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  • State Street Global Advisors: Mend It, Don't End It [View article]
    Using enhanced asset management disclosure to address the financial conglomerate discount will be a battle. The "sum of the parts game" didn't get TRV (formerly STA) any significant valuation differentiation when JNC was stuck inside of it.
    Apr 19 06:31 AM | Likes Like |Link to Comment
  • 7 Asset Management Stocks Yielding At Least 3% [View article]
    TROW cash and investments on balance sheet = $6.3 per share, or c.10% of its market cap. TROW has nearly doubled its divi-ps since 2007, in addition share buybacks have reduced share count by -5.5% since 2007. TROW = classic "keep head down, keep nose out of trouble, deliver some value to shareholders with no nonsense". BLK's divi-ps has also more than doubled since 2007 and recently announced further increase to share buyback authorization.
    Feb 24 12:36 PM | Likes Like |Link to Comment
  • 2 Stocks To Buy, 2 To Avoid In Asset Management [View article]
    The choppy market environment of 2011 has left some of the stocks in the sector with AUM levels that were either unchanged or slightly down at the end of 4Q-11 versus 4Q-10. This could be expected to pressure the sector's ability to print double-digit EPS growth during the first half of 2012.
    Jan 17 11:36 AM | Likes Like |Link to Comment
  • Why BlackRock Is On Our Buy List [View article]
    BLK has solid room to grow its DPS in the future from the current $5.5 annualized pace:
    1. Current Payout Ratio is <50%
    2. BLK has a low-capital intense business model, suppportive of healthy dividend payments and even sharebuybacks.

    The ROE in this blog post = way understated since BLK acquired a lot of goodwill in the iShares and MLIM deals in the last 5-years. The "real" ROE is probably closer to 20% range (such as at TROW).
    Oct 27 06:55 PM | Likes Like |Link to Comment
  • TROW - post 3Q earnings could see more downward pressure [View instapost]
    With Eurozone news sparking a mega market rip, the 20x-21x P/E range on a $3.00-$3.10 EPS for 2012e could see TROW shares capped by the $61-65 range from May-June 2011.

    If the P/E premium to peers compresses, then other stocks such as BLK, AB, LM, JNS, IVZ could crank out more upside than TROW in a sustained market rally environment.

    This is based on using the 2012e S&P 500 EPS of c.$100 per share and assuming that in a bull market scenario the P/E could go to 14x-15x (1400-1500 range on S&P).
    Oct 27 04:04 PM | Likes Like |Link to Comment
  • Investors prefer to focus on Travelers' (TRV +5.9%) plan to pursue targeted pricing and changes in terms and conditions rather than its 67% Y/Y profit drop, boosting shares. A multiyear streak of outsized losses from severe weather is the top factor in providing an impetus to raise rates across all its operating segments. Insurance peers: CB +2.1%, ACE +3.4%, WRB +2.6%.  [View news story]
    TRV trading near 1x the just reported TBVps of $51.85 for 3Q-11, and the commentary on P&C pricing trends is positive, sounds like a financial stock that more conservative investors can stomach
    Oct 19 05:50 PM | Likes Like |Link to Comment
  • Sector Snap: Asset managers' slide on analyst note [View article]
    It's worth mentioning that the 2012 earnings outlook will probably be revisited in 2 weeks time, when most of the Asset Management stocks have completed the quarterly earnings reporting cycle. Those estimates will be very sensitive to how the S&P 500 fares during Q4-11, this was clearly on display during 3Q-11, where the >10% decline in the S&P 500 led to 2012e EPS downgrades of -5 to -10% on many of the asset management stocks.

    As for stock picking in the sector, the companies that are demonstrating an ability to grow AuM from net new inflows are the ones most likely to show the best revenue and eps growth: BLK, BEN and TROW are examples of names in the sector that have had positive new inflows in 2011.
    Oct 17 10:03 AM | Likes Like |Link to Comment
  • JPM: Still A Strong Long-Term Buy [View article]
    JPM is trading at roughly 1x its trailing tangible book per share, the most recent quarter was running at a 13% ROTE.

    The "DVA" item that flattered 3Q results is an earnings element that has the potential to be unwound in future periods under a bullish scenario (i.e. when credit spreads tighten).

    Sporting a 3% DPS yield (31.90 share price vicinity), provides some support under most scenarios where the European sovereign debt/banking mess results in some form of muddling through.

    Beyond that, the market could easily look to re-rate the stock towards a 1.1x-1.5x TBVps range, which would peg the shares between $33-$45 (especially under scenarios where markets believe there is visibility on a 15% ROTE)
    Oct 16 04:03 PM | Likes Like |Link to Comment
  • AFLAC: Lots of Macro Risk For This Dividend Champion [View article]
    Great review of the details
    "why do they own so much financial debt?" = an important question, and if you look at the many Financial Analyst briefings over the years, this company has been very proud of its "consistent" double digit operating EPS growth track record over the long haul. However in recent years, the double digit growth has required more and more financial engineering (share buybacks etc.) as revenues growth in the double digits has been a struggle to achieve (i.e. slower sales growth in Japan and USA = hurts premium growth; falling interest rates = hurts investment income growth...which you duly note contributes the lion's share of earnings power).

    Just as sure as the trees cannot grow to the sky, a consistent double digit EPS growth rate cannot be sustained indefinitely.
    Sep 22 10:49 AM | 1 Like Like |Link to Comment
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