Asset Management Stocks in Canada
What You Should Know
- In Canada, most asset management is done by banks and insurance companies, which have diversified into asset management.
- Brookfield Asset Management, CI Financial and Fiera Capital are publicly traded pure Canadian asset management companies.
- Power Corporation and Fairfax Financial are two conglomerates with sizable asset management businesses.
- Brookfield and Fairfax have both provided their investors with phenomenal returns over the medium and long term.
| List of Top Canadian Asset Management and Conglomerate Stocks | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company | Ticker Symbol | P/E | P/B | D/E | Annualized Total Return | |||
| Brookfield Asset | BAM.A | 96 B | 11.8 | 1.69 | 3.73 | -16.30% | 15.60% | 9.35% |
| Power Corporation | POW | 21.7 B | 7.75 | 0.97 | 0.83 | -18.20% | 6.98% | 1.82% |
| Fairfax Financial | FFH | 16.7 B | 6.06 | 0.88 | 0.55 | 23.60% | 7.27% | 8.16% |
| CI Financial | CIX | 2.58 B | 4 | 1.5 | 2.08 | -46% | 0.60% | 0.61% |
| Fiera Capital | FSZ | 904 M | 6.3 | 2.51 | 2.02 | -3.82% | 7.40% | NA |
| Data from morningstar.ca as of 27 September 2022. | ||||||||
This page reviews Brookfield Asset Management stock, Power Corporation stock, Fairfax Financial Stock and CI Financial stock. We pass on Fiera Capital because of its smaller market capitalization and shorter history as a public company.
The financial sector is the largest sector of the main Canadian stock market index, the S&P/TSX Composite. It constitutes 31.1% of the index as of August 31, 2022. The financial sector is composed of Canadian bank stocks, Canadian Insurance stocks, asset managers and conglomerates. This page looks at two asset managers, Brookfield stock and CI stock, and two conglomerates, Power stock and Fairfax stock. You can use WOWA’s stock profit calculator to calculate your return on investment (ROI) after each stock trade.
We should also mention Mackenzie Investments, a fast-growing pure asset management company in Canada. It is not considered in this note because here, we are focused on public companies, and Mackenzie is held privately.
| Largest Canadian Asset Managers according to Canadian Institutional Investment Network | |
|---|---|
| Asset Manager | Canada Pension Assets Under Management (in million) |
| RBC GLOBAL ASSET MANAGEMENT INC. | $393,803.5 |
| TD ASSET MANAGEMENT | $367,772.2 |
| BLACKROCK ASSET MANAGEMENT CANADA LTD | $246,441.0 |
| CIBC ASSET MANAGEMENT | $185,496.8 |
| BROOKFIELD ASSET MANAGEMENT | $179,833.0 |
| FIDELITY CANADA INSTITUTIONAL | $170,957.5 |
| MANULIFE INVESTMENT MANAGEMENT | $142,931.0 |
| FIERA CAPITAL CORP | $112,635.7 |
Brookfield Asset Management Inc
Brookfield Asset Management Inc | ||
|---|---|---|
| Exchange: Ticker | TSX: BAM.A, NYSE: BAM | |
| Indices | S&P/TSX Composite, S&P/TSX 60 | |
| Main business | Wealth management products, real estate, renewable energy | |
| Forward dividend yield | 1.26% | |
| Trailing dividend yield | 1.20% | |
| Trailing annual revenue | $86.2 B | |
| Price/Sales | 0.81 | |
| Last Price | $57.5 | |
| Data from morningstar.ca as of 27 September 2022. | ||
Brookfield is one of the largest alternative asset management companies in the world. It is managing close to US$725 billion of assets. Its investments are primarily in real estate, renewable energy, infrastructure and credit. Its subsidiary, Oaktree Capital, specializes in distressed equity investment. Brookfield corporate headquarters are in Toronto, with offices in the world's leading financial centers, including New York City, London, Mumbai, Shanghai and Sydney.
It was founded in 1899 to construct and manage electricity and transport infrastructure in Brazil. Traction, Light and Power Company was incorporated in Toronto and listed as a public company to be the parent company for Sao Paulo Tramway Co and Rio de Janeiro Tramway Co in 1912. Edper Investments acquired Traction, Light and Power Company in 1959.
Brookfield Asset Management Inc
In 1969 the company became Brascan Limited. During the 1970s, the company divested its Brazilian investments and made significant investments in real estate, timber and mining, mainly in Canada.
In 2005, it was renamed Brookfield Asset management. Between 2013 and 2018, Brookfield returned to Brazil with nearly $10 billion in energy, infrastructure and real estate investments.
Principal public subsidiaries include Brookfield Infrastructure Partners, Brookfield Renewable Partners, Brookfield Property Partners and Brookfield Business Partners.
In 2018, Brookfield bought the bankrupt nuclear reactor manufacturer, Westinghouse Electric Company, for $4.6 billion. It also acquired most of Oaktree Capital Management in 2019 for $4.7 billion. In the same year, Brookfield bought an Indian luxury hotel chain. Mark Carney, a former governor of the Bank of England and Bank of Canada, became a vice-chair of Brookfield in 2020.
Brookfield Place - Bay Wellington Tower
Qatar Investment Authority is a major Brookfield investor. There have been many claims against Brookfield, including death spiral financing and an attempt to influence the former US administration. But none of these claims are proven.
Brookfield is in the process of listing its asset management business and distributing 25% of it to its shareholders. The last available financial results are Brookfield's second quarter (Q2) 2022 results relating to the April-June period. Net earnings for Q2 2022 were US$1,475 million, which includes the share of other shareholders of subsidiaries. Net earnings attributable to shareholders were US$590 million.
Power Corporation of Canada
Power Corporation of Canada | ||
|---|---|---|
| Exchange: Ticker | TSX: POW, Frankfurt: PCR.F, Munich: PCR.MU, Berlin: PCR.BE | |
| Indices | S&P/TSX Composite, S&P/TSX 60 | |
| Main business | Conglomerate | |
| Forward dividend yield | 6.19% | |
| Trailing dividend yield | 6.04% | |
| Trailing annual revenue | $58.2 B | |
| Price/Sales | 0.37 | |
| Last Price | $31.5 | |
| Data from morningstar.ca as of 28 September 2022. | ||
Power Corporation was formed in 1925 by two stockbrokers, Nesbitt and Thomson. Power Corporation was a holding company for managing investments in Canadian public utility companies. During the 1930s, Power also acquired some interest in a Pulp and Paper company and an Oil Company.
In 1952, Arthur Nesbitt handed over the role of president to his son Arthur Nesbitt. The Nesbitt family sold their interest in Power Corporation to the Paul Desmarais group in 1968. In 1975, Power Corporation attempted to acquire Argus Corporation.
Power Corporation of Canada
At the time, Argus was Canada's most influential and best-known conglomerate. Power only managed to buy half of the non-voting Argus shares. The famous media tycoon Conrad Black later bought Argus, and he sold it piece by piece.
Power Financial Corporation was established in 1984 and is currently a wholly owned subsidiary of Power Corporation. Power Financial has interests in financial services companies in Canada, US and Europe.
A notable example of those companies is WealthSimple. Great West Lifeco and IGM Financial are the most important subsidiaries of Power Financial. IGM Financial is a Winnipeg-headquartered company listed on the Toronto Stock Exchange.
Investors Group office building in Toronto. Investors Group is a company of IGM Financial, which is a subsidiary of Power Financial Corporation.
Power Financial Corporation also owned half of Parjointco, which in turn owned 55% of Pargesa. Pargesa’s main asset is 50% interest in Groupe Bruxelles Lambert (GBL). In 2020, Parjointco and other Pargesa shareholders exchanged Pargesa shares for GBL shares, and then Pargesa was delisted from the SIX exchange in Switzerland and went out of the picture.
GBL is a Belgian holding company listed on Euronext. In 1998, GBL sold Banque Bruxelles Lambert (BBL) to the ING Group. Imerys, LafargeHolcim, Adidas, SGS, Pernod Ricard and Umicore are the most important holdings in the GBL portfolio.
Since 2005, Jeffrey Orr has been CEO of Power Financial. In 2020, each share of Power Financial was exchanged for 1.05 shares of Power Corporation. After this exchange, Power Financial was delisted from TSX. It continues to report relevant financial information to the public.
Fairfax Financial Holdings Ltd
Fairfax Financial Holdings Ltd | ||
|---|---|---|
| Exchange: Ticker | TSX: FFH, FFH.U | |
| Indices | S&P/TSX Composite | |
| Main business | Conglomerate, insurance | |
| Forward dividend yield | 2.0% | |
| Trailing dividend yield | 2.0% | |
| Trailing annual revenue | $24.0 B | |
| Price/Sales | 0.49 | |
| Last Price | $630 | |
| Data from morningstar.ca as of 27 September 2022. | ||
Markel service of Canada was incorporated in 1951. Its name later changed to Markel Financial Holdings Ltd. Markel Financial was specialized in trucking insurance and controlled by the Markel family. By 1985, Markel was in deep financial trouble.
In 1985, Prem Watsa, who was among the founding partners of Hamblin Watsa Investment Counsel Ltd., acquired a controlling stake in Markel Financial. In 1987, he reorganized and renamed Markel to Fairfax Financial Holdings Limited. Watsa has been very successful at the helm of Fairfax. Fairfax's book value per share has grown 23% annually over the first 25 years of Watsa’s management. Mr. Watsa is an Indian-born Canadian dubbed Canada’s Warren Buffet.
Fairfax Financial Holdings Ltd
Concurrently Watsa is vice president of Hamblin Watsa Investment Counsel. Mr. Watsa controls a large portion of the Fairfax voting shares through 1109519 Ontario Limited, The Sixty Two Investment Company Limited and 810679 Ontario Ltd.
In 2007, Fairfax had a large long position in credit default swaps (CDS) on mortgage-backed securities (MBS). In other words, Fairfax had bought insurance on money lent against US houses without actually having lent any money against US houses. This was a way to bet that the US housing bubble would burst in the near future. The US housing bubble burst in 2007-2008, and Fairfax made a considerable profit from its CDS position.
Fairfax was the largest holder of BlackBerry stock with a 10% stake when it offered to purchase BlackBerry for $4.7 billion, or $9.00 a share, in 2013. Research In Motion (RIM) was founded in 1984 and developed the BlackBerry brand of communication devices. It was a symbol and source of pride for the Canadian technology sector.
It managed to offer the most secure cell phone devices. Still, fierce competition from Apple and Samsung with their better marketed, and more user-friendly devices shrunk its market share and landed it in a financially tight corner by 2013. Fairfax's bid might have been an attempt by Mr. Watsa to encourage other potential BlackBerry buyers to submit their bids. This bid was scrapped later, and instead, $1 billion was injected into BlackBerry, which gave it time to shed its money-losing ventures and concentrate on its strength.
CI Financial Corp.
CI Financial Corp. | ||
|---|---|---|
| Exchange: Ticker | TSX: CIX, NYSE: CIXX | |
| Indices | S&P/TSX Composite | |
| Main business | Wealth management products | |
| Forward dividend yield | 5.33% | |
| Trailing dividend yield | 5.33% | |
| Trailing annual revenue | $2.65 B | |
| Price/Sales | 0.9 | |
| Last Price | $13.5 | |
| Data from morningstar.ca as of 28 September 2022. | ||
CI Financial is based in Toronto. It offers investment management and wealth management together with brokerage and trading services. The main operating divisions are:
- CI Global Asset Management (Formerly CI Investments),
- CI Assante Wealth Management,
- CI Direct Investing,
- CI Investment Services,
- and CI Private Wealth
Universal Savings Fund Management Ltd was established in 1965. It went public as C.I. Fund Management in 1994. BPI Financial Corp. was acquired in 1999 for $206 million. CI Fund acquired the Canadian operations of financial firm Assante Corp. for $846 million in 2003. Around the same time, it acquired Spectrum Mutual Fund Services.
CI Financial Corp.
Sun Life Financial formed Spectrum in 1987. This transaction (purchase of Spectrum) resulted in Sun Life Financial became the owner of 37% of CI. In an attempt to improve its wealth management business, Scotiabank bought this stake from Sun Life for $2.3 billion. But a conflict between CI Financial and Scotiabank management prompted Scotiabank to sell its 37% stake in CI in 2014.
It changed its name to CI Financial in 2005 to reflect its diversification. CI Financial purchased Rockwater Capital in 2007 for $250 million. CI purchased Hartford Investments' Canadian operations in 2010. In 2015, CI acquired First Asset Capital Corp to enter the ETF business.
In 2016, CI acquired 80% of Grant Samuel Funds Management to expand into Australia and New Zealand. In 2017, CI acquired Sentry Investments for $780 million and also BBS Securities Inc., which owned online brokerage Virtual Brokers.
In 2019, CI bought 49% of Redpoint Investment Management to increase its presence in the Australian market.