Fiera Capital is one of the Fastest growing Financials Period

  

Fiera Capital has been analyzed in a couple of  my other posts on Workathon (see 10/23/2017).It has grown since that blog so that now it has $139 billion in assets under management (AUM) which is an 11% increase over it's AUM in the last blog.This is a very substantial growth rate for a Canadian financial institution.In addition, quarterly revenues grew 15% over Q2 in 2017.Although adjusted EBITDA per share remained constant at $.35 per share.The increases came from the acquisition of CGOV Asset Management and Clearwater Capital.

6 Month Performance

              Fiera had a good second quarter with revenues up 15%;the main factor causing the increase was the acquisition of CGOV and Clearwater Capital.It also renegotiated the terms of it's credit agreement so that now it's  capacity is $600 million.Revenues for the 6 month period were $350 million up 22% over 2017.Earnings were ahead also by 20%.
                         Comparison of Junior Financials
   In a previous blog on Blogdaleupsome (Sept. 22,2017) 3 junior financials are compared,that is, AGF Management,Guardian Capital and Fiera Capital.Later we took a quick look at Goeasy Financial.All 3  have dropped in price from a year ago.Fiera Capital showed the biggest increase in AUM from less than $125 billion to almost $140 billion.But it issues shares to make it's acquisitions and this dilutes earnings.So adjusted EBITDA per share was  flat  since Q2 of 2017 and adjusted net earnings per share was actually down slightly.The other two showed slight increases in earnings but nowhere near the same growth.A company just recently included with this group is Goeasy Financial.It is smaller in market capitalization but has a growth rate even surpassing Fiera Capital.Down the road there may be some consolidation and Fiera and Goeasy will likely remain
      This appears to be a tough market for junior financials.AGF's price has withered as has Guardian Capital.Fiera Capital's price has also stalled.But there can be no doubt that Fiera has had the largest growth in AUM  and revenues.Fiera's problem is that e.p.s. has remained flat.In comparison, Goeasy Financial has had  good growth in revenues and earnings and it's price has flourished.
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Emera will have 7 annual dividend increases

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Emera has had 4 years of 7% annual dividend increases and has given guidance that there will be 3 more years of 5% dividend increases.Consequently it's yield now is 5.6% and is one of the highest yields of major utilities.A good part of this dividend program has been created by the acquisition of Teco Energy,a Florida utility.Even though it is true that owning Teco has caused greater investment expenditures than planned for.                                                                                               Emera's CEO says that their payout ratio will stay in the range of 45-55% of adjusted funds from operations.And that means that Emera has paid for these continuous dividend increases by  having continually increasing revenues and earnings.For example,revenues have more than doubled from 2014 to 2017 and earnings have more than doubled also in this same period. 

The Second Quarter

Second quarter net income was $.38 per share compared to $.47 in  Q2 of 2017.While e.p.s for 6 months was $1.56 compared to $1.95 in 2017.And adjusted net income for the 6 months was $313 million or $1.35 per share versus $269 million or $1.27 per share.But these are derived or accounting measurements;more importantly operating cash flow

  increased from $703 million to $767 million or almost $.35 per share for the 6 month period.

                Right from the start Emera found that it underestimated the investment required by the condition of the plant and by the regulated authorities.This year Emera says that it has $1.7 USD billion " of regulated rate base investment opportunities".That will include a $850 million USD investment to modernize it's Big Bend Power Station  in Tampa Bay, Florida and building a number of solar power stations.Also more money will be put into it's Maritime Link that connects Maine to the grid.

The Second Half 

Increases in earnings are expected in Emera Maine,Nova Scotia Power,Emera Florida and the Maritime Link.Very likely, little revenues will be generated from their new solar projects in 2018.But this blog expects operating cash flow to increase by 10% over 2017.EMA has traded in the $42-$43 price range  for most of the year and a 9-10% increase in e.p.s should send the price to the $45 area sometime in the second half.

                                             http://www.cppib.com/en/ ;https://www.zacks.com/

Aimia fields a New Offer

  Above is one of Bombardier's new CRJ-1000s.And they have become more popular recently and so has Aimia'sAeroplan loyalty program.It got an original offer from Mittleman Brothers but that does not cover the redemption obligations of Aeroplan.The new offer is from Air Canada and several of Aimia's banking partners.The value is for the cost of it's obligations plus $250 million; in total the value would be $2.25 billion.RBC has come out recently stating that Aimia should take this offer so that it can cover all of it's Aeroplan  obligations.This blog prefers an amended deal.
      The Success of Aeroplan
          Aimia has worked on the success of Aeroplan for a long time.For many years many investors thought that the only equity Aimia had was in it's Aeroplan program.And now Air Canada and it's partners want it's main program for $250 million equity and covering it's costs.In fact, one of the main problems that Aimia had is that Aeroplan was so successful that it did not need partners.No one has equity in Aeroplan but Aimia.TD and CIBC and VISA have equity in the credit card program but not in Aeroplan.The saving of the plan can be done by ensuring that Air Canada has some equity in Aeroplan.A 25 to 50% share taken by Air Canada would ensure that both partners would be working for the future success of the program.Now a $250 million payment would be greeted popularly by Aimia investors.This blog would not take a position on the equity to be acquired by Air Canada but 25% might be low and 50% might be high.Because this would save the credit card program TD and CIBC and Visa should not be too unhappy.
                   The Future of a New Improved Aeroplan
    Aeroplan was launched in 1984 and became a full subsidiary of Aimia in 2005.It generated enough income several years ago so that the stock traded at $25.And now it has 5 million customers.                             Aimia was working on improvements before the Air Canada offer.Air Canada air  miles will be able to be switched with other carriers and perhaps  have a better rewards program.More improvements will likely be coming so that the value of Air Canada's investment will increase in the future.In fact, Air Canada should insist on improvements and an increase in total customers once it has equity in the plan.Both parties would like to see Aeroplan generating enough income to raise Aimia to a fraction of it's old peak of $25 a share.And this blog suggests that the new Aimia Aeroplan contain all the customers presently in the Air Canada Aeroplan program.
                   The Exact Value
  It is clear that Aimia made a mistake by not having Air Canada have any equity at all in Aeroplan.It is also clear that Air Canada (and it's partners) now expect to get a bargain.That is why the best deal for Aimia is to have Air Canada buy some equity now and not risk that the obligations will be redeemed  in July 2020 or only partly redeemed.Primarily some kind of deal must be made to prevent any substantial redemptions but should Aimia have to lose all of it's equity earned since 2005 to do this?An initial investment now (byAugust 2)could be arranged and an agreement to review a further investment in 5 years at a new value.This would almost eliminate redemptions for a 5 year period and delay the exact valuation of Aeroplan until 2025.After all the unilateral non-renewal of a 15 year contract (July 2020) when there are no performance issues is at the least unethical and at the most illegal.             

  www.brookfield assetmanagement.com; www.canadapensionplan.com