Founded by the Demarais family, Power Corp of Canada (PWCDF, PWF.TO) is a powerhouse Canadian financial company unfamiliar to most investors. However, it offers stable exposure to Canadian and European markets. Power Corporation of Canada is a diversified international management and Canadian holding company. Through its subsidiary, Power Financial Corporation, it has interests in companies in the financial services sector in Canada, the United States and Europe. Through its subsidiary, Square Victoria Communications Group, it holds interest in companies from the communications and media sector. Power Corporation also holds and actively manages a portfolio of investments in the United States, Europe and Asia. The company manages assets of $1.22 trillion.
Power Corp’s largest investment is a 68% owner of Power Financial. PWCDF also owns a communications and media firm along with various other investments. The investments include private equity positions in companies in Europe, the US, China and the Pacific Rim.
The company reaches 12 million Canadians and serves about 1 in every 3 Canadian households, a statistic that makes Power Corp the envy of most US financial firms.
Power Financial, its largest holding, is a financial services company involved in insurance, money management, and European equity investments. Power Financial offers some well-known financial services brands, such as Canada Life, Great-West Life, Irish Life, London Life and Putnam Investments. ICM Financial offers wealth management services along with commercial employee benefit packages. Power Financial, through its interest in Pargesa (PRGAF, PARG.SW), owns about 12.5% of Groupe Bruxelles Lambert (GBLBF, GBLB.BR.), itself a holding company with concentrated equity investments in major European companies. For example, GBLBF owns a 3.6% interest in the French oil giant Total (TOT) and represents about 20% of GBL’s book value.
Power Corp pays a $1.04 annual dividend for a current 4.8% yield. Unlike many of its US counterparts, Power Corp improved its long-term value during the financial crisis of 2007 to 2009 by earning their dividends and maintaining their payouts. However, like much of the financial sector, Power company stocks slid by about 50%. PDWCF raised their dividend by 7% earlier in the year.
As interest rates turn up in the US and Canada, insurance companies are expected to be positive benefactors of higher interest rate spreads. As the US Dollar weakens against the Canadian Loonie, PWCDF investors will benefit as well though higher share prices and dividends. However, as a thinly traded ADR, limit orders should be utilized for all buys and sells.
Investors seeking greater exposure to foreign financial firms should review Power Corp.
Thanks for reading and this article first appeared in the Oct issue of Guiding Mast Investments. George Fisher