asset management
CANADIAN PACIFIC RAILWAY LTD. $78.20, Toronto symbol CP, shot up to $91 in mid-July on takeover speculation, but it has now moved back down to where it was when the speculation began. This is due to the market downturn since then, plus rising doubt on the odds of a takeover. Potential bidder Brookfield Asset Management wanted to break CP into two pieces, railways and real estate. It felt this would let it generate enough extra value to pay a high price for the company and still come out with profits for itself. But CP says it has already considered this kind of breakup and restructuring, and concluded that it may not generate enough value to make it worthwhile. This could simply mean that CP management and Brookfield are using different assumptions in their analysis of the plan. The difference may also reflect a potential conflict of interest: CP managers may want to hang on to their jobs and Brookfield may want to replace them....
FAIR ISAAC CORPORATION $39.47 (New York symbol FIC; SI Rating: Average) (415- 472-2211; www.fairisaac.com; Shares outstanding: 57.4 million; Market cap: $2.3 billion) faces increased pressure to put in place changes to boost its sales and profits, now that hedge fund Sandell Asset Management has acquired 5% of the company. Sandell has asked Fair Isaac to explore alternatives to enhance its shareholder value, including a possible sale of the company in whole or in part. Fair Isaac is already selling off unprofitable parts of its mortgage application operations, expanding into China and spending more money on research....
AIC DIVERSIFIED CANADA FUND $46.42 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds stocks of some U.S. firms. The $1.6 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, Johnson & Johnson, Thomson Corporation, Brookfield Asset Management, Royal Bank, Manulife Financial and Royal Bank of Scotland. AIC Diversified Canada Fund holds just 23 stocks. The fund holds 53.6% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Consumer staples, 16.1%; Energy, 8.2%; Consumer discretionary, 7.5%; Health care, 7.0%, Industrials, 3.0%; Information technology, 2.3%; and Conglomerates, 1.5%....
These two AIC funds hold much of their portfolios in financial services stocks. We prefer diversified funds. But if you must focus on something, finance is a relatively stable sector. If you do invest in these funds, be sure to adjust the rest of your portfolio so they won’t overly concentrate your stock and mutual fund holdings in the financial sector. AIC AMERICAN ADVANTAGE FUND $7.73 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks, with over 99% of assets in the financial services area....
CIBC CANADIAN EQUITY FUND $27.77 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and yet have growth potential. The $662.8 million fund’s top holdings are Petro- Canada, EnCana, Manulife Financial, Teck Cominco, Bank of Nova Scotia, TD Bank, Canadian National Railway, Brookfield Asset Management, BCE Inc. and Alcan. CIBC Canadian Equity holds 38% of its portfolio in Financial services stocks and 25% in Energy stocks....
TD CANADIAN EQUITY FUND $32.70 (CWA Rating: Conservative) (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) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, Suncor Energy, TD Bank, Rogers Communications, Alcan, Canadian Oil Sands Trust, CN Railway, Ivanhoe Mines, Goldcorp and EnCana. The $3.1 billion fund currently holds about 27% of its portfolio in Financial services shares. It also has a bias towards Energy stocks, with 27% of its holdings in that sector....
Here are five large funds run by each of Canada’s big-five banks. Each holds the kind of conservative, well-balanced portfolios of high quality stocks we recommend. All five have a high weighting in Financial services and Energy stocks. However, they stick with high-quality issues with sound fundamentals, so these concentrations don’t add a lot of risk. Each has its quirks, but overall they are well positioned for low-risk returns. TD CANADIAN EQUITY FUND $32.70 (CWA Rating: Conservative) (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) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, Suncor Energy, TD Bank, Rogers Communications, Alcan, Canadian Oil Sands Trust, CN Railway, Ivanhoe Mines, Goldcorp and EnCana....
GREAT LAKES HYDRO INCOME FUND $20.30 (Toronto symbol GLH.UN; SI Rating: Extra Risk) owns 26 hydroelectric generating stations located on seven river systems in four distinct geographic regions: Quebec, Ontario, British Columbia and New England. Its facilities have 1,015 megawatts of generating capacity. In the three months ended March 31, 2007, Great Lakes’ revenues fell 1.2%, to $48.2 million from $48.8 million. Cash flow per share fell 3.8%, to $0.51 from $0.53. Power generation in British Columbia was lower due to an overhaul on an operating unit at the Lois facility. Total power generated was slightly lower than in the 2006 quarter, when water inflows were unusually strong....
TD SCIENCE & TECHNOLOGY FUND $14.94 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W1P9. 1-800-461-3863; Web site: www.tdcanadatrust.com. No load — deal directly with the company) invests mostly in U.S. firms. The fund’s gain in Canadian dollars over the last year was 3.4%. The Nasdaq index rose 7.4% in Canadian funds. The $122.6 million fund’s manager is well-respected U.S. mutual fund manager T. Rowe Price Associates. Its MER is 2.78%. TD Science & Technology’s top holdings include: Microsoft, Juniper Networks, Broadcom, Yahoo!, American Tower, Google, Foxconn International Holdings, Cisco Systems, Hewlett-Packard and Adobe Systems. TD Science & Technology Fund is a buy for aggressive investors only.
The outlook for technology stocks is positive over the next few years. However, if you want to invest in tech funds, limit your investment to modest quantities. And these funds should only make up a portion of the manufacturing sector holdings in your portfolio. Above all, invest only in funds, like these two, plus Fidelity Focus Technology, above, that focus on established businesses rather than start-ups. TD SCIENCE & TECHNOLOGY FUND $14.94 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W1P9. 1-800-461-3863; Web site: www.tdcanadatrust.com. No load — deal directly with the company) invests mostly in U.S. firms. The fund’s gain in Canadian dollars over the last year was 3.4%. The Nasdaq index rose 7.4% in Canadian funds. The $122.6 million fund’s manager is well-respected U.S. mutual fund manager T. Rowe Price Associates. Its MER is 2.78%. TD Science & Technology’s top holdings include: Microsoft, Juniper Networks, Broadcom, Yahoo!, American Tower, Google, Foxconn International Holdings, Cisco Systems, Hewlett-Packard and Adobe Systems....