asset management
WINDSTREAM CORP. $10 will buy Iowa Telecommunications Services Inc. (New York symbol IWA), which sells telephone services in rural areas of Iowa and Minnesota. This is Windstream’s fourth major purchase this year. If you include its previous deals for two rural phone companies and a firm that sells Internet services to businesses, Windstream is paying a total of $2.2 billion in cash, shares and assumed debt. That’s about half of its market cap. Using acquisitions to expand adds risk. But Windstream can put these businesses’ steady cash flows toward the purchase price. That should help it maintain its $1.00 dividend, which yields 10.0%. Buy. T. ROWE PRICE GROUP INC. $49 is buying 26% of UTI Asset Management Co., India’s fourth-largest wealth-management firm. The $138-million price is 4% more than the $132.9 million, or $0.50 a share, that T. Rowe Price earned in the third quarter of 2009. UTI has over 10 million clients, and accounts for about 10% of India’s mutual fund market. This partnership lets T. Rowe Price profit from India’s growing prosperity without the risk of setting up its own operations. The deal should close by the end of this year. Buy. CONAGRA FOODS INC. $23 has raised its quarterly dividend by 5.3%, to $0.20 a share from $0.19. The new annual rate of $0.80 yields 3.5%. Best Buy.
Tata Motors (ADR), $11.72, symbol TTM on New York (Shares outstanding: 479.7 million; Market cap: $5.6 billion), designs, makes and sells vehicles, including cars, trucks and buses, mainly in India. It also makes and sells related parts and accessories. Tata is based in Mumbai, India. Tata Motors is part of the Tata group, one of India’s leading business conglomerates. Tata group has interests in a number of areas, including steel, software services, hotels, chemicals, insurance and asset management. In February 2005, Tata bought a 21% stake in Hispano Carrocera SA, Spain’s leading bus manufacturer. Recently, Tata purchased the remaining 79% of Hispano. This adds to Tata’s presence in the Spanish market. It also gives it added growth opportunities in international markets for buses and coaches....
Criterion Water Infrastructure Fund is a mutual fund that invests in a variety of industries that have something to do with water. These include creating and supplying water, making and selling water-related technology, and providing environmental services and packaged water. Criterion Water Infrastructure Fund is managed by Geneva-based Pictet Asset Management. The fund started up in February 2007. The fund seeks to invest in a number of trends its management sees as currently shaping the global water industry. These are:...
TD HEALTH SCIENCES FUND $15.19 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) mainly invests in large-capitalization health-care stocks and earlier-stage biotechnology shares in the U.S. The fund’s managers believe these firms will benefit from increased health spending spurred by an aging population. The $151.7-million TD Health Sciences Fund’s top holdings include Gilead Sciences, Alexion Pharmaceuticals, Teva Pharmaceutical, Baxter International, Vertex Pharmaceuticals, Medco Health Solutions, Wyeth, Roche Holdings, Henry Schein Inc. and Schering Plough. TD Health Sciences Fund lost about 7.8% in Canadian dollars in the year ended August 31, 2009, compared to a loss of 15.6% for the S&P 500 (also in Canadian funds). The fund’s MER is 2.68%....
Sector, or “theme” funds are not without risk, but they are much safer than investing in one or two companies in more volatile fields, such as health care and biotechnology. If you choose to invest in sector funds, you should limit your investment to modest amounts. Above all, only invest in those with proven management and high-quality holdings. Here are updates on two we like. Both have outperformed the S&P 500 index by a wide margin over the past year. TD HEALTH SCIENCES FUND $15.19 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) mainly invests in large-capitalization health-care stocks and earlier-stage biotechnology shares in the U.S. The fund’s managers believe these firms will benefit from increased health spending spurred by an aging population....
CGI GROUP INC., $12.78, Toronto symbol GIB.A, rose roughly 10% this week in response to computer-maker Dell Inc.’s (Nasdaq symbol DELL) friendly takeover of Perot Systems Corp. (New York symbol PER). Like Perot, CGI sells information-technology and business-process services to a wide range of clients. Dell is paying a premium of over 60% for Perot. This helped spur investor interest in other computer-outsourcing stocks, including CGI. However, insiders control 53% of CGI’s votes through multiple-voting class “B” shares. That makes a hostile takeover unlikely....
TD CANADIAN EQUITY FUND $21.81 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-866-222-3456; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach to pick stocks. The fund’s managers look at fundamentals, like earnings, cash flow and debt level, to identify what they see as undervalued companies. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, TD Bank, Manulife Financial, Bank of Nova Scotia, Canadian Natural Resources, Sun Life Financial, Suncor Energy, Ivanhoe Mines, EnCana Corp. and Research in Motion. The $2.5-billion fund holds 49.0% of its portfolio in resource stocks. It also has a bias toward financial services stocks, at 32.1%....
These five large mutual funds — one from each of Canada’s big-five banks — suffered last year and early this year. That’s because they were heavily weighted toward financial services and resource stocks. However, many shares in those sectors have moved up since March. We think they have room to go higher. We still feel that the best way to profit in the stock market is to stick with high-quality, well-established companies and to spread your money out among the five sectors. You should also ensure that your investments are diversified within each sector. These five funds continue to stick with high-quality investments. However, you still should adjust your portfolio to reflect the funds’ high weightings in certain sectors....
China Life Insurance (ADR), $64.27, symbol LFC on New York, (Shares outstanding: 496.1 million; Market cap: $31.9 billion) sells annuity products and life insurance to individuals and groups in China. It offers individual and group life insurance, accident, and health insurance. China Life is China’s largest life insurer with about 41% of the country’s life insurance market. In addition to life insurance, the company provides asset management services and health and accident insurance. China Life has over 102 million individual and group life policies and annuities, and long-term health insurance policies in force. It also provides both individual and group accident and short-term health insurance policies, as well as services. China Life has over 15,000 field offices and approximately 716,000 agents. China Life was established in 1949 as the People’s Insurance Company of China. The company became a for-profit company in a 2003 restructuring. China Life was listed on the New York and Hong Kong stock exchanges in 2003 and the Shanghai stock exchange in 2007. Chinese government-owned China Life Insurance (Group) Co. holds 72% of the shares of China Life....
In 2011, the Canadian government will begin taxing income trusts (with the exception of real estate investment trusts, or REITs). The effect the tax change will have on Canadian investors’ portfolios is something we’ve often discussed in our Canadian Wealth Advisor newsletter. When the income-tax benefits of Canadian income trusts are eliminated, some may convert to conventional corporations — the same structure as most common stocks. Others may choose to remain as trusts. Either way, some Canadian income trusts will cut their distributions. That’s because their cash available for distribution to unitholders will fall after they begin to pay corporate taxes and can’t pass it all on tax-free....