A Competition between 3 Junior Financials

My Sept.22,2017 Blogdaleupsome Blog

A blog written on September22,2017 talked about 3 junior financials and attempted to pick which one was the most likely to succeed.The 3 juniors were AGF Management,Fiera Capital and Guardian Capital.All had a market capitalization of slightly less than $1 billion.This blog looks at the progress of all three over the 9 month period.

Guardian Capital

Guardian Capital has a large portfolio (about $700 million) of Bank of Montreal shares as well as sells mutual funds and has some financial services.In September,2017 it was trading at about $25 a share.It has fallen slightly to the $23 level but has made only one small recent acquisition. It's market capitalization has actually gone down.Financial services have not fared well in this period and GCG has followed the trend.In addition, the value of BMO shares have fallen off slightly.This stock is stable but moves up quite slowly and in addition does not pay a dividend.

Fiera Capital

The second junior looked at was Fiera Capital.It is still paying($8.6 million annually) for the acquisition of Natcan ($60 million) and won't be finished for 5 more years. Recently it released it's first quarter report and it's performance is quite good.Revenues increased by about 25% although e.p.s. declined slightly and the quarterly dividend was increased by 6% to $.19 per share.Still it's share price dropped from $14 per share in Septembet,2017 to it's present $12 and was as low as $11.50.Fiera has been quite active and made a couple of acquisitions during the 9 months and made another (CGOV Asset Management) on May31.CGOV has $5 billion of AUM bringing Fiera Capital's  total AUM to $136 billion.Fiera says that this deal is modestly accretive to adjusted EBITDA and it"gives them a diverse suite of investment solutions".But Fiera has grown by issuing common shares and now  has 91 million shares outstanding.This results in a good growth

  trajectory but it dilutes earnings per share.

AGF Management

The third junior financial was picked as the likely stock to have the largest gains in September,2017It is largely a mutual funds  distributor  and owner of several ETFs.It services branches in north America,Europe and Asia.And furthermore they closed  in June the 100%acquisition of FCCM,a U.S.based asset manager.FCCM has been wrapped into their new  division called AGFiQ.This division is starting to show good growth as it has 9 ETFs and $400 million in U.S. institutional investors.Presntly AGFiQ has $6 billion in assets under management.However the AGF Management stock price has not performed as well as the company has.The stock price fell from$8.50 in September,2017 to about $6.75 now.This in spite of a steadily increasing AUM almost every month.

In Conclusion             

This blog is less interested in Guardian Capital after studying it for 9 months.It has a beta of about 1 as it is less active than the others in the group.However it still should be regarded as a good investment.It has a yield of more than 2% and a P/E ratio of only 11.25.This is well below the ratio for chartered banks and insurance companies.But this blog sees limited upward potential;it is more like a solid corporate bond.Fiera is still seen as the growth stock;it makes good acquisitions and often.Although it's  acquisitions are  accretive the increase in equity dilutes e.p.s.Earnings are growing quickly but e.p.s. lags at this time.AGF is still seen by this blog as the one with the best upwards potential.Although it's share price has not performed as well as expected.It is seen by this blog as a "sleeper" that could suddenly make a move to the $8  level very quickly.And the new stock being watched here is Goeasy Financial (GSY).Revenues are growing by 25 to 30% each quarter and earnings by almost as much.It lends to non-prime customers and has tremenduous growth in it's loan portfolio.It is trading around $40-$41 per share now and is picked to hit $45 by the end of the third quarter.     https://www.zacks.com/  ;https://www.fool.com/