Archive for June, 2009

Since the announcement last Friday by Manulife that the company was being investigated by the Ontario Securities Commission, share price has fallen a whopping 15 per cent. According to Mario Mendonca, of Genuity Capital, that makes Manulife cheap. “We see significant upside in the stock at current levels,” said Mendoca in a report issued before the markets opened Wednesday.

Mendonca, who was among the noisy analysts last fall urging Manulife to raise more capital, says if the S&P falls to the 700-750 level, the company would have to issue more common equity, something I’m sure CEO Donald Guloien would be loathe to do. (The S&P is currently at 900.)

Meanwhile, Mendonca has lowered his target price on Manulife from $27 a share to $25, a cautious approach given his positive view. Markets this morning opened slightly higher ahead of the Federal Reserve meeting with Manulife up 28 cents a share in the first few minutes at $20.52.

(Declaration: I hold MFC and have done so since prior to beginning my research on the book early in 2008. With the exception of dividend reinvestment, I conducted no trades in the stock.)

UPDATE: A week later, Mendonca downgraded Manulife to a HOLD, the same as saying: sell. Mendonca said that Manulife’s message was so “nuanced” (translation: confusing) he had no choice but to reverse his field. With no new information issued by the company, the analyst’s conclusion was unusual to say the least. But it wasn’t nuanced; it was a clear 180-degree turn.

Newly appointed CEO Donald Guloien continues to put his stamp on Manulife with the appointment of Michael Bell as Chief Financial Officer. Bell held a similar role for the last six years at Cigna Corp., a Fortune 200 provider of employer-sponsored health, accident and disability insurance. Bell replaces Peter Rubenovitch, one of Dominic D’Alessandro’s earliest hires in 1995.

When D’Alessandro arrived as CEO in 1994, he didn’t like a lot of what he saw in the executive ranks, and set out to replace most of the senior officers. Guloien doesn’t have that issue, but he will be presented with opportunities such as is the case with Rubenovitch who is retiring.

Just as well. Every new CEO needs his or her own people in place. It’s not that the predecessor had the wrong people, or that loyalties can’t be transferred, it’s normal human nature to want your own team. With David Paterson newly ensconced in public affairs, this is Guloien’s second appointment in a month.

Meanwhile, Guloien is also making capital strength a first priority. Even though the regulatory-mandated Minimum Continuing Capital and Surplus Requirements (MCCSR) are “near the highest levels in our history,” according to Guloien, he wants an even higher number. “We will embark on a plan to increase capital to fortress levels,” Guloien said in a statement. Moreover, to do so, he wants to avoid issuing more shares, and that’s good news for current shareholders who don’t want the value of their holdings diluted.

In other developments, the Ontario Securities Commission has told Manulife it has come to the preliminary conclusion that the company failed to disclose, on a timely basis, information about the sale of its guaranteed investment products. On the face of it, such inaction by Manulife seems unlikely, and indeed, the company says it was up-to-date with all filings. The OSC will be investigating further. Stay tuned.

As the author of a dozen books, I often get asked how to write a book. One such request came recently from The Canadian Journalism Project. Here’s a link to the outcome.

When Donald Guloien succeeded Dominic D’Alessandro as CEO of Manulife last month, Warren Thomson was promoted to replace Guloien as chief investment officer. In turn, Jean-Francois Courville has just been named to replace Thomson as CEO of MFC Global Investment Management, putting him in charge of about $100 billion in client assets.

Courville has an interesting connection with Guloien. Both are members of the Young Presidents’ Organization, a worldwide group of business leaders who became presidents before they turned 40. In Guloien’s case, he was invited to be a YPOer in 1993, when he was president of Manulife America. At the time, corporate members were uncommon. Most YPOers were entrepreneurs or members of the “lucky sperm club” who’d inherited their roles in family businesses.

Courville joined Manulife in 2007 from State Street Canada where he’d been president and CEO for two years, a position that met the criteria for the exclusive YPO admission. Guloien and Courville are the only YPOers among Manulife’s 24,000 employees.

YPO has international meetings where members meet political leaders and attend seminars held in luxurious hotels, but the most useful aspect is the local chapter. Each member participates in small discussion groups that are like group therapy where everything is confidential and members help each other solve work-related problems.

YPOers used to be kicked out of the elite organization at age 50. For some, the experience was traumatic, commemorated by a rocking chair with their name on it. “I’d gotten mentally adjusted to the fact,” Guloien told me. “A couple of years away it was sort like one of those big things, like kids moving away. I was thinking, ‘I’m getting old.’ But I got mentally ready for it and thought, ‘This is a transition.’”

Just as Guloien was about to turn 50 and get the rocking chair, YPO changed the rules. He was allowed to stay for another five years.

As for J-F, as everybody calls Courville, at 41 the rocking chair isn’t even a blip on the radar screen of his life. He’s a decade younger than Guloien and it’s not too soon to say that he’s a possible successor as CEO of Manulife after Guloien has had his ten-year run.

“Manulife” was featured in a half-page Amazon.ca ad in the Globe and Mail this morning. There I was lined up with three far more famous authors: Michael Ignatieff, Issy Sharpe and Larry King.

We’re all discounted, just in time for Father’s Day.

You’re one click away. See “Buy this book” above.

Our son Mark, CEO of Wellington Financial, and his wife, Andrea Whiting, a vice-president at BMO Financial Group, hosted a lively reception at the august Toronto Club last night to to celebrate the publication of my new book about Manulife. Other family members on hand were our daughter, Alison, a professor of art history at McMaster, and her husband, Ken McLeod, a professor of music at the University of Toronto; Andrea’s parents, Donna and David Whiting, of Erin, Ontario; and, most importantly, my wife Sandy, who as the book’s dedication indicates, “Makes everything possible.”

First to arrive at the early evening event was Hal Jackman, former lieutenant-governor of Ontario. He was soon joined by sixty guests who included Madam Justice Mary Lou Benotto of the Superior Court of Ontario and her husband, Douglas Stoute, the Very Reverend Dean of Toronto; John Honderich, chair of Torstar Corp.; Ken Rotman, co-chief executive officer and managing director, Clairvest; Phil Deck, chairman and CEO of MKS Inc.; Wanda and Dick O’Hagan, who has worked for two prime ministers, Lester Pearson and Pierre Trudeau; my literary agent, Linda McKnight of Westwood Creative Artisists, and my publisher, Andrea Magyar, of Penguin Canada.

Also in attendance were Roy Firth, executive vice-president, Individual Wealth Management, Manulife; The Reverend Canon Andrew Sheldon of All Saints’ Kingsway and his wife, Amy Crawford; Frank Potter, a director of Canadian Tire and several other companies; lawyers Rene Sorell of McCarthy Tetrault and Neill May of Goodmans; among the journalists were Andy Willis of the Globe and Mail, BNN’s Howard Green, Noel Hulsman, editor, Report on Small Business, and Sean Pasternak of Bloomberg.

Other friends and well-wishers included Elaine Solway, President, Garden Club of Toronto; Menna and Bob Weese, vice-president, Government and External Relations, GE Canada; Catherine Nicol, Regional Affairs Director for Finance Minister Jim Flaherty; Joe Martin, Director of Canadian Business History at the Rotman School of Management, a trio of medical men, Dr. Jim Kiproff, Dr. Jim Cullen and Dr. Bruce Rowat; as well as three from various arms of RBC: Tony Soares, Julia Clubb and John Harding.

The only faux pas of the evening came from yours truly. In my brief remarks I mentioned the first book I wrote, The Moneyspinners, and how Don Matthews had hosted a similar reception in the very same location in 1963. Matthews, the developer who successfully took Prime Minister Jean Chretien to court, was also on hand last night.

After my speech was finished, several people sidled up and said, “Did you mean to say 1963?” Unlike some of life’s blunders, I was able to return to the podium and correct myself immediately. I’ve been writing books for a long time, but not that long. The first of my dozen books came out in 1983, not 1963.