Power Results Met With an Icy Reception

It’s a safe bet the Desmarais family isn’t losing sleep over weaker than expected results out of its two holding companies. You shouldn’t either.

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler, CFA, is Lead Advisor on Discovery Canada 2017. He is also the Chief Investment Advisor for Motley Fool Canada and is the lead advisor on its flagship Stock Advisor Canada product. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published March 13, 2013 5:56 pm EDT

There was plenty of weakness across the S&P/TSX Composite on Wednesday, as the Canadian market fell by slightly more than 1%.

Two names that typically don’t show up on a “worst of” list but were significant negative contributors to today’s decline are Power Corporation (TSX:POW) and Power Financial (TSX:PWF). The stocks were down by about 3% as both companies reported lower than expected results.

Results

The table below contains a snapshot of each company’s results. Clearly, 2012 was a challenging year as low-interest rates and wonky equity markets continue to weigh on the financial subsidiaries embedded within these holding companies.

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	2012	2011	Change	2012	2011	Change
Power Corp.	$2.09	$2.50	-16.4%	$1.81	$2.24	-19.2%
Power Fin’l	$2.38	$2.44	-2.5%	$2.30	$2.43	-5.3%

Source: Company reports

Worry? Who us?

You’d be hard pressed to find an entity outside of Omaha, Nebraska that could care less about quarterly results than the Desmarais family controlled Power Group. Today’s earnings release makes no mention of a conference call to discuss the results and is void of any commentary.

The Power Group invests for the long-term and doesn’t let quarterly fluctuations distract them from their objective of owning companies that have a proven ability to dominate.

Their patience and focused strategy has paid off, especially for long-term shareholders. The table below outlines the total returns provided by both Power Corp. and Power Financial over several historical periods. With dividends included, these companies just don’t lose to the Canadian market.

	POW	PWF	S&P/TSX
2 Year	9.8%	8.7%	-5.4%
5 Year	5.8%	12.7%	-3.1%
10 Year	111.8%	131.0%	106.8%
20 Year	1102.1%	2106.0%	263.0%

Source: Capital IQ

The Foolish Bottom Line

Companies like Power Corp. and Power Fin are somewhat rare on the Canadian landscape. These are companies that you can essentially buy and forget about. Sure they’ll have days like today, but over the long-term, odds are that you’ll be well served by having one (or both) of them in your portfolio.

We have created a special report that identifies several other Canadian companies that have similar buy and forget characteristics. To find out who these companies are, simply click here and the report will be delivered to your inbox, absolutely free!

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Fool contributor Iain Butler does not own shares in any of the companies mentioned in this report at this time. The Motley Fool has no positions in the stocks mentioned above.