Shares in These Two Leading Canadian Investment Managers Are Soaring!

Shares in two of Canada’s leading investment managers have been leading the way in February, including Gluskin Sheff + Associates Inc (TSX:GS) whose shares are already up 11.34% this month.

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Stock in two of Canada’s top investment management firms are leading the charge so far in February.

Through the first two weeks of trading this month, shares in both CI Financial Corp (TSX:CIX) and rival Gluskin Sheff + Associates Inc (TSX:GS) are already up nearly double digits.

Shares in CI Financial are up 9.27% so far in February, while Gluskin Sheff stock has already reached double-digit territory, thereby gaining 11.34%.

Let’s take a look at what’s been driving the stock in these two investment managers higher.

CI Financial reported its fourth-quarter and annual results on February 8. On revenues of $529 million, the firm was able to generate net income of $140.4 million and an impressive 37.1% return on equity for the fourth quarter.

That 37.1% ROE figure is considerably above CI’s cost of capital, meaning that it has been successful in delivering positive returns for its equity shareholders.

Meanwhile, earnings per share of $0.57 for the fourth quarter were more than enough to support the firm’s quarterly dividend payout of $0.18, which is currently yielding investors a 3.73% annual distribution against Friday’s closing price.

When you consider CI has previously announced an aggressive plan to buyback as much as $1 billion of its own stock over the next 12 to 18 months, this is clearly a firm that has its shareholders interests top of mind.

Gluskin Sheff stock, on the other hand, is currently paying out to its shareholders a hefty 9.19% dividend yield as of this writing.

Whether or not the firm’s disappointing results through the first six months of its current fiscal year will threaten to put that dividend remain to be seen. However, it should be viewed as an encouraging sign that GS.TO stock did manage to close up 7.04% on February 7, the day it reported second quarter results.

That result may have come as a bit of a shock however when you consider that earnings for the second quarter were just $0.24 per share, down from $0.61 in the year ago period.

Nearly all of the decline can be attributed to the fact that Gluskin Sheff has generated less than $1 million in performance fees from its clients so far through the first two quarters compared to the over $29 million in performance fees that its managers generated through the company’s first two quarters of 2017.

Bottom line

Both firms saw the value of their share prices hit extremely hard in 2018, so it probably shouldn’t come as much of a surprise to see each get a bit of a bounce as markets have responded favourably so far to start the new year.

I continue to like both of these company’s stocks and will be monitoring them carefully in the coming days and weeks in search of an attractive entry point.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jason Phillips has no position in any of the stocks mentioned.

More on Dividend Stocks

money cash dividends
Dividend Stocks

TFSA Passive Income: 2 Top TSX Dividend Stocks to Buy on the Correction

These top dividend stocks look cheap to buy right now for a TFSA focused on passive income.

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Oversold TSX Stocks to Buy in July

Invests can now find good value right now in top TSX dividend stocks.

Read more »

You Should Know This
Dividend Stocks

OSFI: Mortgage Arrears Only 0.15% Despite Rate Hikes

The OSFI is happy with the low mortgage delinquency but remains worried over the impact of rising rates on Canadian…

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

2 Great TSX Stocks to Start a TFSA Retirement Fund During a Market Correction

These top TSX dividend stocks look cheap right now to buy for a TFSA retirement portfolio focused on passive income…

Read more »

consider the options
Dividend Stocks

Recession Worries? Try Buying These 2 Stocks

Consider investing in these two safe dividend stocks if you are worried about your investment returns due to fears of…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

TFSA Investors: Should You Be Holding Cash Now?

Holding cash might not be the best option for TFSA investors in 2022, but using surplus cash to purchase dividend…

Read more »

stock market
Dividend Stocks

4 Dividend Stocks With Yields of at Least 5% in a Bearish Market

By investing in these stocks, investors can earn reliable dividend yield of 5% or more.

Read more »

Path to retirement
Dividend Stocks

Retirement Investors: 2 Top Defensive TSX Stocks to Own During a Recession

These top defensive TSX dividend stocks look good to buy for a retirement fund during an economic downturn.

Read more »