# Power Corp. (POW.TO) vs Power Financial (PWF.TO)



## gibor365 (Apr 1, 2011)

As an option was thinking to buy POW or PWF ... what do you think about those two?


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## Financial Cents (Jul 22, 2010)

@gibor, love them both. I own PWF. 

I own PWF over POW not for any large set of reasons, but I do like the fact that I have more exposure to GWO and IGM companies through PWF; the need for insurance is not going anywhere anytime soon.

http://www.myownadvisor.ca/


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## Echo (Apr 1, 2011)

No preference really, they both look like decent options right now. To me, insurance looks like a good value buy right now but I like SLF the best out of the industry choices.


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## canadian_investor (Jul 4, 2011)

Does anyone know why Power Financial PWF has been steadily sliding for many weeks now? I didn't think they have much exposure to Greek debt.
Cann't find any significant reasons but PWF is sliding cent by cent every day and has lost over $3 YTD.
is this a buying opportnity or is it a deeper reset of the value of this company?


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## Oldroe (Sep 18, 2009)

Power owns Pargesa Sa that controls some of the largest European company's.
With this exposure to the euro and on going financial problems Greece ect. I believe Power corp/fin have these problem priced in.

I own both and will be buying if and when it gets a little nastier for the euro.


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## m3s (Apr 3, 2010)

Reposez en paix, M. Desmarais. I was always curious exploring the backcountry, and watching his planes discreetly come and go. Who knows how much the world was shaped deep in the Charlevoix forest. He conglomerated quite the list of companies over the years.


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## My Own Advisor (Sep 24, 2012)

Has come a long ways from a bus company in Sudbury...
http://www.cbc.ca/news/business/paul-desmarais-dies-the-man-who-was-power-corp-dead-at-86-1.1931144

A Canadian business icon.


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## HaroldCrump (Jun 10, 2009)

Really sad to hear of his demise.
Power Financial has rewarded me well, both in terms of capital gains as well as a dividend yield.
I don't hold it right now, but I did very well with it between 2009 and 2012.


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## My Own Advisor (Sep 24, 2012)

Why did you sell Harold? Got enough gains out of it?


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## HaroldCrump (Jun 10, 2009)

My Own Advisor said:


> Why did you sell Harold? Got enough gains out of it?


Yes, I figured it was about fairly valued at $30 or so last year.
I had bought in the mid teens in early 2009 and 2x gain was good enough, not to mention the nice dividend.

I saw better opportunities in other companies in the same sector, namely, Sun Life and Manulife, so redirected the capital into those.


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## My Own Advisor (Sep 24, 2012)

Smart. I still hold PWF. 

I didn't get MFC at the bottom but not bad. 

Held SLF for a few years now, held all the way down and held all the way back up. I guess the good thing is, DRIPping the entire time.


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## humble_pie (Jun 7, 2009)

one would think this is an early 18th century palace in the heart of france, right?

no, it's just a l'il country cottage belonging to the late Paul Desmarais, patriarch of the power corporation complex, in rural Sagard, northeast of quebec city.

personally i think a building like this, in the location where it is, is an affront. It's a pompous piece of imitation disney world plunked down in the middle of a wild, unpopulated hilly region in mideastern quebec.

in or near a big city, an imitation palace would be fine, if owners would insist to build it. But far out in a rough frontier-like region like Sagard it's kind of a monstrosity. The architectural references should have been early new france, imho. Quarried stones, lumber, pine, trapping, furs.

i wonder what the younger generation desmarais will do with this huge white elephant as the years & the generations pass. Can you imagine the cost of upkeeping just those french garden parterres today? you'd need 2-3 full-time resident groundskeepers ...

http://www.idesignarch.com/billionaire-paul-desmarais-stunning-estate/

.


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## Mall Guy (Sep 14, 2011)

well, another calls it "For Harb'r' . . . employment in a very rural area ???


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## hboy43 (May 10, 2009)

What is wrong with these two? I don't see anything obvious, so added 890 POW shares at just under 29. PE about 7, yield comparable to the banks, and share price gone nowhere in a decade or so. Looks like classic value and huge conglomerate discount to me.


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## agent99 (Sep 11, 2013)

hboy43 said:


> What is wrong with these two? I don't see anything obvious, so added 890 POW shares at just under 29. PE about 7, yield comparable to the banks, and share price gone nowhere in a decade or so. Looks like classic value and huge conglomerate discount to me.


We have owned both of them for quite a while in registered accounts. They have never done much (no gain in 10 years), but the dividends flow in. I should use them as part of our RRIF withdrawal next year. They would be better off in a taxable account. 

According to this site, Power is the better buy:
http://www.fool.ca/2016/02/16/power-corporation-of-canada-the-yield-is-not-the-reason-to-own-it/

I have owned these as well as the major banks since Oct 2003. Did a check of *Total Annualized Return* using Longrundata.com

POW - 6.25%; PWF - 7.15% and as a comparison, RY - 11.28%; XIC - 7.24%

Really don't see much point in holding these. We just have them to provide some diversification. Consider them bond-like equities.


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## humble_pie (Jun 7, 2009)

what may have held POW down is its historic large holding in Pargesa, a belgian-dutch-swiss holding company that owns, it says somewhat mysteriously, "significant positions in large companies based in europe," including the banque Lambert of brussels.

european stocks have fared badly of late. European financial stocks have been harder hit than north america.


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## hboy43 (May 10, 2009)

agent99 said:


> POW - 6.25%; PWF - 7.15% and as a comparison, RY - 11.28%; XIC - 7.24%
> 
> Really don't see much point in holding these. We just have them to provide some diversification. Consider them bond-like equities.


Well, on "past performance ..." and reversion to the mean, plus value and conglomerate discount as already noted, this is exactly the kind of security I like to hold. Also, the banks have made a ~12% run the last month that POW did not participate in, so here I went.

Hboy43


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## My Own Advisor (Sep 24, 2012)

Thanks for sharing that link HP. That's quite the palace!!!!!!

POW and PWF are very bond-like.


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## londoncalling (Sep 17, 2011)

I currently have zero insurance companies in my portfolio. I was expecting low interest rates to remain constant since 2008. Thus far I was right. That doesn't mean not owning an insurance co was the right decision. For the sake of proper allocation and lower volatility it would make sense to own an insurance co. Still trying to figure out how to evaluate them. Also trying to figure out which own to own. I struggled with this for BAM and its different entities. In both cases I chose to do nothing as it was the easier choice at the time. Perhaps it is a question of practical over perfect. As of this moment I am leaning towards PWF.


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## Market Lost (Jul 27, 2016)

I wrote a few naked puts for $28 on this stock, but since then the price action has been pretty ugly. I like the dividends, and I know the company has some good history, but I'm not sure I like the last couple of quarters.

Any thoughts on whether to take the shares or close the contracts.


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## humble_pie (Jun 7, 2009)

^^

i have held POW for a profit in the past & at that time there was adequate premium in the options.

recently i gave re-entry a small thought but the fact is the giant holdings in european financials keep turning me away.

your position is at a loss, i take it? would you be able to roll the puts forward in time & down in strike price? if necessary you would have to repeat again & perhaps even again as time passes, in order to keep rescuing the position from assignment.

i do this kind of operation when options go wrong. The idea is that the original premium is the only money i am ever going to make from those mothers. Thereafter, it becomes a question of rolling forward to more beneficial strike prices at no cost - sometimes this manoeuvre can even be done as a credit spread - in order to prevent assignment of the now-unwanted stock. Or (with calls) in order to prevent assignment of the now-desirable stock.

best of luck with this

.


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## Market Lost (Jul 27, 2016)

humble_pie said:


> ^^
> 
> i have held POW for a profit in the past & at that time there was adequate premium in the options.
> 
> ...


Thanks for the reply. It's a small position of only four Sep $28 contracts, and it would be easy to roll them forward, which was something I was thinking of. My other thought was to take the shares and immediately write a call to lower my ACB, but you have a point with the European financials. Seems like rolling forward at a lower strike would work now that the price has stabilized.


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## humble_pie (Jun 7, 2009)

^^

there look to be very attractive roll-forward-&-down opportunities in POW puts. Something like the april 27 puts is as good as it gets. It's a credit spread that would take your 4 puts out of harm's way while earning a few credit dollars on the side.




Market Lost said:


> My other thought was to take the shares and immediately write a call to lower my ACB.



this is the standard strategy that gets preached quite a lot. It's not a strategy i believe in. Because stock prices can melt down so much faster than they ever inched & worried their way upward in the first place.

a stock that might have taken a year to creep from 60 to 90 can collapse to 30 & woe betide any believer who sold $60 puts as it plummeted. Unhappy examples are acq, vrx, cxr & other downward dogs.

a party who sold an acq 50 ot 60 put & who subsequently accepted assignment, now has no calls to sell. The only calls being publicly traded have strikes so low he will face a massive capital loss if exercised. Bref, there's nothing he can do except live with the downward dog of a stock or take the crippling loss.

my religion goes that, when selling puts, one wants to anticipate plunges & move puts out of harm's way ASAP.

.


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## hollyhunter (Mar 10, 2016)

Technicals are showing good signs of upside potential. Looking for breakout at $28.23 with a short term target of 32.97.


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## like_to_retire (Oct 9, 2016)

Looks like a big shakeup at Power Corp. 

I see POW up about 7.5% and PWF up about 10%

Desmarais brothers to retire as Power Corp. co-CEOs as company restructures.

Power Corporation and Power Financial Announce Reorganization, Simplified Corporate Structure and Refocused Strategy.

Added: After reading the release, I see a nice 10.49% dividend increase for POW also. It also seems like they're moving the dividend dates by 2 months.

_"The Board of Directors of PCC intends, following the Reorganization, to increase the quarterly dividend paid to holders of PCC Subordinate Voting Shares and Participating Preferred Shares to 44.75 cents per share and move forward the regular quarterly payment dates by approximately two months, commencing with the dividends to be paid in the second quarter of 2020. The decision to declare any dividends, including the amounts and dates of such dividends, is subject to approval by the Board of Directors of PCC."_

ltr


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## OptsyEagle (Nov 29, 2009)

even drove up Great West Life over 2%. I know these multi-corporate structures are a real pain to figure out but still surprising it would have such an effect on a company at the bottom of the structure. GWO is easy to figure out. It is just GWO. Lots of owners but public companies will always have that.


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## agent99 (Sep 11, 2013)

like_to_retire said:


> Looks like a big shakeup at Power Corp.
> 
> I see POW up about 7.5% and PWF up about 10%
> 
> ...


Just saw that on BMOIL. We own both POW and PWF in RRIFs. Never paid much attention to them. I was surprised to read how good their performance has been under the Demarais brothers. 


> After 23 years as Co-Chief Executive Officers of PCC, Paul Desmarais, Jr. and André Desmarais have decided to retire from their roles.
> >>>> Since their appointment, the annualized Total Return to Shareholders, including dividends and capital appreciation, has been 11.7% and 13.1% for each of PCC and PFC, respectively, compared to 7.7% for the S&P TSX Composite index.


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## agent99 (Sep 11, 2013)

agent99 said:


> Just saw that on BMOIL. We own both POW and PWF in RRIFs. Never paid much attention to them. I was surprised to read how good their performance has been under the Demarais brothers.


We also have small amount in PWF.PR.E - Sounds like they will be making an offer to buy back 12% of pfds as part of the arrangement? Offer only to come in January.


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## OptsyEagle (Nov 29, 2009)

Companies like the Power Group are sometimes misunderstood. It's not that they cannot come up against a slower growth future, like many other companies, but with financial companies like the Power Group, who generate a tremendous amount of cash that is not required to maintain their regular businesses, they end up with a very large number of options to build value for shareholder, outside of their normal business operations.

Case in point, they just completed a $5 billion share repurchase not long ago. Now they are buying back preferreds. Who knows what tomorrow will bring, but these guys will have the cash to make some move somewhere and remember, the Desmarais are just retiring. They are not selling their stock.


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## like_to_retire (Oct 9, 2016)

I've owned POW for a long time, and I've always considered it basically dead money that I collect a very nice and safe dividend from. 

The share price is flat forever, but the 5% dividend is always appreciated. 

Over the years, I've batted around dumping it when I think I have a better idea, but then I regain my composure and set it back on the shelf.

If you look at the attached chart of POW without dividends (share price only) you can see how anemic it has been forever, while it pumps out its reliable dividend.

Then if you look at the second chart that includes dividends, the total return ain't that bad. Still not as good as the index, but it's in the running.

Now I'm interested to see what will transpire in the next decade. I'm kinda glad I held on.


POW without dividends - share price since Jan 2005








POW including dividends vs XIU with dividends since Jan 2005








ltr


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## agent99 (Sep 11, 2013)

like_to_retire said:


> Then if you look at the second chart that includes dividends, the total return ain't that bad. Still not as good as the index, but it's in the running.


As always, it depends on the timeframe. As they said in the press release, "11.7% and 13.1% for each of PCC and PFC, respectively, compared to 7.7% for the S&P TSX Composite index". Since 1995.


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## like_to_retire (Oct 9, 2016)

agent99 said:


> As always, it depends on the timeframe. As they said in the press release, 11.7% and 13.1% for each of PCC and PFC, respectively, compared to 7.7% for the S&P TSX Composite index. Since 1995.


Yep, for sure, and they had to go back 25 years to make it look good.

Come on, we all know about POW/PWF. It's dead money that pays a dividend. 

If you need to go back 25 years to show a profit, there's a problem in my book. I ain't gonna live that long.

Historically, if someone wants 0% capital gain and a 5% dividend, they know where to go. It's a good deal.

Let's see what they can do with this new structure, and the Desmarais brothers at arms length.

I'm hopeful. What do others think?

ltr


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## agent99 (Sep 11, 2013)

like_to_retire said:


> Yep, for sure, and they had to go back 25 years to make it look good.
> 
> Come on, we all know about POW/PWF. It's dead money that pays a dividend.


True that neither stock has been too exciting. That's why I hardly ever looked at either. Just nice stable dividend payers with preferred like characteristics.

I bought POW a bit earlier than 2005 (Early 2003) - it would have beaten the index on Total Return basis by about 2% had I re-invested the dividends in same stock (I didn't!) I think I bought PWF later - it hasn't done much, except pay nice dividends. The PWF pfd we have pays 5.5% - so not much different performance than the stock.


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## leeder (Jan 28, 2012)

Would this be considered a deemed disposition of PWF common shares when this reorganization occurs and acquisition of POW shares?


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## AltaRed (Jun 8, 2009)

I sold PWF about 6 weeks ago after holding many years. Bad timing but that is how the dice rolls. I can't stand anything that does not have solid EPS growth and a climb in both share price and dividend growth. Total Return is the name of the game in common equity.

Think there will a sustained step up in valuation due to simpler structure but that is just re-arranging the spots on the leopard. The business is still the same when it is all over. More aggressive share buybacks may be all that changes EPS numbers.


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