pension plan
BANK OF NOVA SCOTIA, $53.59, Toronto symbol BNS, is buying the 82% of DundeeWealth Inc. (Toronto symbol DW) that it does not already own. DundeeWealth manages investments and operates a brokerage business. The company also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice. DundeeWealth is a recommendation of Stock Pickers Digest, our newsletter for aggressive investing. The deal will double the size of Bank of Nova Scotia’s mutual-fund business, and make it the fifth-largest mutual-fund company in Canada. It gives also gives the bank a number of new growth opportunities: Bank of Nova Scotia will now be able to sell more of its products and services to DundeeWealth’s high-quality clientele. As well, the bank may sell Dynamic funds through its branches in Asia and Latin America. Moreover, by expanding its wealth-management business, Bank of Nova Scotia is putting itself in a position to profit as more baby boomers approach retirement....
POTASH CORP. OF SASKATCHEWAN, $141.32, Toronto symbol POT, fell 4% this week after Ottawa said it would block the hostile takeover offer by BHP Billiton Ltd. (New York symbol BHP). However, under the Investment Canada Act, which governs foreign takeovers of Canadian companies, BHP now has 30 days to modify its bid so that the takeover is a “net benefit” for Canada. The stock is now trading at 8.7% above the $130.00 U.S.-a-share that BHP is offering. That indicates that investors expect a higher offer from either BHP or another bidder. BHP still has room to raise its bid. That’s because BHP’s shares also trade on the London Stock Exchange, and British law would require BHP to hold a special shareholders’ vote if the value of a takeover offer is more than 25% of BHP’s market cap. At the time of the original announcement on August 17, 2010, the bid represented 21% of BHP’s market cap. Right now, the offer is equal to 15% of BHP’s market cap....
On Thursday, October 29, two directors of Maple Leaf Foods Inc. (symbol MFI on Toronto) from the Ontario Teachers’ Pension Plan resigned their positions. Maple Leaf is Canada’s largest food processor. It sells most of its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. The company is one of the stock market picks we’ve long recommended in our Successful Investor newsletter.
Expiration of shareholders’ agreement brought big changes to Maple Leaf Foods
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SNC-LAVALIN GROUP INC., $52.10, Toronto symbol SNC, has cancelled its plan to increase its stake in Highway 407, a 108-kilometre toll highway north of Toronto. The company owns 16.77% of the 407. Earlier this month, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of the 407. However, SNC said it would exercise its right of first refusal and buy the shares from Ferrovial. That would have increased SNC’s stake in the 407 to 26.77%....
SNC-LAVALIN GROUP INC., $52.78, Toronto symbol SNC, is a leading Canadian engineering and construction company. SNC also owns 16.77% of Highway 407, a 108-kilometre toll highway north of Toronto. This week, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of 407. CPPIB agreed to pay $894.3 million for 10% of the 407. However, SNC intends to exercise its right of first refusal and buy these shares from Ferrovial. That will raise SNC’s stake in the highway to 26.77%....
Railways have been around since the 19th century, and they are still the safest, most energy-efficient way to move goods over land. They also face little competition from new competitors, because of the high cost of building new rail lines. Canadian Pacific remains our favourite railway for new buying. It has close relationships with major producers of coal, potash and other commodities. That gives it predictable revenue streams. As well, new, fuel-efficient locomotives and scheduling software are lowering CP’s costs. CANADIAN PACIFIC RAILWAY LTD. $63 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.7 million; Market cap: $10.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.7%; SI Rating: Above Average) transports freight over a 25,000-kilometre rail network between Montreal and Vancouver. It also connects with major hubs in the U.S. Midwest and Northeast. The U.S. accounts for 30% of CP’s revenue....
The stock market downturn of 2008/2009 renewed investor interest in food stocks. That’s because food is a necessity of life, and food producers’ shares are much less volatile than those of cyclical companies, such as resource firms. To increase your returns and cut your risk, you should focus on food makers with strong brands, such as the three we analyze below. The popularity of their brands makes it easier for them to launch new products and expand their market shares. As well, all three have strong balance sheets that are letting them make acquisitions and build new plants. However, only two are buys right now. SAPUTO INC. $35 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 207.9 million; Market cap: $7.3 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.8%; SI Rating: Average) is Canada’s largest producer of dairy products, including milk, butter and cheese. The company also makes snack cakes and tarts. Aside from Saputo, its main brands include Neilson, Stella and Dairyland. The company also has operations in the U.S., Argentina and Europe....
BCE INC. $34 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 758.8 million; Market cap: $25.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.4%; SI Rating: Above Average) is buying the 85% of CTVglobemedia that it does not already own. This private company owns the 27-station CTV Television Network. CTVglobemedia also owns 30 speciality channels, 34 radio stations and The Globe and Mail newspaper. This is the second time that BCE has bought CTV Television. In 2000, it paid $2.3 billion for 100% of CTV. It later merged CTV with The Globe and Mail into a new company called Bell Globemedia. BCE held 70% of this new company, and Woodbridge Co. (a private company owned by the Thomson family) held the remaining 30%. BCE felt that combining media content with its satellite TV, Internet and phone networks would help it compete with larger, international media/telecom companies....
CENOVUS ENERGY INC., $28.74, Toronto symbol CVE, has received regulatory approval to expand its Foster Creek oil-sands project in northern Alberta. Cenovus owns 50% of this project; U.S.-based oil company ConocoPhillips (New York symbol COP) owns the other 50%. The company will expand Foster Creek in three phases over the next seven years. When the expansion is finished, Foster Creek’s average daily production will rise to 210,000 barrels from the current 120,000 barrels. Cenovus has also asked for approval for a fourth phase, which would bring Foster Creek’s average daily production up to 235,000 barrels, starting in 2019. Cenovus’ share is 117,500 barrels. To put these figures in context, Cenovus’ average daily production, including natural gas, was 253,733 barrels in its latest quarter....
BCE INC., $32.99, Toronto symbol BCE, is buying full control of CTVglobemedia, the private company that owns the CTV Television Network, which consists of 27 TV stations. CTVglobemedia also owns 30 speciality channels, 34 radio stations and The Globe and Mail newspaper. BCE has controlled the CTV television network before: in 2000, the company bought a majority interest in CTV as part of a “convergence” strategy to combine media content with its satellite TV, Internet and phone networks. The plan did not work out as well as BCE had hoped. So, in 2005, BCE sold most of its CTV stake to Woodbridge Co., the Ontario Teachers’ Pension Plan and Torstar Corp. (see below). Right now, BCE owns 15% of CTVglobemedia. It will pay $1.3 billion for the remaining 85%. The company will also assume $1.7 billion of CTVglobemedia’s debt. Following the purchase, BCE will sell 85% of The Globe and Mail to Woodbridge. These deals still need regulatory approval, but BCE expects to complete them in mid-2011....