Felix Pinhasov's  Instablog

Felix Pinhasov
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Part-time investor particularly interested in resource companies.
  • Power Financial Director And Former CEO Sold $56.1M Worth Of Shares 0 comments
    Oct 29, 2012 11:02 AM | about stocks: POFNF

    According to regulatory filings, Power Financial Corporation (OTCPK:POFNF) insider and director, Robert Gratton, has been heavily selling shares in the public market for the past four months. The former chief executive has sold about 2.2M shares worth roughly $56.1M, which represent 62.6 percent of the 3.53M shares he held at the beginning of the year.

    Gratton served as the company's chief executive for 15 years, from 1990 to 2005, and currently serves as a board member of the company.

    Power Financial Corporation is a management and holding company with businesses operating in the insurance and financial services industry. The company's most notable holdings include a 68.2 percent holding of Great-West Lifeco (OTC:GWLOF) , an international financial services provider and insurance company, in addition to a 58 percent interest in IGM Financial (OTCPK:IGIFF),one of Canada's largest distributors of Mutual Funds.

    The company's holdings are experiencing both industry specific and competitive pressures.

    On one side, Great-West Lifeco must meet its long-term life insurance commitments by purchasing long-term government bonds that do not yield enough to cover the potential commitments. As a result, it must set aside more capital to meet those commitments, which jeopardizes its ability to pay its current dividend. On the other side, IGM Financial has to compete with low cost Exchange Traded Funds by lowering its Mutual Funds management fees, which also jeopardizes its current dividend payout.

    In many cases, the disposition of shares by a director does not translate into relevant information. However, given Gratton's extensive background and insight into Power Financial and its subsidiaries, investors should definitely take notice and reconsider their position in the company.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in OTCPK:IGIFF over the next 72 hours.

    Stocks: POFNF
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