cash flow for the last 5 and 10 years is at 9% and 10% per year, respectively.
The growth in earnings is great for the last 5 years, but low for the last 10 years. However, 10 years ago takes us to 2000, when a lot of tech companies made money. For this company, the earnings crashed in 2001 and have been gradually improving since. The 5 and 10 year growth in earnings is at 11% and 4% per year, respectively. Growth in Book Value is ok. Over the past 5 and 10 years, book value has grown at 5.7% and 5.9% per year.
Now we get to the debt ratios and they are indeed good, especially the Liquidity Ratio and the Asset/Liability Ratio. These ratios are 2.75 and 3.45 at the end of 2010. The 5 year median ratios are 2.23 and 2.81. Any ratios at or above 1.50 are good. The other ratios are good without being great. The Leverage ratio is good at 1.55 and the Debt/Equity Ratio at 0.55 is good at the end of September 2010. A D/E Ratio is considered very good at 0.50 and below. This ratio has been low for a number of years and the current one (1st quarter of 2011) is very low at 0.41.
I find this a very interesting company and worthy of further investigation and possible investment.
Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.
First, let’s talk about dividends. This company just started to pay dividends in 2003. The growth in dividends since then, over some 7 years, is a great 25% per year. The growth is a little lower for the last 5 years, but still at a great 20% per year. The last increase came just recently at 13% this year. Some years they have raised the dividends twice. (Also note that this companies financial year runs to September 30th each year, so when I am talking about years, I am talking about a year ending at September 30th.)
I can only find one analyst looking at this company and he gives a potential EPS at $1.72 in 2011. The company says that they expect to earn between $1.50 and $1.80. However, you slice and dice these figures, they still put the dividend at a potential payout from earnings a little high, from 65% to 56% to 54%. The payout from cash flow could also be quite high with a potential of being around 52%.
This is what the CEO says about the increase in dividends. "Based on our earnings to date, our future outlook and our healthy cash position we have increased our quarterly dividend to $0.25 per share; an increase of over 13%. Our annualized dividend of $1.00 per share represents a yield in excess of 5% relative to recent share prices. We continue to maintain a strong balance sheet that provides not only the basis for future growth and the ability to weather any future downturns, but also the added customer confidence in our ability to execute". He certainly seems confident in the company’s ability to pay the increase dividend.
The total return on this stock has certainly been very good over the past 5 and 10 years. The compounded growth for the last 5 and 10 years has been at 12% and 15% per year, respectively. The compounded growth in stock price for the last 5 and 10 years has been at 7.5% and 12% per year. Compare this to the compounded growth of the TSX index at for the last 5 and 10 years a 4% per year and this company does look very good.
I like to see good growth in revenue, because good growth in revenue bodes well for future gains in earnings and cash flow. However, the 5 and 10 year growth in revenue is ok rather than great at 6% and 8% per year, respectively. Part of the reason is that revenue fell about 5% in 2010 from revenues earned in 2009. Cash flow, excluding changes to current Assets and Liabilities, is the cash flow now thought to be the one to track. This company has done quite well in this category as the growth in this cash flow for the last 5 and 10 years is at 9% and 10% per year, respectively.
The growth in earnings is great for the last 5 years, but low for the last 10 years. However, 10 years ago takes us to 2000, when a lot of tech companies made money. For this company, the earnings crashed in 2001 and have been gradually improving since. The 5 and 10 year growth in earnings is at 11% and 4% per year, respectively. Growth in Book Value is ok. Over the past 5 and 10 years, book value has grown at 5.7% and 5.9% per year.
Now we get to the debt ratios and they are indeed good, especially the Liquidity Ratio and the Asset/Liability Ratio. These ratios are 2.75 and 3.45 at the end of 2010. The 5 year median ratios are 2.23 and 2.81. Any ratios at or above 1.50 are good. The other ratios are good without being great. The Leverage ratio is good at 1.55 and the Debt/Equity Ratio at 0.55 is good at the end of September 2010. A D/E Ratio is considered very good at 0.50 and below. This ratio has been low for a number of years and the current one (1st quarter of 2011) is very low at 0.41.
I find this a very interesting company and worthy of further investigation and possible investment.
Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.
Monday, May 2, 2011
Insider Trading
The only clear message on insider trading is lots of insider buying. This can tell you that insiders really feel that their company is undervalued in the market. There can be many reasons for this. Insiders could feel that a company is being unjustly punished for a recent bad quarter or year. For insiders to buy, they much also feel that the company has a bright future.
However, do not take a company’s repurchase of their shares the same way. Companies repurchase shares for lots of reasons, and from what I have read, they do not do their repurchasing at low stock prices. However, I do take increases in dividends as Management believes in the ability of the company to provide future earnings and cash flow to cover the increase in dividends.
Insiders with options probably sell because they feel that options are part of their pay. Also, they may not want to hold lots of stock in the company in which they work. Look at what happened to Enron Corp. I understand that lots of employees had stock in this company and also had lots of their pension money in this company. When it when bankrupt, they lost their jobs, their savings and their pensions. Enron showed that you should not be too dependent on the company in which you work. If the company goes bankrupt, you can lose a lot. In bear, markets there are always companies that go bankrupt.
Looking at Insider Trading Reports shows how much company’s officers own in both shares and options. I must admit, I do not much care for companies where insiders have masses amount of options and few shares. The push to give options to company’s insiders was to align insiders interest with the shareholders. But this is not what occurred. At some companies, insiders are cashing in options in the 8 figures. Look at my recent review on BCE where I found that the CEO sold off $43.7M shares. He was cashing in on his options.
I look at reports to see what is happening. Is there a lot of insider selling or insider buying? I do not like it when there are massive amounts of Insider selling. I recently reviewed BCE and found that the CEO has sold off some $43.7M in shares (from Options). See my blog entry at BCE. Insider buying is a good indication of the insider’s faith in the company as is when insider retain the options they are given. (I also consider management has faith in the company when they increase the dividends.)
Some of the big companies I owned seem to lately have an orgy of insider selling and not only BCE (TSX-BCE). Enbridge (TSX-ENB) insiders have recently sold almost $50M. See my blog entry at Enbridge. Also, Canadian National Railway (TSX-CNR) insiders have sold some $27M. See my blog entry at CNR. Compare this to some smaller insider ownership companies like AltaGas Ltd (TSX-ALA) where the CEO owns some 1.5% of the company and there is some insider buying. See my blog entry at AltaGas. Also, take a look at TECSYS Inc (TSX-TCS) where insiders own 60% of the company. Here there is a bit of insider buying and no insider selling. See my blog entry at TECSYS.
I also like to know if there are large portions of the shares owned by someone or some company. I do not mind companies with a large family ownership position. However, not everyone feels this way though. Look at recent money spend to get rid of Stronach from Magna and related companies. There are pros and cons to family ownership of companies. The best pro is that these companies tend to have very low debt and good debt ratios. A con would be that family secessions could be tricky.
Wikipedia does a have are large item on this subject of Insider Trading. Reuters gives interesting information on institutional buyers of companies. See Reuter. Note that for Canadian companies you have to follow the stock symbol with “.to”. For example, for BCE use “BCE.to” to get information on this stock.
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.
However, do not take a company’s repurchase of their shares the same way. Companies repurchase shares for lots of reasons, and from what I have read, they do not do their repurchasing at low stock prices. However, I do take increases in dividends as Management believes in the ability of the company to provide future earnings and cash flow to cover the increase in dividends.
Insiders with options probably sell because they feel that options are part of their pay. Also, they may not want to hold lots of stock in the company in which they work. Look at what happened to Enron Corp. I understand that lots of employees had stock in this company and also had lots of their pension money in this company. When it when bankrupt, they lost their jobs, their savings and their pensions. Enron showed that you should not be too dependent on the company in which you work. If the company goes bankrupt, you can lose a lot. In bear, markets there are always companies that go bankrupt.
Looking at Insider Trading Reports shows how much company’s officers own in both shares and options. I must admit, I do not much care for companies where insiders have masses amount of options and few shares. The push to give options to company’s insiders was to align insiders interest with the shareholders. But this is not what occurred. At some companies, insiders are cashing in options in the 8 figures. Look at my recent review on BCE where I found that the CEO sold off $43.7M shares. He was cashing in on his options.
I look at reports to see what is happening. Is there a lot of insider selling or insider buying? I do not like it when there are massive amounts of Insider selling. I recently reviewed BCE and found that the CEO has sold off some $43.7M in shares (from Options). See my blog entry at BCE. Insider buying is a good indication of the insider’s faith in the company as is when insider retain the options they are given. (I also consider management has faith in the company when they increase the dividends.)
Some of the big companies I owned seem to lately have an orgy of insider selling and not only BCE (TSX-BCE). Enbridge (TSX-ENB) insiders have recently sold almost $50M. See my blog entry at Enbridge. Also, Canadian National Railway (TSX-CNR) insiders have sold some $27M. See my blog entry at CNR. Compare this to some smaller insider ownership companies like AltaGas Ltd (TSX-ALA) where the CEO owns some 1.5% of the company and there is some insider buying. See my blog entry at AltaGas. Also, take a look at TECSYS Inc (TSX-TCS) where insiders own 60% of the company. Here there is a bit of insider buying and no insider selling. See my blog entry at TECSYS.
I also like to know if there are large portions of the shares owned by someone or some company. I do not mind companies with a large family ownership position. However, not everyone feels this way though. Look at recent money spend to get rid of Stronach from Magna and related companies. There are pros and cons to family ownership of companies. The best pro is that these companies tend to have very low debt and good debt ratios. A con would be that family secessions could be tricky.
Wikipedia does a have are large item on this subject of Insider Trading. Reuters gives interesting information on institutional buyers of companies. See Reuter. Note that for Canadian companies you have to follow the stock symbol with “.to”. For example, for BCE use “BCE.to” to get information on this stock.
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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