Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: berkshiremystery on July 27, 2013, 07:48:42 AM

Title: ELF.TO - E-L Financial Corp. Ltd.
Post by: berkshiremystery on July 27, 2013, 07:48:42 AM
RE: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/djco-daily-journal-corporation/msg124486/#msg124486

After I logged into the board in the last two days I got a little tsunami wave of private IM responses about my previous post in the DJCO thread about my mentioned little reclusive Canadian gem, a miniature baby-type of Fairfax. The company owners have high integrity and here at the board it was mentioned only once. They are totally reclusive and shun the public light,... the company owners aren't interested in any publicity, thus the shares almost have no liquidity, trade rarely and are still relative way below book value. And this might also be the crucifix of the problem that knowbody from the most knowledgable members here ever discusses this company. I would guess maybe 5-10 people here at the boards are aware of them, of course Norman Rothery, Francis Chou and also Third Avenue know them. This company, an insurance company could probably be mentioned right after Berkshire, Fairfax, Markel and Leucadia. They are E-L Financial Corp of Toronto, Canada, and are only a 5 minute walk away from Fairfax headquarters. The company is run by the reclusive Jackman family from Rosedale, Toronto.
 
I might finally start the thread about

(http://s17.postimg.org/vd2xi7t17/image.jpg). 
E-L Financial Corporation Limited.   (ELF.TO)
the little miracle at 165 University Avenue in Toronto

- Since 1969, the company’s book value has risen more than a hundredfold and over more than four decades it has suffered only four money-losing years.

- The Toronto-based company doesn’t have a website. It lacks a public relations department.

- E-L shares trade infrequently because the wealthy Jackman family of Rosedale, Toronto and a few institutional investors own most of the shares.

- Other value investors that are aware of this company include Third Avenue Mgmt. and Chou Associates, according to Bloomberg.

Source:

E-L Financial's stock price discount a tempting value play
May 01, 2012 (Update Sep. 10, 2012) The Globe & Mail
http://www.theglobeandmail.com/globe-investor/investment-ideas/e-l-financials-stock-price-discount-a-tempting-value-play/article4104087/
with opinions by our fellow board member Norman Rothery.

E-L Financial Corporation (ELF.TSX) @ The Globe & Mail
Financials, Quotes...
http://www.theglobeandmail.com/globe-investor/markets/stocks/financials/?q=ELF-T

-----

E-L Financial Corp. Ltd. (ELF.TO) -Toronto @ Yahoo! Finance
http://finance.yahoo.com/q?s=Elf.to&ql=1

E-L Financial Corp. Ltd. (ELFIF) - USA OTC Markets @ Yahoo! Finance
http://finance.yahoo.com/q?s=Elfif&ql=1


(http://s22.postimg.org/pnva17u9t/image.jpg)
Headquarters of E-L Financial at 165 University Avenue, 10th Floor, Toronto, ON M5H 3B8

(http://s24.postimg.org/mgmg5eu91/image.jpg)

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(http://s9.postimg.org/ttwnejkzj/image.jpg)

(http://s23.postimg.org/t3uc123jv/image.jpg)
Source: http://www.sedar.com/FindCompanyDocuments.do?lang=EN&page_no=1&company_search=E-L+Financial+&document_selection=0&industry_group=A&FromDate=26&FromMonth=10&FromYear=1997&ToDate=26&ToMonth=04&ToYear=2013&Variable=Issuer

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- E-L Financial's net equity value per Common Share at March 31, 2013 was $790.90.
     http://finance.yahoo.com/news/e-l-financial-corporation-limited-154021372.html
  The current market price per Common Share at July 24, 2013 was $645.
     http://finance.yahoo.com/q/hp?s=ELF.TO+Historical+Prices

Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: hellsten on July 27, 2013, 08:15:43 AM
Thank you for posting. I will definitely have a closer look at ELF.TO. Stock price is up 60% in one year, so I guess I'm a bit late to the party :'(
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: ajc on July 27, 2013, 08:26:37 AM
Thanks, berkshiremystery.
Now I'm just hoping it doesn't end up on the front page of some well-known business paper in the Sunday edition!

(DJCO up 10% in 3 days, I'm still slowly bashing my head against the desk for having bumped your post on that...)
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 27, 2013, 08:29:36 AM
Thanks, berkshiremystery.
Now I'm just hoping it doesn't end up on the front page of some well-known business paper in the Sunday edition!

(DJCO up 10% in 3 days, I'm still slowly bashing my head against the desk for having bumped your post on that...)

I have researched probably over 50-100 web links about them,....
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 27, 2013, 08:38:55 AM
Since E-L Financial in Toronto doesn't maintain a website, someone might only get the annual reports in hardcopy form directly at:

E-L Financial Corp. Ltd.
165 University Avenue
10th Floor
Toronto, ON M5H 3B8

Phone: 416-947-2578
Fax:     416-362-2592

-----
Or from the Canadian type of EDGAR database at SEDAR.com

Company Search:  E-L Financial
Industry Group: All
Document Selection: All   
Sorted: By Issuer
Date From: October 26 1997
Date To: April 26 2013

Search results 1-100

Annual Reports PDF-files ----->>>>

http://www.sedar.com/FindCompanyDocuments.do?lang=EN&page_no=1&company_search=E-L+Financial+&document_selection=0&industry_group=A&FromDate=26&FromMonth=10&FromYear=1997&ToDate=26&ToMonth=04&ToYear=2013&Variable=Issuer

-----

SEDAR.com - Search for Canadian Public Companies
Main Search Form
http://www.sedar.com/search/search_form_pc_en.htm


======

Empire Life annual reports --->>>
http://www.empire.ca/consumer/about-us/annual-report/en/

Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: NormR on July 27, 2013, 08:46:08 AM
Shhh, stop hyping my stocks.   ;)

It will be interesting to see what they do with the cash they get from The Dominion.  Also, the stock split at Algoma Central was unexpected.  I wonder if we might see one at the ELF.
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 27, 2013, 08:57:18 AM
Shhh, stop hyping my stocks.   ;)

It will be interesting to see what they do with the cash they get from The Dominion.  Also, the stock split at Algoma Central was unexpected.  I wonder if we might see one at the ELF.

I know,... they will get something like $1.1 billion...

Travelers to buy insurer from Canada's E-L Financial for $1.1 billion
Reuters - June 10th, 2013
http://finance.yahoo.com/news/travelers-buy-insurer-canadas-e-134954682.html

U.S. insurer Travelers Co Inc (TRV.N) said it would buy Dominion of Canada General Insurance Co from E-L Financial Co Ltd (ELF.TO) for about $1.1 billion to boost its presence in Canada.

=============




Of course their subsidiary companies Dominion of Canada General Insurance Co and also Empire Life maintain some web presence with some interesting company information also about ELF.

---

Empire Life @ Wokipedia.org
http://en.wikipedia.org/wiki/Empire_Life

The Empire Life Insurance Company (Empire Life or Empire Vie) is a Canadian life insurance and financial services company with its headquarters in Kingston, Ontario, Canada. It was incorporated in 1923 and is a subsidiary of E-L Financial Corporation Limited of Toronto, Ontario, Canada.

In 1968, E-L Financial Corporation Limited [2] acquired 94% of the outstanding shares of Empire Life. In 1987, E-L Financial acquired The Montreal Life Insurance Company, as well as the life insurance operations of The Dominion of Canada General Insurance Company, and adopted the marketing name of Empire Financial Group.


---

Empire Life & E-L Finincial Corp Ltd. Family Tree Chart of Corporate Structure....
http://www.empire.ca/consumer/about-us/our-company/corporate-structure/en/

(http://www.empire.ca/resources/images/assets/FamilyTreeEN.jpg)
Link source: http://www.empire.ca/resources/images/assets/FamilyTreeEN.jpg

Company History Overview ...
http://www.empire.ca/consumer/about-us/our-company/our-history/en/index.html




Significant events in Empire Life history
---------------------------------------------
2011 New visual identity introduced
2009 Surpassed $8.5 billion in assets under management
2008 Launch of Class Plus—segregated fund with guaranteed minimum withdrawal benefit (GMWB)
2008 The Company celebrates 85th anniversary
2007 In October, surpassed $1 billion in gross segregated fund sales (year-to-date)—a company record
2006 Marketing name change from Empire Financial Group to Empire Life
2002 Amalgamation with Concordia Life Insurance Company
2000 Assumption of annuity and registered retirement income fund (RRIF) block of policies of Coopérants, Mutual Life Insurance Society
1997 Acquisition of Colonia Life Insurance Company (name changed to Concordia Life Insurance Company)
1997 Assumption of deferred annuity block of policies of Allstate Life Insurance Company of Canada
1995 Agreement to administer and assume deferred annuity and RRIF block of policies of Confederation Life Insurance Company
1993 Acquisition of non-participating individual insurance policies of The Citadel Life Assurance Company
1992 Acquisition of a block of group business of The Metropolitan Life Insurance Company
1987 E-L Financial Corporation Limited brings together through merger and acquisition activities The Empire Life Insurance Company, The Montreal Life Insurance Company and the life insurance section of The Dominion of Canada General Insurance Company; adopt marketing name of Empire Financial Group
1970 Life insurance business in-force grows to $1 billion
1968 E-L Financial Corporation Limited is formed as holding company of Empire Life
1963 Empire Life acquires first computer
1957 Empire Life begins selling Group products
1936 Merger with Mutual Relief Life Insurance Company; Head Office moves from Toronto to Kingston, Ontario
1934 Acquisition of The Canadian Order of Odd Fellows insurance portfolio
1929 Merger with The Commonwealth Life and Accident Insurance Company
1926 The Company expands outside Ontario by opening a Branch Office in British Columbia
1923 The Empire Life Insurance Company is founded by Milton Palmer Langstaff in Toronto, Ontario

=====

Dominion of Canada General Insurance Company @ Wikipedia.org
http://en.wikipedia.org/wiki/The_Dominion_of_Canada_General_Insurance_Company

-----

Dominion of Canada General Insurance Company
http://www.thedominion.ca/
http://www.thedominion.ca/Mobile/Contact-Us.aspx
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: Liberty on July 27, 2013, 09:29:41 AM
Looked at them a couple years ago but passed. Maybe I shouldn't have  :-\
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: ajc on July 27, 2013, 09:32:49 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 27, 2013, 10:31:01 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

Nope, I haven't been to any AGM's and I don't know the Jackman's personally,
but if you search on the web about them, you will find a lot of info about them.

----

E-L Financial is owned by the Jackman family from Rosedale in Toronto.

List of Canadians by net worth @ Wikipedia.org
http://en.wikipedia.org/wiki/List_of_Canadians_by_net_worth
Richest Canadians (2011 statistics)
No. 58  Hal Jackman  $1.06 billion



"Hal" Jackman"
Henry Newton Rowell "Hal" Jackman @ Wikipedia.org
http://en.wikipedia.org/wiki/Hal_Jackman

Henry Newton Rowell "Hal" Jackman, OC, O.Ont, CD (born June 10, 1932 in Toronto, Ontario), served as the 25th Lieutenant Governor of Ontario from 1991 to 1997. He is the son of former Member of Parliament Harry Jackman and philanthropist Mary Rowell Jackman. His mother was the daughter of another former Member of Parliament, Newton Wesley Rowell. His sister, Nancy Ruth, is a philanthropist who was appointed to the Senate in 2005.

(http://www2.macleans.ca/wp-content/uploads/2008/12/ted19.jpg)
Source:http://www2.macleans.ca/wp-content/uploads/2008/12/ted19.jpg

and  @ http://www2.macleans.ca/2008/12/09/ted-rogers/

-----

His father was...

Harry Jackman
Harry Jackman @ Wikipedia.og
http://en.wikipedia.org/wiki/Harry_Jackman

Henry Rutherford "Harry" Jackman, OC (November 5, 1900 – November 22, 1979) was a Canadian politician and successful entrepreneur. He represented the electoral district of Rosedale in the Canadian House of Commons from 1940 to 1949.

In business, Jackman built the Empire Life group of financial service companies during the Great Depression.


-----

They have a family foundation that is donating a lot to Toronto art institutions and Hal's daughter Victoria Jackman is the executive director.

Hal Jackman Foundation
http://www.haljackmanfoundation.org/

Victoria Jackman (Executive Director)
http://www.haljackmanfoundation.org/contact-us/

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Design Exchange Black and White gala
Oct. 30, 2010 - The Globe & Mail
http://www.theglobeandmail.com/news/toronto/design-exchange-black-and-white-gala/article1370824/
Gala honouree designer Bruce Mau with Victoria Jackman, executive director of the Hal Jackman Foundation

-----

Victoria Jackman (executive director)
http://www.gettyimages.de/detail/nachrichtenfoto/executive-director-of-the-hal-jackman-foundation-nachrichtenfoto/83595753


-----

Great Spaces: inside the home of Victoria Jackman and Bruce Kuwabara
Toronto Life
http://www.torontolife.com/style/toronto-homes/2010/12/07/great-spaces-inside-the-home-of-victoria-jackman-and-bruce-kuwabara/

-----

Birth of a Museum

(http://Bata Shoe Museum) @ Bloor Street West, Toronto
http://www.batashoemuseum.ca/media/background/birth_of_museum.shtml

Mrs. Sonja Bata, Founding Chairman of the Bata Shoe Museum, and The Honourable Hal Jackman, then Lieutenant-Governor of Ontario, cutting the cake at the public opening of the Museum. May 6, 1995.

=====


An Hour with the Honourable Hal Jackman
March 7, 2013 Interview for Dolce Mag
http://www.dolcemag.com/successstories/an-hour-with-the-honourable-hal-jackman/13526

Quote: “I have no regrets about anything I've done. I think I'd do it all the same ”

-----

Hal Jackman: Too much gloom
Dec 30, 2008 Interview
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=a5cf8087-2722-4be5-aca1-23040b3d8925

-----

Black missed his calling: Jackman
National Post
http://www.financialpost.com/story.html?id=d6226a8a-c05c-497a-b928-8b44c2faf86c&k=89554

-----

Henry N. R. Jackman gives largest donation in the history of the Faculty of Law
University of Toronto
http://news.utoronto.ca/henry-n-r-jackman-gives-largest-donation-history-faculty-law

-----
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: constructive on July 27, 2013, 10:37:02 AM
Since 1969, they have increased book value by 12.2% annualized, correct?

Very good but not quite in the league of Berkshire or Fairfax. On the other hand, considering their size and new cash opportunity they might be positioned as well as Berkshire and Fairfax to hit 12% in the future.
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 27, 2013, 10:52:02 AM
Since 1969, they have increased book value by 12.2% annualized, correct?

Very good but not quite in the league of Berkshire or Fairfax. On the other hand, considering their size and new cash opportunity they might be positioned as well as Berkshire and Fairfax to hit 12% in the future.

They had in 1969 net common shareholders equity of      21,447,000
and have grown this equity in 2012 to about              2,981,537,000.

Maybe not quite impressive as BRK or FFH, but certainly at a good rate.
You should note that ELF recently traded not long ago at about half book value,
so a hypothetical 10% ROE would translate on half book value to about a 20% return  ;)
We have seen BAC and AIG some 12-18 months ago on a similar cheap scale with a comparable
hypothetical future ROE assumption.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mranski on July 27, 2013, 01:24:48 PM

I believe they are involved with this company


http://www.ucorp.ca/ucl_nh.htm
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: benhacker on July 27, 2013, 02:18:25 PM
I think this was covered a few times on the old BRK board...

I thought it was covered here by Ron(?), but maybe I was thinking of the reference to Norm's article.

I have owned shares since 2010.  50-60% of effective book while their CEFs and hold co buy shares slowly is pretty low risk.  They seem kind of like Loews to me.  They won't shoot the lights out, but they are shareholder friendly and at a big book discount they will buyback.  Low risk good reward and tax efficient.

thanks for posting BRK Mystery.

Ben
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: berkshiremystery on July 27, 2013, 04:39:53 PM
Here's some biographical video about Hal Jackman. His son Duncan N. R. Jackman, the current CEO of E-L Financial also speaks in the video about his dad.

The Hon Henry N R Jackman - 2005 Champion of Public Education - The Learning Partnership
YouTube.com (6:28min Video)
http://www.youtube.com/watch?v=FtSNHGdV5A8

(http://s15.postimg.org/iqsil2t17/image.jpg)

(http://s17.postimg.org/4boz9p03j/image.jpg)

(http://s24.postimg.org/9idt8nn39/image.jpg)






Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: berkshiremystery on July 27, 2013, 04:53:24 PM

I believe they are involved with this company


http://www.ucorp.ca/ucl_nh.htm

E-L Financial operates as an investment and insurance holding company. It operates in three business segments:

- E-L Corporate,
- The Dominion and
- Empire Life.

The Company invests in equities and fixed income securities directly, and indirectly, through pooled funds, closed-end investment companies and other investment companies (E-L Corporate).

E-L Corporate investments include:
- United Corporations Ltd. (United),
- Economic Investment Trust Ltd. (Economic) and
- Algoma Central Corp. (Algoma).

The investments - corporate portfolio includes short-term deposits, common shares in public and private companies, units in pooled funds and units in a common contractual fund.

The Company owns
100% of The Dominion of Canada General Insurance Company (The Dominion) and
80%  of  The Empire Life Insurance Company (Empire Life).

Economic and United are both closed-end investment companies and Algoma is a shipping company.
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: NormR on July 28, 2013, 08:07:15 PM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

It's essentially a family company and I don't have any particular insight into the clan. 

As others have pointed out, they seem to be sensible investors but not as good as the folks at FFH/BRK/etc. 

The company falls into the generally undervalued bucket for me.  While I only hold a few shares, I like the company more as time goes on.  Just keep in mind that it was much less expensive not that long ago. 
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: berkshiremystery on July 29, 2013, 05:50:19 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

It's essentially a family company and I don't have any particular insight into the clan. 

As others have pointed out, they seem to be sensible investors but not as good as the folks at FFH/BRK/etc. 

The company falls into the generally undervalued bucket for me.  While I only hold a few shares, I like the company more as time goes on.  Just keep in mind that it was much less expensive not that long ago.

I would in general agree with Norm. Therefore I would put them at the last end/level of the chain of  those jockey stocks. I mean on the last level,... in relative long term book value growth over the decades. From 1969 to 2012,... over a hundredfold increase in common shareholders equity ($21M - $2.9B). BRK & FFH were compounding their equity on a much more compressed bases, faster and much steeper.

So my overview below applies only for their long term book value growth and their managerial skills of growing BV.

1) BRK
2) FFH,
3) ... LUK & MKL
4) ELF


But ELF has been quite undervalued in the last 12 months ($450-550, currently around $645), and were trading way, way below their intrinsic value (book value currently around $790 something, and rising) on a relative bases compared with BRK, FFH. So therefore ELF was only catching up. Of course they are currently not as cheaply anymore. I would consider them for any investors long term watch list, and of course only strike the perfect pitch, if they trade extremly depressed. A family run insurer that might be capable to achive a hypothetical 10% ROE trading extremely below book should give some good margin of safety in certain depressed market situations.
Title: Re: ELF.TO - E-L Financial Corp. Ltd. (& the Jackman's)
Post by: StubbleJumper on July 29, 2013, 05:54:31 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

It's essentially a family company and I don't have any particular insight into the clan. 

As others have pointed out, they seem to be sensible investors but not as good as the folks at FFH/BRK/etc. 

The company falls into the generally undervalued bucket for me.  While I only hold a few shares, I like the company more as time goes on.  Just keep in mind that it was much less expensive not that long ago.


IMO, it was much less expensive a couple of months ago because the $1.1B that they'll receive in the fall for the Dominion company is nearly enough to take this sucker private....  So, if they do opt to take the $1.1B, add a wee bit of debt and take it private, what price to they offer?  Adjusted BV per share is still north of the current market price.  Would the current market price of ~$645+30% do it?  That would roughly equate to adjusted BV....

SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: berkshiremystery on July 29, 2013, 06:16:17 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

It's essentially a family company and I don't have any particular insight into the clan. 

As others have pointed out, they seem to be sensible investors but not as good as the folks at FFH/BRK/etc. 

The company falls into the generally undervalued bucket for me.  While I only hold a few shares, I like the company more as time goes on.  Just keep in mind that it was much less expensive not that long ago.


IMO, it was much less expensive a couple of months ago because the $1.1B that they'll receive in the fall for the Dominion company is nearly enough to take this sucker private....  So, if they do opt to take the $1.1B, add a wee bit of debt and take it private, what price to they offer?  Adjusted BV per share is still north of the current market price.  Would the current market price of ~$645+30% do it?  That would roughly equate to adjusted BV....

SJ

If you have hawk like eyes, you might also see that certain holdings are also quite below their actual intrinsic value. Just have a look at United Corps.  ;)

ELF owns more than half of United Corporations, a closed end fund that’s been around for almost a century and which is now consolidated at the E-L level.

1st qtr 2013 common equity $860.85 M
  http://www.theglobeandmail.com/globe-investor/markets/stocks/financials/?q=UNC-T&page=balanceSheet&frequency=QUARTERLY#financials-content

July 26, 2013 market cap $769.45 M
http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=UNC-T

------

No way that E-L Financial and asset flipper can be used in the same sentence
2013-06-10 NationalPost
http://business.financialpost.com/2013/06/10/no-way-that-e-l-financial-and-asset-flipper-can-be-used-in-the-same-sentence/

In what seems like a Buffet-like approach to selling parts of the overall business, E-L announced Monday the sale of its The Dominion of Canada General Insurance Co. to the Travelers Companies Inc. – a $1.125 billion divestiture.

“We are extremely proud of what The Dominion team has achieved over the years. We could not be happier that Travelers, a highly respected and well capitalized firm, will be the platform for future growth and success,” stated Duncan Jackman, E-L Financial’s chief executive officer and Hal’s son. The company was formed in 1887.











Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on July 29, 2013, 07:12:16 AM
Thanks NormR and berkshiremystery, ELF seems like a really interesting idea.

I was just wondering if either of you have attended any of their annual meetings and maybe met the owners and management? If so, it'd be much appreciated if I could get either of your (or anyone else's) impressions of them.

It's essentially a family company and I don't have any particular insight into the clan. 

As others have pointed out, they seem to be sensible investors but not as good as the folks at FFH/BRK/etc. 

The company falls into the generally undervalued bucket for me.  While I only hold a few shares, I like the company more as time goes on.  Just keep in mind that it was much less expensive not that long ago.


IMO, it was much less expensive a couple of months ago because the $1.1B that they'll receive in the fall for the Dominion company is nearly enough to take this sucker private....  So, if they do opt to take the $1.1B, add a wee bit of debt and take it private, what price to they offer?  Adjusted BV per share is still north of the current market price.  Would the current market price of ~$645+30% do it?  That would roughly equate to adjusted BV....

SJ

If you have hawk like eyes, you might also see that certain holdings are also quite below their actual intrinsic value. Just have a look at United Corps.  ;)

ELF owns more than half of United Corporations, a closed end fund that’s been around for almost a century and which is now consolidated at the E-L level.

1st qtr 2013 common equity $860.85 M
  http://www.theglobeandmail.com/globe-investor/markets/stocks/financials/?q=UNC-T&page=balanceSheet&frequency=QUARTERLY#financials-content

July 26, 2013 market cap $769.45 M
http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=UNC-T

------

No way that E-L Financial and asset flipper can be used in the same sentence
2013-06-10 NationalPost
http://business.financialpost.com/2013/06/10/no-way-that-e-l-financial-and-asset-flipper-can-be-used-in-the-same-sentence/

In what seems like a Buffet-like approach to selling parts of the overall business, E-L announced Monday the sale of its The Dominion of Canada General Insurance Co. to the Travelers Companies Inc. – a $1.125 billion divestiture.

“We are extremely proud of what The Dominion team has achieved over the years. We could not be happier that Travelers, a highly respected and well capitalized firm, will be the platform for future growth and success,” stated Duncan Jackman, E-L Financial’s chief executive officer and Hal’s son. The company was formed in 1887.



You're bang-on.  ELF has a number of securities that it knows well and could purchase that are currently selling for well below BV/IV.  Their own shares are what I suggested, but United and Economic chronically sell at a significant discount to a sum-of-the-parts market valuation.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on November 08, 2013, 01:39:09 AM
So ELF has announced a $75 special dividend, which should account for roughly $300m of the $1.1B that they're getting from the sale of the Dominion.  After blowing $300m on a special dividend, it now seems unlikely that the Jackmans will try to use the Dominion sale proceeds to take ELF private.

Yesterday the common shares closed at $740/sh.  The share price is getting perilously close to adjusted book value.  I'm thinking that this might be a good time to sell as I can't see much potential for the remaining lifeco plus the cash being valued much above book.

Anyone else selling?


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: NormR on November 08, 2013, 06:03:45 AM
Well, it traded at 1.4 times tangible book value in 2006, according to S&P Capital IQ.  But discounts have been more common.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on November 08, 2013, 08:52:07 AM
Well, it traded at 1.4 times tangible book value in 2006, according to S&P Capital IQ.  But discounts have been more common.


True, valuations were a bit steeper in the past.  I guess I'm looking at Empire Life from the perspective of reasonably plausible levels of interest rates over coming years.  But, who knows....
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: benhacker on November 08, 2013, 10:40:29 AM
I blew out all my ELF yesterday.  I think my average was in the $400-425 CAD.  Felt like the right time to sell.  I like the company, but was only a ~2% position or so and I didn't have high conviction without the massive P/B discount.

Ben
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on November 25, 2013, 09:41:02 AM
I finally blew mine out the door a couple of weeks ago at $750/sh.  Interesting that it keeps creeping up.  If my memory serves me correctly, at its current price of $780 it's within 5% of adjusted book. 

If somebody told me a year ago that ELF would be back near book in 2013, I would not have believed him!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Aberhound on April 17, 2014, 06:23:39 PM
Is there any disclosure of the stock holdings held by corporate? Basically they sold Dominion for $1B and increased their investments in securities by $1B with $600M of the $1B invested into US securities. The now have $3B in equities. Dominion had a worsening combined loss ratio so the company de-risked by exchanging Dominion for equities. The track record of the corporate investment returns look very good. Has anyone calculated the return on the investments in securities? My impression of the numbers is that they are very good. The growth in book value is not an accurate record of the investment performance at corporate because of the drag caused by Dominion and the fact that Empire manages its own much bigger investment portfolio and the distortions caused by the controlled entities. Jackman the CEO is only 46 so is this a young jockey stock to hold many years? It looks like he is focused on increasing the corporate equity investment holdings as he has increased it dramatically to $3B. He doesn't brag about his results like Buffett or Prem which I like if I am going to accumulate shares over a long time.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on April 27, 2015, 11:54:39 AM
ELF is currently trading around 2/3 book which looks like the lower end of p/b over the past decade.   Seems very reasonable given the TSX is near highs.   Anyone have theories on why shares have traded down, is there significant O&G exposure?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: notorious546 on January 06, 2016, 10:37:59 AM
i just started look at this name. seems like book value has caught up with the premium placed on the shares. looks like about 2/3rds of book value right now. 2.8 billion in market capital and only 465 shares traded today! liquidity is just crazy low.

anyone adding or holding here?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on January 07, 2016, 05:19:54 PM
ELF is primary a life insurer now with a big investment portfolio.  Many life insurers are trading at substantial discounts to book value, even large ones like MET is at similar p/b.  P&C insurers, like they used to have with Domnion insurance, are trading at higher p/b valuations as they are seen as lower risk as their claims are shorter term and do not have the long tail liabilities that the lifeco's have and need to find through (current) low rate long term bonds.

But if you want a life insurer and don't mind one that is thinly traded, family controlled with a small dividend, ELF should do well as Canada has an oligarchic life insurance market, is cheap, conservatively run.

If you are willing to go to the US, NWLI has similar characteristics, but is cheaper and more consistent earnings.  KCLI has a better dividend, but is now trading on the OTC market, so that may make it hard to trade.

I think if you buy a company like ELF.TO or NWLI, you will be well rewarded as interest rates normailze and that stock approaches an ever-increasing book value.  I think it is more of a question of when, not if and the timeframe will drive your annual return.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on February 04, 2016, 03:54:12 AM
A very important recent development is the purchase of the minority stake in Empire Life at book value. It's important because it now allows E-L Financial to sell Empire Life at a premium like they did for Dominion. One of the reasons for selling Dominion was that it didn't have the scale to compete and the same could be argued for Empire Life. A sale would likely be done at a premium to book thus making the NAV higher than the accounting book value as all of the major Canadian life insurers would compete for the asset.

A way to get a clue on what else ELF owns is to look at the holdings of UNC and EVT. Both are closed end funds that ELF manages and has giant stakes in. Actually, buying EVT might be a cheaper way to acquire ELF as EVTs biggest holding is ELF and EVT trades at a big discount to NAV.

Long ELf and EVT.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on February 04, 2016, 05:55:37 PM
You could be right about selling Empire Life.

Since Hal Jackman got out of the business and the son took over, a lot of things are lining up - the consolidation of Empire Life you mentioned, but also the sale of Dominion and the change in dividend policy in EVT to distribute all dividends, not just a token one.

There is not a lot of value in being public for this group of companies as they continue to slowly buy up the outstanding shares reducing the float.  They also never come to market to raise capital.  Would be cleaner to just run as a family business and not have to deal with 3rd party shareholder and they could get rid of the costs of being public.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on February 04, 2016, 07:07:53 PM
So, they sold Dominion and if they sell Empire Life, what's left?  Algoma, United and Economic?  I don't get it.  Makes no sense unless the Jackman family just wants to own passive investments and live a comfortable life from their billions in capital...
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on February 05, 2016, 05:12:33 AM
Exactly.  And focus on the things you like your charities or whatever you like.  Maybe the son has different interests than the father did.

Tough to be a mid-sized insurer in Canada these days.  You don't have the scale of the big 3, but you don't have the focus and cheapness of the small ones like Lutheran Life for example.

Mutual Life, London Life, Canada Life, Standard Life, Zurich Life, etc. are all gone and you are left with Manulife, Great West and Sunlife controlling 80% of the market and then Empire Life trying to still go alone.  I was talking to a broker and he likes working with Empire because their prices are good, but tough to compete on price when you are the small guy.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 02, 2016, 12:22:23 PM
Pretty good quarter out of ELF with book value up to $1089 vs the $635 price and a 1000% increase in the dividend to $1.25/quarter from 12.5 cents/quarter.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: NormR on March 02, 2016, 01:19:03 PM
Pretty good quarter out of ELF with book value up to $1089 vs the $635 price and a 1000% increase in the dividend to $1.25/quarter from 12.5 cents/quarter.

That sweet 0.2% yield ;-)
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 02, 2016, 01:44:36 PM
0.8% yield! That's a quarterly dividend!

Obviously not a meaningful yield but a big change for them in terms of policy as the quarterly dividend has been 12.5c/quarter for at least 20 years.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: NormR on March 02, 2016, 02:51:08 PM
0.8% yield! That's a quarterly dividend!

Obviously not a meaningful yield but a big change for them in terms of policy as the quarterly dividend has been 12.5c/quarter for at least 20 years.

Hot damn, that'll teach me to not skim the press release!  I'm waiting for the 10-for-1 share split  :)
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Studesy on March 03, 2016, 07:24:24 AM
Pretty good quarter out of ELF with book value up to $1089 vs the $635 price and a 1000% increase in the dividend to $1.25/quarter from 12.5 cents/quarter.

That sweet 0.2% yield ;-)

Apparently someone doesn't like the news.  I've had limit orders in the $627 range unfilled for the last 2 months.....to my surprise they were filled yesterday!  Not that this is a large decline... just seems unusual that this occurred alongside a solid earnings release and div increase....or am I missing something??
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: KinAlberta on November 23, 2016, 01:14:10 PM
Any following ELF lately?

A bit of a bump up likely on qrtrly results.


Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: notorious546 on November 23, 2016, 02:32:35 PM
Any following ELF lately?

A bit of a bump up likely on qrtrly results.

I'm still following it. Still overcapitalized and growing book value moderately. Higher interest rates are still good for the company. not sure if there are any catalysts that will narrow the valuation gap or at least easily visible ones.

E-L Financial’s net equity value per Common Share was $1,132.28 at September30, 2016, an increase from $1,089.23 as at December31, 2015.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 23, 2016, 11:12:36 PM
The only thing I can think of, is a potential sale of Empire Life and a special dividend like they did after they sold the P&C business. We have seen life insurance valuations go up significantly recently so its potentially easier for one of the big insurers (GWO, SLF or MFC) to buy Empire at a big premium to book. This will of course take the ELF NAV even higher.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on November 29, 2016, 05:34:06 PM
EVT, the top company in the Jackman family holdings and owner of a lot of ELF (can't remember exactly) also changed their dividend policy a couple years ago from a flat $0.60 per year to $0.15 per quarter, plus distributing all the dividends of the investments that EVT owns.  So, since Duncan Jackman has taken over from Hal, we've seen a significant increase in the activities which uncover shareholder value - the EVT dividend, the sale of P&C division Dominion insurance, and now the increase in dividend at ELF.

My hope is that the new management continues these actions and we see an increase in the valuation given to all of these companies.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 30, 2016, 11:51:33 PM
Perhaps we will.

In my conversations with Duncan, he seems to like the discount to the extent it allows the family to acquire more shares at that big discount.  I also think the higher dividends gives them more cash to buy those shares of UNC, EVT and ELF. If they keep buying, theoretically the discount will close over time.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on December 16, 2016, 02:54:10 PM

E-L Financial’s net equity value per Common Share was $1,132.28 at September30, 2016, an increase from $1,089.23 as at December31, 2015.

Notorious,

Where did you find this net equity value?  I don't see it in the financials and when I calculate it I get a different number.  No doubt I am just missing something so any help is appreciated.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 16, 2016, 09:56:51 PM
Hopefully Notorious doesn't mind me answering but its on page 4 of the MD&A or page 3 of the financial statements in the highlights. Just make sure you are pulling up E-L Financial and not Empire Life off of Sedar.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on December 17, 2016, 06:01:48 AM
Thanks!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 28, 2016, 04:33:45 AM
Write up on SeekingAlpha http://seekingalpha.com/article/4032732-e-l-financial-trading-nav-potential-value-accretive-catalysts
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: notorious546 on March 03, 2017, 10:52:26 AM
stock was highlighted in the last value investor insight issue FWIW.

Q4/16 results out. Shares at 65% of book value while book grew 6% year over year.

Quote
TORONTO, ONTARIO--(Marketwired - March 3, 2017) - E-L Financial Corporation Limited ("E-L Financial") (TSX:ELF)(TSX:ELF.PR.F)(TSX:ELF.PR.G)(TSX:ELF.PR.H) today reported for the year ended December 31, 2016, consolidated shareholders' net income of $333.1 million or $80.88 per share compared with $534.6 million or $132.18 per share in 2015. For the fourth quarter of 2016, E-L Financial had consolidated net income of $100.1 million or $24.49 per share compared with $207.7 million or $51.90 per share in 2015.

E-L Financial's net equity value per Common Share was $1,159.26 at December 31, 2016, an increase from $1,089.23 as at December 31, 2015.

"Empire Life continues to deliver strong results with record earnings for 2016 despite challenges associated with the current economic and political environments along with the impact of low interest rates. With a common shareholder return of 13%, Empire Life continues to demonstrate sustained profitable organic growth. Although E-L Financial's investment returns declined from 2015, which were mostly driven by currency movements, the global investment portfolio has had continued momentum through 2016. I am proud to report continued growth in our net equity value to our common shareholders with a total return of 6.8% for 2016," said Duncan Jackman, Chairman, President and CEO of E-L Financial.

E-L Corporate

For the year ended December 31, 2016, E-L Corporate earned net income of $181.6 million compared to $447.2 million in 2015. The decrease in net income is primarily due to E-L Corporate's net gain on investments of $155.8 million compared to $568.9 million in 2015. E-L Corporate's investments in 2016 yielded a pre-tax total return of 6% mainly due to positive investment returns on global equities which was partially offset by the strengthening of the Canadian dollar against the U.S. dollar and Euro. The net gain on investments in 2015 was mostly attributed to the favourable impact of a lower Canadian dollar. At December 31, 2016, 84.0% (2015 - 85%) of E-L Corporate's investments were denominated in foreign currencies with 49% (2015 - 48%) and 12% (2015 - 14%) exposed to U.S. and European equities respectively.

E-L Corporate 2016 fourth quarter net income was $47.9 million, a decrease of $146.8 million compared to 2015. The return on investments for the fourth quarter decreased compared to the prior year primarily due to lower investment returns and the impact of foreign currencies in the fourth quarter of 2015.

Empire Life

For the year ended December 31, 2016 Empire Life's net income attributable to E-L Financial was $151.5 million compared to $87.4 million for the comparable period in 2015. The increase in net income was due to higher profits from the Individual Insurance product line primarily resulting from improved stock market conditions in 2016, a favourable update of policy liability assumptions and management actions to improve asset/liability matching in 2016.

Empire Life's fourth quarter net income attributable to E-L Financial was $52.1 million compared to $13.0 million in 2015. The increase in net income was primarily due to higher profit from the Individual Insurance product line primarily attributable to improved stock market conditions in 2016, a favourable update of policy liability assumptions for the Individual Insurance product line in 2016 (compared to an unfavourable update in 2015) and management actions to improve asset/liability matching in 2016.

Empire Life's assets under management (including segregated fund and mutual fund assets) increased 10% over December 31, 2015 levels to reach $16.1 billion.

Empire Life's Minimum Continuing Capital and Surplus Requirements ratio increased to 248% at December 31, 2016 compared to 201% at December 31, 2015 resulting from Empire Life's issuance of $149.5 million of preferred shares during the first quarter of 2016 and the issuance of $200 million of subordinated debentures during the fourth quarter of 2016.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: notorious546 on March 03, 2017, 10:53:26 AM
Write up on SeekingAlpha http://seekingalpha.com/article/4032732-e-l-financial-trading-nav-potential-value-accretive-catalysts

can you post article can't seem to read/get access to it?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on March 03, 2017, 11:14:57 AM
Thanks for the link notorious.

It is still on the cheaper side based on a simple price to book comparison.  I like that book has increased despite what is happening with bond yields.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 03, 2017, 01:53:39 PM
Write up on SeekingAlpha http://seekingalpha.com/article/4032732-e-l-financial-trading-nav-potential-value-accretive-catalysts

can you post article can't seem to read/get access to it?

I can't it went premium so I don't have access either.

One interesting way to play ELF is to buy EVT which is a closed end fund where over 40% of the NAV is ELF. It also trades at over a 25% discount to NAV so its a bit of a double discount and it has lagged ELF lately. There is some cross ownership as well as EVT's biggest shareholder is ELF!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 04, 2017, 09:36:34 AM
I want to point out that E-L has been doing a good job growing Empire Life since they bought the 20% they didn't already own in 2015. Since then the book value has grown over 20%. It's important to note that if they sold Empire Life, it would sell at a multiple of book which implies the actual NAV is actually a decent amount higher. Empire Life is around $300/share of the $1159.26 NAV. The last large transaction in Canadian life insurance was Manulife buying Standard Life for about 19.5x EPS and 1.9x book value. Based on 2016 results, this would put Empire Life worth around $575-725/share for ELF.

I'm not sure what the tax basis is for Empire Life is but even if its somewhat nominal, there is a real argument that the NAV here is closer to $1400 after tax vs the stated $1159.

There is seemingly no rush to sell Empire Life and last quarter ROE was 17% so perhaps it's in our best interest that they keep growing it and sell it when the outlook dims.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on March 04, 2017, 10:00:21 AM
Safety,

This is good to hear.  It is very cheap based on your assumptions and crazy cheap when you look at the market at large.  I have read that they are very prudent on asset sales / purchases so probably are just waiting for multiples to heat up a bit more.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 04, 2017, 03:20:17 PM
The lack of liquidity, high stock price and the fact that it's not in any index keep retail and institutional investors away alike.

Management also does zero to promote it and slowly buys the stock of ELF and the closed end funds EVT and UNC. It's like sneaking going private story!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bizaro86 on March 07, 2017, 06:25:31 AM
You know they aren't promotional when they don't have a website!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 08, 2017, 04:11:41 PM
Anyone going to AGM in Toronto this week? It's one of the few chances to talk to management given the lack of conference calls.

They will also report Q1 that day and I expect NAV should increase by about 4%. It's a very crude estimate! However, if correct will take NAV to about C$1200 versus the recent quote of C$816. Of course, as I noted in a post above, the NAV discount looks a lot bigger if Empire Life is valued on the basis of what it would sell for to one of the big three versus book value.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 10, 2017, 09:56:46 AM
The quarter ended up being a bit better than expected.

Discount to NAV stands at 33%.

Duncan made the point at the meeting that now that Empire Life has ROE's north of 15%, the discount to book seems unwarranted.

http://www.marketwired.com/press-release/e-l-financial-corporation-limited-announces-march-31-2017-financial-results-tsx-elf-2215419.htm
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on May 10, 2017, 06:12:02 PM
If they want to close the discount some type of dividend or share repurchase might be necessary.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 10, 2017, 07:02:37 PM
They do have a dividend but it's tiny.

I don't think they really care about closing the discount per se. The family is usually adding to their position over time. Maybe one day they take it private.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 22, 2017, 02:42:12 AM
Article in the Financial Post from last week with ELF as a top pick.

http://business.financialpost.com/investing/buy-sell/this-fund-manager-is-sticking-with-quality-despite-the-allure-of-cheaper-names
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on May 22, 2017, 10:25:29 AM
Great link.  Just wanted to pull a snippet from it.  Basically just affirms what you have been saying.

Quote
“It’s got profitability measures that are as attractive as the other public life insurers,” Cooke said, noting that those names trades at roughly 1.5x book value, while E-L trades closer to 0.7x.
..
Netting out what he thinks the insurance business is worth, Cooke believes E-L’s collection of corporate investments is trading at about 50 or 60 cents on the dollar.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: EliG on May 22, 2017, 12:08:48 PM
Article in the Financial Post from last week with ELF as a top pick.

http://business.financialpost.com/investing/buy-sell/this-fund-manager-is-sticking-with-quality-despite-the-allure-of-cheaper-names

It's funny that the article didn't mention -- even in passing -- their big loss on Home Capital:

https://www.qvinvestors.com/Commentary?id=19119

They owned ~13% of HCG before they dumped the shares at the end of April. Their ACB was in the high 20s / low 30s. They sold around $7 or $8.

Two weeks later, they are giving interviews about "sticking with quality". ::)
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on May 22, 2017, 02:46:37 PM
True and honestly I have never heard of the company before but they have kicked the markets butt in the past 3,5,10 years and also since inception.  People on this board said the turtle creek and mawer had positions in HCG.  Donville Kent also had a position, maybe still does, and has written the stock up at least once.  I am not trying to make excuses but it fooled a lot of people so I wouldn't ignore their analysis in general.

I just look at this type of thing as another set of eyes and more importantly publicity for ELF.  They just aren't going to go out and sell the story themselves.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on August 04, 2017, 06:05:49 AM
ELF reported Q2 last night. NEV/share increased to $1241.48 so at the current stock price of $840, the NEV discount is around 32%. Overall the NEV is up 7% this year so far.

https://www.globenewswire.com/news-release/2017/08/03/1072324/0/en/E-L-Financial-Corporation-Limited-Announces-June-30-2017-Financial-Results.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on November 23, 2017, 02:15:12 PM
ELF is now trading at 64% NAV.   I am not sure how good of a comp they are but Great West Life is about 150% NAV and SunLife is around 130% NAV.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on November 25, 2017, 05:46:29 AM
With these smaller life insurers, you have to know that they almost always will trade at low valuations.  They have for decades and I don't see any reason that this will change.  I think ELF's business is good and will continue to do well, but you can't expect much of an upward revaluation or reversion to the mean.

The other specific unique thing about ELF is they used to also own P&C insurer Dominion and sold it to the Travelers in 2013.  I'd have to go back to their annual reports to see what % of their profitability was from Dominion vs. Empire Life, but it was quite large and that probably is a good reason for their outperformance over the life insurers as the life insurers have been hurt more by low interest rates and MFC specifically was overly aggressive prior to 2007 and paid for that over the last 10 years.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: clutch on November 25, 2017, 05:59:36 AM
With these smaller life insurers, you have to know that they almost always will trade at low valuations.  They have for decades and I don't see any reason that this will change.  I think ELF's business is good and will continue to do well, but you can't expect much of an upward revaluation or reversion to the mean.

One could argue why this should trade consistently at low valuations (in absolute terms) while all other stocks / asset categories have been inflated in the current environment. In theory, shouldn't this type of stock's valuation have been inflated as well?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 25, 2017, 08:45:03 AM
With these smaller life insurers, you have to know that they almost always will trade at low valuations.  They have for decades and I don't see any reason that this will change.  I think ELF's business is good and will continue to do well, but you can't expect much of an upward revaluation or reversion to the mean.

One could argue why this should trade consistently at low valuations (in absolute terms) while all other stocks / asset categories have been inflated in the current environment. In theory, shouldn't this type of stock's valuation have been inflated as well?

In 2005-2006, ELF traded at a premium to NAV. It kind of ties in with your inflation argument to the extend that financial stocks were overvalued in that time frame. I still find most financial stocks to be pretty fairly valued so perhaps that's why there is no inflation its valuation.

I think the broader reason for the discount is that ETFs and more funds being indexed means that not many are looking at ELF stock as it's not in any ETF. It's also illiquid and since the financial crisis, money managers care way more about liquidity.

Also, Empire Life had an ROE below 10% for a long time and its only a recent development that the ROE has improved. An ROE above 10% argues for a P/BV north of 1 but since not many people are looking, the revaluation may take a long time. Not a problem for me as I just add more when the discount gets bigger than "normal", like it is now.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: clutch on November 25, 2017, 11:22:25 AM
The way you framed this, this one seems like a good opportunity.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on November 25, 2017, 12:15:19 PM
Thanks for the feedback all.

I am definitely not suggesting it will trade up to book any time soon.  Just pointing out that there is large margin of safety combined with excellent management track record.  These two in conjunction are hard to find these days.  I do think it will trade to book if interest rates ever move up but won't hold my breath on that.

Historically it has traded roughly 55% book to 110-120% (back in 06).  So based on this simple metric it is well on the lower bound but I suppose could always go lower.  Limited downside, substantial upside and in the meanwhile should earn you high single digits to low double digits if prior record is meaningful.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: ourkid8 on November 25, 2017, 12:32:56 PM
Is there a share repurchase plan in place?

Thanks for the feedback all.

I am definitely not suggesting it will trade up to book any time soon.  Just pointing out that there is large margin of safety combined with excellent management track record.  These two in conjunction are hard to find these days.  I do think it will trade to book if interest rates ever move up but won't hold my breath on that.

Historically it has traded roughly 55% book to 110-120% (back in 06).  So based on this simple metric it is well on the lower bound but I suppose could always go lower.  Limited downside, substantial upside and in the meanwhile should earn you high single digits to low double digits if prior record is meaningful.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: oddballstocks on November 25, 2017, 01:39:51 PM
I think this is an excellent opportunity.  I find the "It's always traded cheap" arguments flimsy.  A counter argument is if this is cheap then why aren't all other similar companies cheap as well?

I think there are a few dynamics at play:

1) The company doesn't have a website, they are 'hidden'
2) There are large insider holders
3) There is a bit of a convoluted structure with their ownership in subsidiaries and subsidiaries owning them

As to buybacks.  The parent owns funds that continually purchase shares of the parent.  This isn't the same as a buyback, but it's similar.  Along the same lines other subsidiaries have purchased shares in the parent as well.

A collection of assets that aren't impaired, and are at least run average (which ELF is) should at least trade at book.  The market is saying they are in the process of destroying shareholder value.  Yet results say otherwise.

This is the type of name I like to buy and shove in the corner of my portfolio.  Right now it seems cheap, it might in a year or four, then suddenly it'll be time to sell.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 26, 2017, 09:13:01 AM
I think this is an excellent opportunity.  I find the "It's always traded cheap" arguments flimsy.  A counter argument is if this is cheap then why aren't all other similar companies cheap as well?

I think there are a few dynamics at play:

1) The company doesn't have a website, they are 'hidden'
2) There are large insider holders
3) There is a bit of a convoluted structure with their ownership in subsidiaries and subsidiaries owning them

As to buybacks.  The parent owns funds that continually purchase shares of the parent.  This isn't the same as a buyback, but it's similar.  Along the same lines other subsidiaries have purchased shares in the parent as well.

A collection of assets that aren't impaired, and are at least run average (which ELF is) should at least trade at book.  The market is saying they are in the process of destroying shareholder value.  Yet results say otherwise.

This is the type of name I like to buy and shove in the corner of my portfolio.  Right now it seems cheap, it might in a year or four, then suddenly it'll be time to sell.

I couldn’t agree with Nate more.

I have asked Duncan about a buyback or stock split and I wouldn’t expect either to happen (at the last few AGMs). I think they like the discount as it lets the family acquire shares more cheaply. I know stock splits don’t effect value but if the stock was liquid enough after a split, it would allow market participants with liquidity constraints like Indices/ETFs to include ELF in their screens.

I also suggested they consider doing a tender offer below NAV for EVT as a way of effectively buying back stock. As an aside, EVT is a publicly traded closed end fund that is controlled by ELF that has a large position in ELF.

It’s nice to see a discussion on ELF.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on November 26, 2017, 09:32:52 AM
I guess the one con I can see is that the founder has handed control over to his son, Duncan.  Not sure what his track record is.  Not a show stopper for me but something I will have to keep an eye on.

Appreciate the heads up on Economic.  Hadn't read their report in detail to notice the loop.  For those interested their stake is:

Quote
At December 31, 2016, the Company’s carrying
value of its direct and indirect investment in E-L Financial of $337,414,000 (2015 - $323,007,000)
represents 41.0% (2015 – 41.2%) of Economic’s total equity investment

So they own about 10% of ELF and ELF owns 24% of them.  This should cancel out 2 or 3 percent of ELF public equity.

Do any of the other subs own ELF?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on November 26, 2017, 09:47:47 AM
Another change I have seen is that their investment portfolio is substantially larger relative to their equity than in the past.  Maybe this is the result of selling Dominion?  At any rate, it looks like in 2007 equity investments were only 35-40% of NAV, they are now in the vicinity of 100%.  These are invested mostly in equities and quite diversified from what I can tell.  Not an issue but just something to be aware of, perhaps their results will be more volatile go forward as a result.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Cardboard on November 27, 2017, 01:11:21 PM
"A counter argument is if this is cheap then why aren't all other similar companies cheap as well?"

While Great West trades at a premium, have a look at the discount to NAV constantly experienced by PWF and POW who own most of it. ELF is somewhat similar to PWF and POW and does suffer from a holding discount.

Cardboard
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 27, 2017, 02:46:22 PM
"A counter argument is if this is cheap then why aren't all other similar companies cheap as well?"

While Great West trades at a premium, have a look at the discount to NAV constantly experienced by PWF and POW who own most of it. ELF is somewhat similar to PWF and POW and does suffer from a holding discount.

Cardboard

While it's true that the NAV discount on PWF and POW, have averaged about 12.1% and 17.5%, respectively over the past 10 years, they also calculate that based on the premium P/B that GWO, which is the biggest component, trades at. For example, right now GWO trades at ~1.75x book value. If you adjust that to 1x, then PWF is trading at a decent premium to NAV. I'm not saying that's the right way to look at it but it makes it more comparable.

Because Empire Life is a smaller component of ELF than GWO is of PWF, perhaps the right thing to do is put a 1.75x multiple on Empire Life. This doesn't seem unreasonable as the Empire would likely sell for a premium to that if it were to be sold. This would take the ELF NAV to over $1500 and increase the NAV discount to 47%. That still seems more attractive than the PWF discount currently at about 15%. One could argue the POW discount is bigger than the ~19% discount it trades at now because it's a double discount as PWF is the biggest component but still materially smaller than the ELF discount.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on November 27, 2017, 04:22:02 PM
A more appropriate compare for ELF might be Texas insures National Western Life, a small cap US insurer that is majority family owned.  The other reason I pick this is because it is easier to get long term valuation information on US stocks.

If you take a look at" https://www.gurufocus.com/chart/NWLI#&serie=,,id:pb,s:NAS:NWLI

You'll see NWLI has traded up near book value for only 3 small periods over the last 20 years - 1992/1993, 1998 and 2007, which is the same time that ELF traded above book value (and don't forget, ELF was half P&C in 2007 and P&C companies generally get higher p/b valuations than life insurers).

It seems now a lot of investors are concerned about life insurers because of low interest rates and what happened to the Japanese Life Insurers when they moved to a low interest rate environment in Japan and many of them became technically insolvent.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bbarberayr on November 27, 2017, 04:26:21 PM
Regarding the Jackman family ownership, the son, Duncan, who has now taken over, is more amenable to dividends and has changed the policy of the main family holding company, Economic Value Trust (EVT-T), to now pay out all investment earnings as dividends through an additional special dividend once a year.  My opinion is he wants the cash flow more than his father did, but we will have to see what other changes he makes.  But so far, they are not indicating anything else.

The following is from the EVT Annual Report - seem fine with the discount in the market:

The Company has been a closed-end investment corporation since 1927 and has never bought back its Common Shares. The Common Shares have traded at a discount to their net asset value, ranging from a 40% discount to a 15% discount over the past 10 years. Management believes that shareholders who have invested in the Common Shares of the Company recognize that the Common Shares of the Company usually trade at a discount to their net asset value.
Closed-end investment corporations have the following benefits: they often allow investors the opportunity to purchase assets at a discounted price; they have management expense ratios which are generally much lower than those for actively-managed, open-ended funds; and the management of a closed-end investment corporation’s portfolio is not impacted by shareholder subscription or redemption activities.
Economic has no plans to become an open-ended investment fund.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 07, 2018, 06:39:05 AM
ELF reported a tremendous quarter yesterday afternoon.

NAV discount is close to 38% vs the historical closer to 33% (admittedly my discount calculation is based on quarterly numbers since 2009 and annual before that so not that scientific).

Decent upside if it just gets back to its historical discount. There is a real argument with the ROE being above 10% at Empire Life, that the discount should close significantly. The investment income alone is getting to be pretty big at ELF exclusive of Empire Life earnings.

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-december-31-2017-financial-results-676023213.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on May 16, 2018, 06:35:05 PM
They reported last week and net equity value was basically flat quarter over quarter ($1324 per share), shares trading at a ~39% discount.

Don't see any discussion on the quality of their equity portfolio - these are their large US equity holdings, correct? https://whalewisdom.com/filer/empire-life-investments-inc#tabholdings_tab_link
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 17, 2018, 03:07:46 AM
They reported last week and net equity value was basically flat quarter over quarter ($1324 per share), shares trading at a ~39% discount.

Don't see any discussion on the quality of their equity portfolio - these are their large US equity holdings, correct? https://whalewisdom.com/filer/empire-life-investments-inc#tabholdings_tab_link

Not necessarily as Empire Life is a subsidiary of E-L and they manage assets on behalf of clients as well. My understanding is looking at the portfolios of UNC and EVT might give a better indication of what they own at the hold co level.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 25, 2018, 05:58:45 AM
New article on Seeking Alpha

https://seekingalpha.com/article/4183685-e-l-financial-38-percent-discount-growing-book-value-potential-catalyst?app=1
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on June 25, 2018, 06:47:58 AM
New article on Seeking Alpha

https://seekingalpha.com/article/4183685-e-l-financial-38-percent-discount-growing-book-value-potential-catalyst?app=1



Not much new in the article.  In essence, you buy ELF with the notion that it'll grow BV by 7 or 8 percent, and then you hope that the valuation gap will narrow considerably to give you a very profitable exit opportunity.  If that valuation gap narrows quickly enough, life is grand!

I'm a little surprised that the Jackman family hasn't just taken this thing private.  Borrow some money, buy back the outstanding shares and be done with the minority holders.  Same with Economic and United -- offer a 15% or 20% premium, buy out the minority holders, collapse the funds and redeploy the capital.  Maybe they'll eventually do it.


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bizaro86 on June 25, 2018, 09:24:09 AM
E-L isn't a very complicated opportunity, but seems like a pretty likely case of high single digits return plus upside optionality. Lots of market exposure though, so that's a risk.

I agree that since they definitely don't need capital,  there isn't any reason for this to be public.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Spos on June 25, 2018, 11:36:57 AM
But what is the incentive for the Jackman family to privatize?  They are in this for the long haul and they can continue to buy shares at a big discount (and ELF can continue to buy discounted EVT and UNC shares).

Maybe if the sell Empire Life, but this reminds me of Loews, where the Tisch family's ownership of L has been increasing forever through L's buybacks.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on June 25, 2018, 05:11:38 PM
But what is the incentive for the Jackman family to privatize?  They are in this for the long haul and they can continue to buy shares at a big discount (and ELF can continue to buy discounted EVT and UNC shares).

Maybe if the sell Empire Life, but this reminds me of Loews, where the Tisch family's ownership of L has been increasing forever through L's buybacks.



Well, I would say that you are probably right.  There must not be much incentive to take ELF, Economic or United private because the Jackman family could have done it on any number of occasions, but has not chosen to do so. 

I guess my mental model would be that the Jackmans borrow ~$1B to buy the ~1m shares of ELF that they currently do not own.  ELF then borrows ~$750m to buy the 6m shares of United that it currently doesn't own.  ELF then collapses United to get full access to the company's $1.7b of assets, which it uses to repay the ~$750m loan.  Of the remaining ~$1B of assets, about $500m could then be dividended to the Jackmans to reduce the $1B that they borrowed to buy ELF (the other $500m remains in ELF to keep capital levels at a stable level).  A similar exercise could then be done with Economic, which would probable allow ELF to access another ~$100m of capital to dividend to the Jackmans, resulting in the ~$1B loan being reduced to ~$400m.  That last ~$400m could probably be repaid through an ELF dividend of excess capital.

Bing, bang, boom.  Full ownership of ELF.  No more minority holders, and much of the buyout is financed by the considerable price discount of United and Economic, while the buyout of ELF is probably done at a market premium that is still a discount to book.

But, as you said, the Jackmans seem to be very patient.


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bizaro86 on June 25, 2018, 08:00:20 PM
From their perspective, if you know you can do something at any time, there maybe isn't a huge incentive to do it now, especially if you aren't planning on spending the money anyway. If you're just going to invest it, why not do so inside ELF as your pseudo-family-office.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: rb on June 25, 2018, 10:24:29 PM
Here's the thing that seems to be missing which may prevent the whole go private.

If they want to go private they'll have to do a tender. Why would the other shareholders tender their shares out for cheap? It makes no sense. The only way for the shareholders to do that is if they are so desperate and beaten down that they gave up any hope. My guess is if the go private doen't happen is because they don't consider that the shareholders are depressed enough so the beatings shall continue.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 26, 2018, 03:58:10 AM
so the beatings shall continue.

Have you been spending a lot of time on Twitter, rb?

It hasn’t been that bad. NAV and share price growth continue and buying at a 40% discount to NAV is a nice margin of safety which people, based on this thread and others, don’t seem to care much about these days.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on June 26, 2018, 06:03:49 AM
Here's the thing that seems to be missing which may prevent the whole go private.

If they want to go private they'll have to do a tender. Why would the other shareholders tender their shares out for cheap? It makes no sense. The only way for the shareholders to do that is if they are so desperate and beaten down that they gave up any hope. My guess is if the go private doen't happen is because they don't consider that the shareholders are depressed enough so the beatings shall continue.



Well, the quick answer is that ELF could offer a 20% or 25% premium to minority holders and still buy the shares for less than book. Same deal with Economic and United -- you could offer a 20% premium and still buy them for less than book.  It would piss off some hardcore value guys, but most would be happy to grab the 20% return and run.  You don't need everyone to agree, you just need a majority. 

That's a little bit like how Prem bought out minority ORH holders for a song.  A few of us hardcore guys are pissed, but everyone else was giddy about the premium.


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Spos on June 26, 2018, 07:32:51 AM
"Well, the quick answer is that ELF could offer a 20% or 25% premium to minority holders and still buy the shares for less than book. Same deal with Economic and United -- you could offer a 20% premium and still buy them for less than book.  It would piss off some hardcore value guys, but most would be happy to grab the 20% return and run.  You don't need everyone to agree, you just need a majority."

I think this is it, having to pay the premium.  By doing this slowly through small purchases, you're not paying the premium.  And if your horizon is long and you have control, having the minorities doesn't seem like a large cost.  Some leakage in terms of public company costs and the small dividends, but the minorities also pay a part of your salary. 

And if this is the thinking they have no real incentive to close the discount.  I'd like to be wrong on this because I own a little of it, but I think a sale of Empire Life would be a more likely first transaction.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: bizaro86 on June 26, 2018, 07:35:19 PM
Wouldn't a tender for the CEFs at a discount put them at risk of having everyone dissent? It seems likely to me that you could make a pretty good case that your shares in a CEF are in fact worth published NAV.

I only own this at the E-L level, because I think that then the discount on the CEFs works at least partially in my favour as they are slowly buying them in. If I was picking one of the CEFs it would definitely be EVT because of the large E-L holding within the fund.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 27, 2018, 02:55:53 AM
Meanwhile, this is the largest insider purchase I have seen them make.

https://www.canadianinsider.com/company?ticker=ELF

15k shares @ 815
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on June 27, 2018, 05:23:05 AM
Meanwhile, this is the largest insider purchase I have seen them make.

https://www.canadianinsider.com/company?ticker=ELF

15k shares @ 815


Yeah, the Jackman family doesn't make many open market purchases.  If they have any aspirations to buy the ~1m shares that they currently do not own, it'll take a hell of a long time when they do it 1,000 at a time.

The more effective slow-moving takeover is when Economic periodically adds a few ELF shares and then when ELF periodically buys a few more Economic shares.  If they do that for long enough, it'll effectively be a buyout.


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 27, 2018, 06:13:11 AM
I generally see them using ELF to buy UNC and the family holding companies buy ELF and EVT.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on July 22, 2018, 11:31:36 AM
Australian hedge fund has a blurb on the ELF family (UNC, EVT included).

http://east72.com.au/wp-content/uploads/2018/07/E72-Quarterly-Report-June-2018.pdf
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on July 22, 2018, 12:06:08 PM
Thanks for the link.  Also a good write-up in there on VNO.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on July 22, 2018, 01:08:44 PM
I just went over the holdings of EVT and UNC (US holdings only for now). Starting to build out a spreadsheet, for fun...

42.3% of the UNC portfolio are US holdings.
Value as of Mar 31: $738,761,000
Current: $791,851,509 (+7.2%)
= + $53,090,509
* 0.52 (ELF stake)
= + $27,607,065

24.5% of the EVT portfolio are US holdings.
Value as of Mar 31: $219,162,000
Current: $231,561,813 (+5.7%)
= + 12,399,813
* 0.24 (ELF stake)
= + $2,975,955

So $30,583,020 increase in net equity value from their US holdings since March 31st (against a net equity value of ~$5.3 billion)?

Does it make sense?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on July 22, 2018, 02:46:44 PM
Like everyone here, I'm pretty attracted by the sizeable discounts on ELF, UNC, and EVT. I'm not happy with the layered corporate structure, however, that leads to a high capital gains tax rate. Just to use ELF as an example: Think about the UNC holding. You pay tax on the stock gains within UNC. Then you pay tax on the gain in UNC within ELF. Then you pay tax on ELF if it's in a taxable account. I kinda grudgingly accept paying capital gains taxes once if necessary, but THREE times on the same gain?? Obviously, the accumulated tax liabilities to date are netted out of NAV so you don't pay that. But you do pay all the tax on future gains. I fully expect that the Jackmans will take all three of these stocks private over time. And when they do, we can be sure that the price we get will be net of all deferred tax liabilities. If the stocks go private in the next few years it will be a good deal to buy now--the discounts are large enough to ensure that. But if it takes longer the tax drag starts to take the gain out of it. For me, buying these three stocks is a guess on how soon the privatization occurs.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on July 23, 2018, 01:19:02 PM
Companies in which The Hon. Henry N.R. Jackman has an indirect interest, control, in the aggregate, 2,909,709 or 72.4% of the outstanding Common Shares of the Company. Although The Hon. Henry N.R. Jackman is associated with some of these companies, (including Dominion and Anglo Investment Corporation Limited) he does not control any of them and, accordingly, does not have beneficial ownership of the Common Shares of the Company held by them.

EVT owns 386K shares of  ELF also which is around 10%
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on July 24, 2018, 05:26:46 PM
I managed to enter in all the information from United and Economic's March 31st reports, and combined them with their stake in Algoma.
This accounts for 1.324 billion of the 5.323 billion net equity value listed in ELF's report.

Since March 31, 2018:
Algoma +6,220,210$
United +43,851,375$
Economic +4,539,748$

Shares outstanding: 4,019,667

Per share, these pieces of ELF went from $329.3 to $342.9 (+4.1%), or a per share increase of 13.6$.


...are there any other pieces available?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on July 24, 2018, 06:49:56 PM
Are you trying to calculate the change in book value quarter over quarter?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on July 24, 2018, 07:39:39 PM
Current value vs. last quarter. You can check my spreadsheet here if you are interested: https://docs.google.com/spreadsheets/d/1F1Pk-vQKZVXX4X2UESABcpliKFGdki0Ip5NQCOxiTaY/edit?usp=sharing
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on July 25, 2018, 03:32:44 AM
I was just curious. I would throw in at least a 10% ROE for Empire Life for the quarter and add that in.

Also, they consolidate UNC and I believe, equity account for Algoma and EVT so the changes in market value don’t necessarily get captured in the book value.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on August 02, 2018, 04:30:34 PM
Empire Life puts up a 15.6% ROE for Q2. Another very strong indication that the NAV is understated when valuing Empire Life at book value.

http://globenewswire.com/news-release/2018/08/02/1546584/0/en/Empire-Life-reports-second-quarter-2018-results.html?ev=1

I also find it interesting that Empire Life appears to have started paying out regular dividends to ELF.

http://globenewswire.com/news-release/2018/08/02/1546588/0/en/Empire-Life-announces-dividends.html?ev=1
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on August 11, 2018, 02:16:14 PM
2nd quarter results out. any input from the knowledgeable posters here? Empire life results seem to keep improving which is encouraging.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Grafter on November 21, 2018, 08:37:04 PM
3rd quarter is out.  It looks like the discount to NAV is about 39% (if I'm calculating it right).
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: woodstove on December 10, 2018, 07:59:58 AM
United Corps has changed investment manager (per recent press release).  Any thoughts?  Does it reflect a strategy change, or just a transition of teams?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: notorious546 on December 13, 2018, 02:00:03 PM
United Corps has changed investment manager (per recent press release).  Any thoughts?  Does it reflect a strategy change, or just a transition of teams?

how why/ does this matter?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: woodstove on December 14, 2018, 01:22:33 PM
Hi Notorious...  I'm not sure I understand your question.  Here is what I was getting at...

-- Do you mean what is difference between strategy change vs transition of teams?  I am curious whether there is strategy change -- eg, with another ELF affiliated fund, a while-ago decision to allocate a small fraction of funds to emerging markets represented a small strategy change, I thought.

-- In contrast, a transition of teams is perhaps not a strategy change, just possibly a determination that another team(s) might be more suited to continue following of prior strategy.   Don't know ... that's why I am interested in thoughts of others.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 14, 2018, 03:44:54 PM
They seem to have a preference for independent money managers so perhaps it has more to do with J&F being acquired by Scotia than a strategy change per se.

As a side note, this is the biggest NAV discount I have seen since 2011. I don’t track it daily but by quarter end back to 2009 and yearly before that. At the end of 2011, the NAV was $642.98 and the stock was $340.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on December 15, 2018, 04:15:40 AM
i FWIW also believe they are more stable w/o the property and casualty business they owned then and sold and with just Empire which is more stable and growing, albeit slowly.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: woodstove on December 15, 2018, 07:29:35 AM
"Preference for independent money managers" -- yes, that seems most probable reasoning.  I admit being a bit concerned about J&F acquisition by Scotia, that the rationality, value, loyalty, patience discipline might get diluted via larger organization culture.  So despite knowing nothing about these new investment managers, I'm ok with such a move.  One of the curiosities about ELF group is that the boards have max age-70 criterion, despite being such long-history firm.  Wise choice in my opinion (and I'm over that hill, among others).  Rely upon seasoned middle generation, facilitate the seasoning and intake.  Re stability -- the group has more cross bracing than most structures.  Very impressive.  Good for worry-free sleep.  Glad to be along for the ride, hope the group never goes private.  Thanks for the link to Australian fund manager writeup -- hadn't seen it before.  Maybe discount is Christmas special !
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on March 09, 2019, 06:50:31 AM
look like corporate's global portfolio got caught in the 4th quarter swoon.  looks like empire had a so-so year. any other more knowledgeable posters have any input.  TIA
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on March 10, 2019, 12:59:23 PM
From my crappy spreadsheeting skills, looks like these are the top drags on ELF from the Mar 2018 carrying value to current market price:

- United's Japan portfolio: -4.3$/share
- Conagra Brands [via United]: -2.7$/share
- Henkel [via Economic]: -3$/share
- Algoma: -3.2$/share (might be wrong about this one, based on SafetyInNumber's previous comment).
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 03, 2019, 12:27:05 PM
Empire Life released its earnings - ROE was decent at 11.2%

http://www.globenewswire.com/news-release/2019/05/02/1815605/0/en/Empire-Life-reports-first-quarter-2019-results.html?ev=1

With the market bounce back, I’m expecting NAV to bounce to new highs when they report next week but I guess we’ll see.

Anyone going to the AGM?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 11, 2019, 08:12:35 PM
ELF reported on Thursday. The NAV hit an all new high at $1382.18 while the NAV discount is the biggest since 2011.

I attended the AGM on Thursday as well. A few shareholders asked about the potential for share buybacks and the push back from management seemed slightly less than the yeas before.

I don't know if they will try something to close the discount or buy the stock back but I wouldn't be surprised if they did. I also don't have high hopes that they will!

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-march-31-2019-financial-results-818983409.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on May 11, 2019, 09:02:50 PM
What reasoning did they provide to not do a buyback? Seems like a no-brainer to buy dollars for 57 cents.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wachtwoord on May 12, 2019, 04:12:51 AM
What reasoning did they provide to not do a buyback? Seems like a no-brainer to buy dollars for 57 cents.

Empire building? Wanting to privately buy cheap shares?

What else would be a good reason really? I really doubt they have alternative investment opportunities with a higher ROIC :P
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 12, 2019, 06:35:58 AM
What reasoning did they provide to not do a buyback? Seems like a no-brainer to buy dollars for 57 cents.

Empire building? Wanting to privately buy cheap shares?

What else would be a good reason really? I really doubt they have alternative investment opportunities with a higher ROIC :P

I think they think it’s akin to financial engineering. They tried a SIB at ALC and barely bought any stock back so they don’t think “it worked”. Now they are doing a special dividend at ALC.

Mostly it seems they think value investing is out of favour and when it comes back in favour the discount will shrink on its own. To me that just seems like an opportunity lost.

I suggested they buy as much EVT they can at par. It would increase their ownership of the ELF shares held there and would be a quasi buyback without impacting ELF shares and then do a SIB on ELF shares.

Another shareholder suggested a normal course issuer bid and a phone number shareholders could call if they want to sell a certain amount of stock. They would have a weekly block exemption.

Another shareholder wants all the dividends passed through. ELF started taking big dividends from Empire Life last year and his argument was the dividends not paid out are only worth 57 cents on the dollar because of the NAV discount.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on May 14, 2019, 07:30:13 AM
have they been buying any more ELF in the investment funds UNC or EVT, of which they are slowly accumulating I believe?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 14, 2019, 11:56:57 AM
have they been buying any more ELF in the investment funds UNC or EVT, of which they are slowly accumulating I believe?

No, they haven't really used those to accumulate ELF recently. I don't think UNC has ever owned any.

EVT does own ~9.5% of ELF but they haven't added any since 2012, as far as I can tell.

ELF does slowly buy shares of UNC but that has slowed to almost nothing lately.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on May 14, 2019, 12:16:55 PM
reminds me of nwli of which i own some. 

I believe i remember ( think anyway as mind may be going) and I tried to google but could not find that Jackson at one point( think in early '90's) bought out an investment company I believe in canada that I believe he owned quite a few shares of.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 15, 2019, 08:44:21 AM
Duncan bought 100 shares yesterday so that’s something 🤪

https://www.canadianinsider.com/node/7?menu_tickersearch=ELF+%7C+E-L+Financial
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 27, 2019, 08:12:30 PM
ELF has a website now.

It's not very useful but at least it exists.

https://www.e-lfinancial.ca/general-information
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: woodstove on May 28, 2019, 02:35:20 AM
Thanks for the pointer to website.  Some good info there including annual reports for past decade.  Info previously available but helpful to have it all gathered together. 
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on September 07, 2019, 11:13:35 AM
They reported last month, and NAV was up to $1,397.35, with the stock trading as low as $720 in the past couple of weeks. A record discount (?) of 52% of NAV.

Continue to be shocked that they don't buyback some of their shares, would be so accretive at these levels.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on September 07, 2019, 09:19:31 PM
They reported last month, and NAV was up to $1,397.35, with the stock trading as low as $720 in the past couple of weeks. A record discount (?) of 52% of NAV.

Continue to be shocked that they don't buyback some of their shares, would be so accretive at these levels.

I heard a theory that they like the discount because they will avoid a bunch of taxes when Henry Jackman passes away. I think he is 87 now. I assume they already did an estate freeze once when they sold the Dominion back in 2013. The NAV was $872.45 at the end of 2013 and the share price was $725.

I have suggested that they should sell down the equity portfolio to buy back stock. It would reduce risk while being accretive to NAV and increasing our ownership in Empire Life on a per share basis.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: ColdandRich on September 14, 2019, 08:24:52 AM
They reported last month, and NAV was up to $1,397.35, with the stock trading as low as $720 in the past couple of weeks. A record discount (?) of 52% of NAV.

Continue to be shocked that they don't buyback some of their shares, would be so accretive at these levels.

I heard a theory that they like the discount because they will avoid a bunch of taxes when Henry Jackman passes away. I think he is 87 now. I assume they already did an estate freeze once when they sold the Dominion back in 2013. The NAV was $872.45 at the end of 2013 and the share price was $725.

I have suggested that they should sell down the equity portfolio to buy back stock. It would reduce risk while being accretive to NAV and increasing our ownership in Empire Life on a per share basis.

Safety, that is an interesting theory and maybe could have some truth.  I guess there are two possible takeaways from it if that is true:

1 - The family has incentives that are different from the average shareholder and that could cause them to act a certain way that furthers their own interests
2 - The share price could potentially be artificially low right now and after Henry passes they will be free to pursue more shareholder friendly moves

Right now I have a chunk of money to deploy and am trying to decide between going with Canadian General Investments (TSE:CGI) or Economic Investment Trust (TSE:EVT).  I think I will go with Economic as I think there are lots of levers for EVT/ELF to pull to unlock value.  I plan to attend the shareholder meeting and add my voice to yours to try and get management to unlock value.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on September 14, 2019, 09:31:38 AM


Safety, that is an interesting theory and maybe could have some truth.  I guess there are two possible takeaways from it if that is true:

1 - The family has incentives that are different from the average shareholder and that could cause them to act a certain way that furthers their own interests
2 - The share price could potentially be artificially low right now and after Henry passes they will be free to pursue more shareholder friendly moves

Right now I have a chunk of money to deploy and am trying to decide between going with Canadian General Investments (TSE:CGI) or Economic Investment Trust (TSE:EVT).  I think I will go with Economic as I think there are lots of levers for EVT/ELF to pull to unlock value.  I plan to attend the shareholder meeting and add my voice to yours to try and get management to unlock value.

I like EVT as well. There is a good argument that EVT will be the first place they could release some value. I would do it by offering to buy it for NAV, thus buying back a lot of ELF at the current share price. Very accretive and relatively simple.

I also like TII.V right now if you are looking for a company trading at 0.55x book and is actually trying to close the discount but having no success. They have maxed out the NCIB the last two years, introduced a new dividend (4% yield) that goes ex on Sept 27 and grown the business. ROE is trending towards 10% and should go over which might close the discount or perhaps the buyback will begin to have an impact when its resumed in late November.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on October 13, 2019, 09:41:37 PM
East 72 with a new discussion of ELF in quarterly report

http://east72.com.au/wp-content/uploads/2019/10/E72-Quarterly-Report-Sept-2019.pdf
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Stuart D on October 13, 2019, 11:53:09 PM
East 72 with a new discussion of ELF in quarterly report

http://east72.com.au/wp-content/uploads/2019/10/E72-Quarterly-Report-Sept-2019.pdf

That's great - @SafetyinNumbers thank you for posting!
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on October 14, 2019, 04:24:03 AM
agreed. good stuff
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: sundin on October 15, 2019, 01:54:07 PM
East 72 with a new discussion of ELF in quarterly report

http://east72.com.au/wp-content/uploads/2019/10/E72-Quarterly-Report-Sept-2019.pdf

"....the company and its associates stress the fact they do not retire equity and that discounts to net asset value are to be expected however, acquiring EVT outright would make some degree of sense. "

Why would they not retire equity w/ such a glaring discount to book value? Is the IRR of acquiring EVT outright is greater than buy backs?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on October 15, 2019, 08:42:02 PM
East 72 with a new discussion of ELF in quarterly report

http://east72.com.au/wp-content/uploads/2019/10/E72-Quarterly-Report-Sept-2019.pdf

"....the company and its associates stress the fact they do not retire equity and that discounts to net asset value are to be expected however, acquiring EVT outright would make some degree of sense. "

Why would they not retire equity w/ such a glaring discount to book value? Is the IRR of acquiring EVT outright is greater than buy backs?

Yeah, because EVT owns ~10% of ELF, if they acquire EVT for NAV, they can buy back a lot of shares back without paying a premium.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on October 22, 2019, 07:45:04 AM
if elf bought evt, would tax basis go to NAV paid by ELF or would ELF still be on the hook for the deferred taxes of EVT?  do any of the knowledgeable have a clue?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on October 22, 2019, 10:01:38 AM
if elf bought evt, would tax basis go to NAV paid by ELF or would ELF still be on the hook for the deferred taxes of EVT?  do any of the knowledgeable have a clue?

I think ELF would pay NAV or close to it for the remaining EVT the Jackmans don't have, which means the value of the assets less deferred tax. The deferred tax would remain a liability for ELF. EVT would still exist, it would just be private and would continue to carry the deferred tax liability.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on October 22, 2019, 10:05:13 AM
thanks
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on October 22, 2019, 03:08:57 PM
if elf bought evt, would tax basis go to NAV paid by ELF or would ELF still be on the hook for the deferred taxes of EVT?  do any of the knowledgeable have a clue?

I think ELF would pay NAV or close to it for the remaining EVT the Jackmans don't have, which means the value of the assets less deferred tax. The deferred tax would remain a liability for ELF. EVT would still exist, it would just be private and would continue to carry the deferred tax liability.

They could also liquidate that portfolio (hedged as soon as they announce the acquisition) if they don't want any additional leverage. They would have to pay the tax but they should be indifferent.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on October 22, 2019, 03:16:16 PM
Has anyone ever asked them if they would have UNC bid for EVT?

I haven't really thought it through but presumably an exchange ratio based on the respective NAVs would work.

They would gain efficiencies for things like listing costs and it could be structured tax free.

That would dramatically increase ELF's share of the ELF shares owned by EVT. I suppose the risk is that ELF shares would jump a lot on news because it would seem like ELF is trying to create shareholder value. No one thinks they have any interest in doing that right now.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: spartan on November 05, 2019, 10:50:29 AM
I've taken a closer look at Empire Life's numbers - see attached spreadsheet (two tabs) for numbers going back to 2001.

Here is a summary for those interested, along with my key takeaways:

Four business segments:
- Wealth Management
- Employee Benefits
- Individual Insurance
- Capital & Surplus

Four revenue streams:
- Net premiums
- Investment income
- Fee income
- Net gains/losses from investments

Business changed after 2009:
- Investment income began to grow at a higher CAGR driven by individual insurance segment. Since 2009, CAGR has been around 6%. Although wealth management investment income has dropped since then, it is compensated by insurance and capital segments.
- Fee income continues to grow substantially and driven by wealth management segment. Since 2003, when segmented information began to be presented, this has grown at 13% CAGR.
- Excluding net gains/losses from investments, revenue growth has been stagnant. Pre-GFC, revenue was growing at around 10% CAGR. Post-GFC, revenue is only growing at 3% CAGR per year.
- Although revenue is stagnant, it is still growing and buttressed by fee and investment income. Most importantly, Empire’s growth seems to be dropping directly to bottom line. Net income has been growing at a blistering pace – close to 25% CAGR since 2010.
- This is a hidden growth business.


- Empire Life is a significant contributor to ELF’s bottom line. If revenue continues to grow at a reasonable rate, and bottom line continues to grow at a high rate, Empire Life should be worth roughly $750 per share in the next year or two (entire value of ELF share price today). It could be worth even more than that to the Big 3 insurance companies; synergies could be quite substantial.

[($200 Million x 15 Multiple) / 4 Million Shares Outstanding] = $750

- Net assets available to common shareholders have been growing at a 12% CAGR since 2013, when numbers began to be segmented. Applying varying multiples (1.1x – 1.7x) implies an intrinsic value per share of $440 – $675. At first glance, this seems too simplistic and undervalues the true growth potential of Empire Life. However, it adds another layer of comfort. As a reminder, the Big 3 insurance companies all trade at similar multiples:
   - Sun Life = 1.65x
   - Manulife = 1.1x
   - Great-West Life = 1.55x
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: BroKon on November 05, 2019, 11:03:40 PM
Thanks for your analysis spartan.
Let me preface my comments with firstly, I think ELF is cheap and I own it, and secondly, that most analysis of Empire Life that I have seen agrees with spartan’s conclusion. However, I just cannot seem to get to there.
I have looked at Empire Life two ways:
•   Using Damoradan base case numbers of US life Insurance companies, where the average Life Insurance company trades on price to book of 0.82 and has a ROE of 12% - which would extrapolate Empire Life to somewhere around 0.75 price to book.
•   Using Sources of Earnings from their annual report and a multiple of 13 (although I do take spartan’s point around growth in fee income, so maybe you could put a higher multiple, but I just took the average of the three life companies he named) which gives a p/b of 1.04
At around 30% of Net Equity Value, none of the above significantly changes how cheap ELF is, and as I said most analysis I read gives it a minimum valuation of 1.4x, but I thought it was worth giving a counterpoint, to add to the discussion on a company that even the chairman believes cheap by buying…..wait for it……another 100 shares the other day.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 06, 2019, 02:04:15 PM
I agree with both of you. I do think Empire Life in a sale scenario would be worth close to where Standard Life sold for at 1.9x book but it likely won't happen until we have much higher interest rates.

The speculation that estate planning is the reason they aren't buying more stock as a family or as a company is the most rational I have heard.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mranski on November 06, 2019, 04:01:57 PM
Ive never been able to understand their holding of Algoma Central, it seems like such a mediocre long term investment, company, and industry. I guess it is small enough overall to not matter enough.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 06, 2019, 07:26:03 PM
Ive never been able to understand their holding of Algoma Central, it seems like such a mediocre long term investment, company, and industry. I guess it is small enough overall to not matter enough.

It's been about a 10 bagger for them so far plus dividends based on EVT's financials. I'm not sure how long they have owned it though I saw it was about a 3 bagger on EVT's financials at the end of 2002. ALC has returned about 9%/yr since then which has beat the S&P/TSX which has had a return of about 5.5%/yr.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on November 06, 2019, 07:55:32 PM
I own elf and continue to hold. I think it will be fine. They are growing book value slowly and the discount is based on interest rates. It's frustrating and they are missing an opportunity but the long term success isn't impeded by the low share price.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mranski on November 06, 2019, 08:23:53 PM
Thanks, Safety, the long term is way better than I thought. I was looking at the 10 year.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: spartan on November 07, 2019, 04:54:57 AM
Has anyone dabbled in their preferreds? Hal has increased his holdings of Series 2 as of late (around $2.5 Million purchased since August). They currently trade at around $22 - yielding 5.4%. Not great but safe. Here's the excerpt from their latest annual regarding the Series 2:

"The First Preference Shares, Series 2 are entitled, if and when declared, to fixed non-cumulative
preferential cash dividends at a rate equal to $1.1875 per share per annum. On and after October 17,
2015, the Company may redeem for cash the First Preference Shares, Series 2 in whole or in part, at
the Company’s option at $25.00 per share, in each case together with all declared and unpaid dividends.

On and after October 17, 2011, the Company may convert all or any part of the outstanding First
Preference Shares, Series 2 into that number of Common Shares determined by dividing by the then
applicable redemption price, together with all declared and unpaid dividends to the date of conversion,
by the greater of $1.00 and 95% of the weighted average trading price of the common shares on the
Toronto Stock Exchange for the 20 consecutive trading days ending on the fourth day prior to the
conversion date."
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 07, 2019, 08:25:42 AM
Thanks, Safety, the long term is way better than I thought. I was looking at the 10 year.

The 10 year shows decent outperformance over the S&P/TSX too (as measured by the XIU so I could include reinvested dividends).

I'm using this site below though so maybe there is a glitch.

https://www.canadastockchannel.com/compound-returns-calculator/
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mranski on November 07, 2019, 08:31:01 PM
I was eyeballing Morningstar financials, eps, and NI, SINCE 09.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 29, 2019, 07:24:18 AM
First decent insider purchase from the Jackman's in a long time.

https://www.canadianinsider.com/company?ticker=ELF

9600 shares at $737.50 takes holdings to 518,358 shares.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on November 29, 2019, 08:34:10 AM
it says Canadian & Foreign Securities Co. Limited bought.  is this controlled by Jackman's?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on November 29, 2019, 08:48:35 AM
it says Canadian & Foreign Securities Co. Limited bought.  is this controlled by Jackman's?

Yes, that is my understanding.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: spartan on December 03, 2019, 01:40:34 PM
A few questions for the more enlightened ones on this message board:

1. As per SEDI filings, the Jackmans have been buying shares of ELF and EVT at a steady pace for years. Should these be viewed as buybacks in disguise? If so, what is the end game?

2. If they ever decide to go private, would they be legally required to offer minority shareholders a reasonable price for their shares? What protections do minority shareholders have when it comes to getting at least book value in the event of privatization.

3. For those that aren't particularly familiar with Canadian estate planning, how could the eventual passing of Hal be a catalyst?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 03, 2019, 07:38:53 PM
A few questions for the more enlightened ones on this message board:

1. As per SEDI filings, the Jackmans have been buying shares of ELF and EVT at a steady pace for years. Should these be viewed as buybacks in disguise? If so, what is the end game?

2. If they ever decide to go private, would they be legally required to offer minority shareholders a reasonable price for their shares? What protections do minority shareholders have when it comes to getting at least book value in the event of privatization.

3. For those that aren't particularly familiar with Canadian estate planning, how could the eventual passing of Hal be a catalyst?

1. It's not a buyback but the family never sells any shares so the supply is removed. So theoretically, the price should rise if demand is the same. That being said, there is no accretion to NAV benefit that helps all shareholders except if the shares rise, the discount will close. When the discount was much smaller, at an AGM, Duncan joked that because they are always buying stock, eventually there won't be any left and the discount should close.

2. They can offer whatever price they want but they would have to get the majority of the minority to agree to it. Perhaps that bar is low right now but I don't know if they want to be seen as doing a take under for their image. All the more reason to do substantial issuer bids every few years.

3. I'm no expert on Canada estate planning but I know on death there is a deemed disposition for tax purposes of all holdings. It's possible that back when ELF sold the P&C biz and paid a special dividend, they might have done an estate freeze at that point and paid a lot of tax. The stock really hasn't gone up much since then (even though the NAV has) so they might have very little tax to pay now. It's just a theory and no evidence to back it up. The Jackmans seem very practical so I don't think it would be surprising if this was the case and if it was actually Hal's idea.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Cigarbutt on December 04, 2019, 06:09:19 AM
Disclosure: I've only followed superficially since the sale of the property-casualty unit but this has been, effectively, a privatization in slow motion.

The privatization could be tomorrow or could be, essentially, never but it's hard to actualize the value of the discount closing. The return going forward will tend to correlate highly with life insurance results.

The Jackman family is not exactly transparent but it is reasonable to assume that they've set up their affairs with a permanent state of mind:
https://www.empire.ca/sites/default/files/2017-05/CapYourTaxesWithAnEstateFreeze-EN-web.pdf
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on December 04, 2019, 08:23:36 AM
does any one know what the number "97-other" means under Jackson's stock trades in inside trading?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on December 04, 2019, 08:30:21 AM
< In a typical corporate estate freeze, the owner of the common shares of the company will exchange those shares for fixed value preferred shares. By making the appropriate elections under the Income Tax Act, the exchange of the shares will not be taxed until the freezer dies. New common shares (and the eventual tax on future growth in value) will be issued to the freezer’s children or grandchildren> 

above from posted address that  Cigarbutt posted.

it would seem from my limited knowledge that if jackson has indeed frozen assets per buying preferred(of which he appears to have done quite a lot of lately) and if the amount is indeed frozen it would possibly behoove the heirs to get the value of ELF closer to its fair value whereby the future taxable value may be less once it comes into their possession versus the much discounted value of present.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 04, 2019, 10:12:13 AM
< In a typical corporate estate freeze, the owner of the common shares of the company will exchange those shares for fixed value preferred shares. By making the appropriate elections under the Income Tax Act, the exchange of the shares will not be taxed until the freezer dies. New common shares (and the eventual tax on future growth in value) will be issued to the freezer’s children or grandchildren> 

above from posted address that  Cigarbutt posted.

it would seem from my limited knowledge that if jackson has indeed frozen assets per buying preferred(of which he appears to have done quite a lot of lately) and if the amount is indeed frozen it would possibly behoove the heirs to get the value of ELF closer to its fair value whereby the future taxable value may be less once it comes into their possession versus the much discounted value of present.

If I understand you correctly that would mean paying more tax now and thus getting less inheritance to compound over time, wouldn’t it?

I think they used the 97-other code since the preferreds seem to be moving from one hold co Or trust he controls to another.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on December 04, 2019, 11:01:37 AM
possibly i do not understand this freezer law, but if Jackson exchanged common for preferred stock set in value and upon death common shares are issued to the heirs ( assuming a convertible preferred?) and the basis of the stock for the heirs is at a higher price that is closer to NAV, would that not be to the heirs benefit?  I have no idea if the stock basis gets bumped up to market value, but that is what I am basing this on. i may not be expressing myself very well so please be patient.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Cigarbutt on December 04, 2019, 11:30:30 AM
^The fiscal setup is probably very complex and sophisticated.
1-The "97-other" code is simply a code different from the typical "10" you would put on the insider trading form and which includes situations where the security is bought through a trust, a private holding or for a separately managed account.
https://www.sedi.ca/sedi/new_help/english/public/Glossary/Nature_of_transaction_codes.htm
2-You have to differentiate the preferred securities that were issued by ELF or any other related public issuers from the preferred securities that would be issued privately in relation to a re-arranged capital structure of a trust or private holding in the context of an estate freeze, a holding which, itself, would own various securities (common, preferred or whatever public or private). The estate freeze is a private transaction that results in 1-the preferred shares being freezed (tax point of view) and being linked to a fixed income with the owner/founder and 2-common shares that "belong" to the next generation(s). The freeze can be flexible and dynamic but the complexity may give rise to a certain level of confusion with the notion of control.
Take the following:
-from last proxy, when the main table seems to indicate that insiders own very little. From the footnote:
"Companies in which The Hon. Henry N.R. Jackman has an indirect interest, control, in the aggregate, 2,926,009 or 72.8% of the outstanding Common Shares of the Company. Although The Hon. Henry N.R. Jackman is associated with some of these companies, he does not control any of them and, accordingly, does not have beneficial ownership of the Common Shares of the Company held by them."
So, does he control or not?
-from the last annual report, under the related parties section:
"The Company has investments in related parties which includes investments in associates of $334,913 (2017 - $330,050) and investments in other related parties within investments - corporate of $785,176 (2017 - $853,707). The ultimate controlling party of the Company and these related parties, is The Honourable Henry N.R. Jackman together with a trust created in 1969 by his father, Henry R. Jackman."
So, the ultimate control is with the Honourable but how this is defined is certainly more clearly defined in other documents.
3-For clarity, I assume that the set up is legal but wonder if the family trusts and various private holdings do not aim, at least in part, to explore the limits of fiscal constraints. The other day, I was discussing with somebody who had to complete due diligence in a certain Mediterranean country in order to arrange financing for a specific transaction. There was some difficulty with some numbers. After some resistance, the counterparty offered the following remark: "So, which financial statements do you want? the public ones? the banker ones? the tax ones? or the family ones? Again for clarity, I'm not suggesting something illegal but the setup is likely to be VERY complicated and likely contains an off-shore theme.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mjm on December 04, 2019, 12:12:31 PM
 thanks for reply.  maybe i should just listen. :-)
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 07, 2019, 06:59:06 AM
More size insider buying but through private trades.

24,100 shares in total from one of the holding companies and Mr. Jackman.

Volume was big (for ELF) on Friday as well but not clear if that was insider activity as well.


https://www.canadianinsider.com/company?ticker=ELF
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Philbert77 on December 07, 2019, 09:57:34 AM
I have a question. Does anyone know or can speculate why Hal Jackman would be purchasing the preferred shares? How would that benefit him versus purchasing the common shares?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on December 07, 2019, 03:23:45 PM
I have a question. Does anyone know or can speculate why Hal Jackman would be purchasing the preferred shares? How would that benefit him versus purchasing the common shares?

I assume it’s just because he wants more income and he knows it’s “risk free” versus the actual risk free rate. The after tax advantage on that income is pretty huge.

Just a guess though.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on February 27, 2020, 05:30:41 AM
Big earnings from Empire Life yesterday on some assumption changes. They also paid out a big dividend to ELF.

NAV should be up strong when ELF reports, making the NAV discount even bigger.

https://www.newswire.ca/news-releases/empire-life-reports-fourth-quarter-and-full-year-2019-results-884996343.html

https://www.newswire.ca/news-releases/empire-life-announces-q4-2019-and-additional-dividends-807798210.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on February 27, 2020, 05:41:44 AM
I just pulled up the US fixed income rates from Bloomberg a few minutes ago.  If rates keep falling, it won't be long before insurance companies will be better off keeping their reserves under the CEO's mattress.  It's a bit of a tough environment for a lifeco.


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 03, 2020, 11:35:34 AM
Q4 results are out.

Highlights are:

- NAV is up to $1486 (up from $1421 at 9/30/20)
- special dividend of $25 on top of regular dividend of $1.25

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-december-31-2019-financial-results-883064054.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 04, 2020, 11:20:49 AM
I’m amazed ELF and EVT both announced NCIBs on top of the special dividend yesterday.

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-normal-course-issuer-bid-843178871.html

https://www.newswire.ca/news-releases/economic-investment-trust-limited-announces-normal-course-issuer-bid-830547874.html

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on March 04, 2020, 01:33:57 PM
I’m amazed ELF and EVT both announced NCIBs on top of the special dividend yesterday.

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-normal-course-issuer-bid-843178871.html

https://www.newswire.ca/news-releases/economic-investment-trust-limited-announces-normal-course-issuer-bid-830547874.html


Maybe the Jackmans view the current situation as a way to buyout a large chunk of the minority holders at half of book?  Really, the discount is getting silly...


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: spartan on March 08, 2020, 07:56:38 AM
I have a question. Does anyone know or can speculate why Hal Jackman would be purchasing the preferred shares? How would that benefit him versus purchasing the common shares?

I assume it’s just because he wants more income and he knows it’s “risk free” versus the actual risk free rate. The after tax advantage on that income is pretty huge.

Just a guess though.

I assume it's also because they've done an estate freeze. Hal doesn't want his kids to pay capital gains on future appreciation of his common shares.

By buying pref shares, he earns a guaranteed 5-6% yield (as mentioned by Safety) and minimizes taxes by avoiding capital gains.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 08, 2020, 08:36:45 AM
The surprise special dividend and first ever NCIB might have changed the narrative. We'll have to see if they are aggressive with the buyback.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on March 08, 2020, 08:49:48 AM
The surprise special dividend and first ever NCIB might have changed the narrative. We'll have to see if they are aggressive with the buyback.

In retrospect, probably should have been obvious that they'd begin to start returning capital to shareholders, after they purchased a large block of shares for themselves from capitulating shareholders at a record discount to book.

As Mark Leonard would say, treating shareholders like "prey instead of partners".
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on March 22, 2020, 10:19:24 AM
The valuation is now close to 1/3 book (Based on dec 31/2019 numbers).  The special dividend is therefor 1.7% of NAV but almost 5% of the share price!   If management can take any action to return equity this could be very rewarding for shareholders.  One scnenario, if they do the special $25 dividend every year for 10 years you would have received half of the current share price and yet still hold an investment trading at about 40% of book (assuming book in 10 years in comparable to end of 2019 numbers, e.g. a completely stagnant decade).

I am just trying to figure out where NAV is now.  Any bonds should be up but of course equities are going to be in the toilet.  Still I would like some insight into the numbers to see how it balances out.  I am having a hard time tracking down their financials, is there a good source?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on March 22, 2020, 08:33:21 PM
The valuation is now close to 1/3 book (Based on dec 31/2019 numbers).  The special dividend is therefor 1.7% of NAV but almost 5% of the share price!   If management can take any action to return equity this could be very rewarding for shareholders.  One scnenario, if they do the special $25 dividend every year for 10 years you would have received half of the current share price and yet still hold an investment trading at about 40% of book (assuming book in 10 years in comparable to end of 2019 numbers, e.g. a completely stagnant decade).

I am just trying to figure out where NAV is now.  Any bonds should be up but of course equities are going to be in the toilet.  Still I would like some insight into the numbers to see how it balances out.  I am having a hard time tracking down their financials, is there a good source?

I don't know if it is helpful, but a while back I shared this spreadsheet of their equity holdings (via Algoma, United, and Economic), as of March 31, 2018. Looks like they are down ~11% from those levels (assuming no portfolio changes). Check it here: https://docs.google.com/spreadsheets/d/1F1Pk-vQKZVXX4X2UESABcpliKFGdki0Ip5NQCOxiTaY/edit?usp=sharing
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on March 23, 2020, 04:26:03 AM
The valuation is now close to 1/3 book (Based on dec 31/2019 numbers).  The special dividend is therefor 1.7% of NAV but almost 5% of the share price!   If management can take any action to return equity this could be very rewarding for shareholders.  One scnenario, if they do the special $25 dividend every year for 10 years you would have received half of the current share price and yet still hold an investment trading at about 40% of book (assuming book in 10 years in comparable to end of 2019 numbers, e.g. a completely stagnant decade).

I am just trying to figure out where NAV is now.  Any bonds should be up but of course equities are going to be in the toilet.  Still I would like some insight into the numbers to see how it balances out.  I am having a hard time tracking down their financials, is there a good source?

I don't know if it is helpful, but a while back I shared this spreadsheet of their equity holdings (via Algoma, United, and Economic), as of March 31, 2018. Looks like they are down ~11% from those levels (assuming no portfolio changes). Check it here: https://docs.google.com/spreadsheets/d/1F1Pk-vQKZVXX4X2UESABcpliKFGdki0Ip5NQCOxiTaY/edit?usp=sharing

You could also use the decline in the UNC.TO NAV YTD (last update is Thursday) as an estimate for non-Empire Life NAV.

https://www.ucorp.ca/sites/default/files/pdfs/ucl_2020navhist_10.pdf
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: mranski on March 29, 2020, 01:12:57 PM
Algoma Central 10 yr numbers on Morningstar are flat by most metrics. It seems to be a dividend with debt.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on March 29, 2020, 02:20:57 PM
The valuation is now close to 1/3 book (Based on dec 31/2019 numbers).  The special dividend is therefor 1.7% of NAV but almost 5% of the share price!   If management can take any action to return equity this could be very rewarding for shareholders.  One scnenario, if they do the special $25 dividend every year for 10 years you would have received half of the current share price and yet still hold an investment trading at about 40% of book (assuming book in 10 years in comparable to end of 2019 numbers, e.g. a completely stagnant decade).

I am just trying to figure out where NAV is now.  Any bonds should be up but of course equities are going to be in the toilet.  Still I would like some insight into the numbers to see how it balances out.  I am having a hard time tracking down their financials, is there a good source?

I don't know if it is helpful, but a while back I shared this spreadsheet of their equity holdings (via Algoma, United, and Economic), as of March 31, 2018. Looks like they are down ~11% from those levels (assuming no portfolio changes). Check it here: https://docs.google.com/spreadsheets/d/1F1Pk-vQKZVXX4X2UESABcpliKFGdki0Ip5NQCOxiTaY/edit?usp=sharing

Thanks for this. 11% isn't bad at all.  However, I see $5.2B of common share investments at corporate alone.  I don't know how to reconcile those numbers.  There is also $7B bonds, $0.5 options, $0.5b preferred shares, $.7b common shares under insurance investments.  I also see $8.5B under segregated funds, which is about 75% common/preferred shares and the rest bonds.

This thing is difficult to understand but I think their total equity exposure is around $12B vs $7B equity, both year end numbers.   With the high equity exposure and a significant amount in the liability side they could be worse off than I first realized.  I have to hope those options were in puts that are kicking ass right now but otherwise this could be ugly.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on April 02, 2020, 09:17:35 AM
I have modeled NAV per share as per the end of Q1 (see attachment)
I get a NAV per share of 1308 CAD at the end of Q1 that would be a decline of 12% YTD (10% excluding the dividend).
The numbers are based on the sensibilities provided in the Annual report.
They provide sensibilities to 20% declines in equity markets for the Life insurer and the E-L corporate, interest rates sensibility for the Empire life, currency sensibility to USD and  sensibility to fair value change in associates (Algoma and economic)
Empire life has a big corporate bond book as you would expect although quality seems to be quite high (only 15% are BBB or lower), despite this the bond prices would have deteriorated and the increase in the value of the bonds due to the decrease in interest rates is most likely overstated in the model.
This book value changes are all based on expected balance sheet changes and do not take into account the P&L for empire life for the quarter as I have no idea what this would be.
I see in their annual report that they have increased retention of the individual life policies, using less reinsurance (not great timing on this to say the least).
They guide to a loss of aprox. 12 million CAD for every 2% increase in mortality.
I don't know what their insurance contracts look like and if they have some kind of pandemic protection, if any of you have any idea on this and can comment would be great.
I assume that the 2% is a long term increase not a spike and i don't think that it would be material to this quarter in any case.
It looks like the shares are selling at a 48% of NAV. This would be the widest it has been as far back as I have looked.
Any feedback would be great.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on April 07, 2020, 12:22:40 AM
they just filed their first month of buybacks and the numbers are incredible, they bought back 160000 shares during march, that is 4% of the outstanding shares.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on April 07, 2020, 02:44:41 AM
They bought 140 thousand shares at an average of 573 dollars, that is at a nearly 60% discount to what NAV per share should have been for the end of the quarter.
This buyback alone should have added 2% to  NAV per share.
See Q1 NAV estimation updated for buybacks attached.
The Jackmans now own over 75% of the company but i still don't think they will try to buy it all in the short term.
Any thoughts?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 07, 2020, 04:14:56 AM
They bought 140 thousand shares at an average of 573 dollars, that is at a nearly 60% discount to what NAV per share should have been for the end of the quarter.
This buyback alone should have added 2% to  NAV per share.
See Q1 NAV estimation updated for buybacks attached.
The Jackmans now own over 75% of the company but i still don't think they will try to buy it all in the short term.
Any thoughts?

140k shares is like 14% of the float at the time. Pretty remarkable. It will be interesting if the discount begins to close as sellers stop needing liquidity.

I don’t think they want to take it private anytime soon but I also didn’t think they would or could be this aggressive on a NCIB.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on April 07, 2020, 04:44:39 AM
It looks like they have been lucky with the timing.
Most of the transactions didn't seem to have gone through the public markets, it looks like the bulk of it were 3 separate private transactions.
I guess funds under pressure trying to sell what they could and they were able to provide liquidity.
They only have left another 60k shares in the NCIB after this.
Can they expand the NCIB amount or is it limited to 5% in 12 months?
The float now should be 850-900k shares.
My guess is that most of it is owned by value mutual funds and they have been under real pressure the last few years.
A discount to NAV is warranted here, but even UNC and EVT are trading at 30-40% discounts to NAV, if we apply the same discount to ELF it should be trading at a range of 795 to 925 CAD, the discount here is crazy in my opinion.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 07, 2020, 06:35:22 AM
It looks like they have been lucky with the timing.
Most of the transactions didn't seem to have gone through the public markets, it looks like the bulk of it were 3 separate private transactions.
I guess funds under pressure trying to sell what they could and they were able to provide liquidity.
They only have left another 60k shares in the NCIB after this.
Can they expand the NCIB amount or is it limited to 5% in 12 months?
The float now should be 850-900k shares.
My guess is that most of it is owned by value mutual funds and they have been under real pressure the last few years.
A discount to NAV is warranted here, but even UNC and EVT are trading at 30-40% discounts to NAV, if we apply the same discount to ELF it should be trading at a range of 795 to 925 CAD, the discount here is crazy in my opinion.

They traded on public exchanges / ATS just not the TSX.

You can where they traded on stockwatch.

https://www.stockwatch.com/Quote/Detail?C:ELF&snapshot=SX
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: BroKon on April 07, 2020, 06:43:02 PM
Can you post a copy of the filing please, as I can't seem to find it.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 07, 2020, 07:15:31 PM
https://www.canadianinsider.com/company-insider-filings?ticker=ELF
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on April 07, 2020, 08:11:24 PM
I have modeled NAV per share as per the end of Q1 (see attachment)
I get a NAV per share of 1308 CAD at the end of Q1 that would be a decline of 12% YTD (10% excluding the dividend).
The numbers are based on the sensibilities provided in the Annual report.
They provide sensibilities to 20% declines in equity markets for the Life insurer and the E-L corporate, interest rates sensibility for the Empire life, currency sensibility to USD and  sensibility to fair value change in associates (Algoma and economic)
Empire life has a big corporate bond book as you would expect although quality seems to be quite high (only 15% are BBB or lower), despite this the bond prices would have deteriorated and the increase in the value of the bonds due to the decrease in interest rates is most likely overstated in the model.
This book value changes are all based on expected balance sheet changes and do not take into account the P&L for empire life for the quarter as I have no idea what this would be.
I see in their annual report that they have increased retention of the individual life policies, using less reinsurance (not great timing on this to say the least).
They guide to a loss of aprox. 12 million CAD for every 2% increase in mortality.
I don't know what their insurance contracts look like and if they have some kind of pandemic protection, if any of you have any idea on this and can comment would be great.
I assume that the 2% is a long term increase not a spike and i don't think that it would be material to this quarter in any case.

It looks like the shares are selling at a 48% of NAV. This would be the widest it has been as far back as I have looked.
Any feedback would be great.

I think the view that mortality will increase is probably wrong. With all the closed business and many staying at home, not commuting, etc, mortality has gone down (saw a chart on this, can't find it right now). If mortality does go up from COVID-19, it will go up substantially in older populations, while at least partially offset by decreased mortality in younger populations. My suspicion (I am not an expert by any stretch) view is that this would be a benefit to life insurers, since the payouts to older cohorts are likely to be less than payouts to younger cohorts...
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: BroKon on April 07, 2020, 08:14:43 PM
Thanks Safety
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: wisowis on April 07, 2020, 08:16:11 PM
I had another question (that I asked in the Knight thread as well, but didn't get an answer). As mentioned above, they repurchased 140k shares since the NCIB started on March 9, 2020. Their NCIB says they may "purchase up to 1,000 Shares on the Exchange during any trading day." Obviously they've bought well in excess of that. Are the NCIB limits not binding?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on April 07, 2020, 11:57:17 PM
Thanks Safety
Total mortality in Spain has double for March compare with last year and it has nearly triple for the last.2 weeks of march.
Now you are right the worst affected age cohort Vs expectations was 65 to 75 followed by over 75s.
This is during the worst of the epidemic and will go down over the next few weeks.
But your point stands that life insurers are affected more by mortalities in the younger cohort
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 08, 2020, 03:21:54 AM
I had another question (that I asked in the Knight thread as well, but didn't get an answer). As mentioned above, they repurchased 140k shares since the NCIB started on March 9, 2020. Their NCIB says they may "purchase up to 1,000 Shares on the Exchange during any trading day." Obviously they've bought well in excess of that. Are the NCIB limits not binding?

Under the NCIB rules, a company is allowed one block trade a week that is above the daily limit. They used the block trade option 3x last month.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 08, 2020, 06:47:32 AM
UNC and EVT also bought some stock back

https://www.canadianinsider.com/company-insider-filings?ticker=UNC

https://www.canadianinsider.com/company-insider-filings?ticker=EVT
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: StubbleJumper on April 08, 2020, 07:18:48 AM
UNC and EVT also bought some stock back

https://www.canadianinsider.com/company-insider-filings?ticker=UNC

https://www.canadianinsider.com/company-insider-filings?ticker=EVT



Any way of seeing whether United or Economic grabbed a few more ELF shares during this decline? 


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on April 08, 2020, 11:34:35 AM
UNC and EVT also bought some stock back

https://www.canadianinsider.com/company-insider-filings?ticker=UNC

https://www.canadianinsider.com/company-insider-filings?ticker=EVT

It would show up on the link to ELF posted previously. They have to file within 5 days so it would have shown up if they did.

I think the more interesting thing is if the family hold cos that get the special dividend use it to buy more stock too and shrink the float even more.

Any way of seeing whether United or Economic grabbed a few more ELF shares during this decline? 


SJ
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on May 07, 2020, 08:09:47 AM
I have modeled NAV per share as per the end of Q1 (see attachment)
I get a NAV per share of 1308 CAD at the end of Q1 that would be a decline of 12% YTD (10% excluding the dividend).
The numbers are based on the sensibilities provided in the Annual report.
They provide sensibilities to 20% declines in equity markets for the Life insurer and the E-L corporate, interest rates sensibility for the Empire life, currency sensibility to USD and  sensibility to fair value change in associates (Algoma and economic)
Empire life has a big corporate bond book as you would expect although quality seems to be quite high (only 15% are BBB or lower), despite this the bond prices would have deteriorated and the increase in the value of the bonds due to the decrease in interest rates is most likely overstated in the model.
This book value changes are all based on expected balance sheet changes and do not take into account the P&L for empire life for the quarter as I have no idea what this would be.
I see in their annual report that they have increased retention of the individual life policies, using less reinsurance (not great timing on this to say the least).
They guide to a loss of aprox. 12 million CAD for every 2% increase in mortality.
I don't know what their insurance contracts look like and if they have some kind of pandemic protection, if any of you have any idea on this and can comment would be great.
I assume that the 2% is a long term increase not a spike and i don't think that it would be material to this quarter in any case.
It looks like the shares are selling at a 48% of NAV. This would be the widest it has been as far back as I have looked.
Any feedback would be great.

Bang on analysis!

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-march-31-2020-financial-results-817480841.html
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 05, 2020, 05:50:22 AM
ELF bought all 200,970 shares allowed under the NCIB plus the family hold co (which ELF indirectly owns a piece) bought another 17k+ shares.


https://www.canadianinsider.com/company-insider-filings?ticker=ELF

It’s only 5% of shares outstanding but it’s also 20% of the float. It might matter at some point.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on June 06, 2020, 08:56:01 AM
My estimation of book value as per the close yesterday is at 1486 CAD per share after all the buybacks.
That is the same as it was at year end and that is after the 26.5 CAD per share dividend it distributed at the end of March.
It is now at close to a 55% discount to NAV.
I watched the Shareholders meeting online, it was the first time I have watched Duncan Jackman speaking and my impressions were good in general as he seems to be a good CEO and the team around him seems quite competent as well, on the other hand I had the impression that they do not care much about minority shareholders.
It isn't so much about what Mr. Jackman said as his tone. Somebody commented about having 100% of their assets in ELF and he was adamant that nobody should have 100 % of their wealth in any one company including ELF. Also somebody thanked them for the stewardship of the company through the years and It seemed to me that he was a bit uncomfortable with the praise.
This is only my subjective impression reading the tone and the body language.
While it is, of course, very good advise not to keep all your wealth in any one company ELF is very similar to a diversified close end equity fund with a modest amount of leverage so it is not as risky as investing in the equity of a company operating in one sector of the economy.
They have completed their 5% buyback in less than 3 months and it was nearly all of it in blocks so they almost didn't buy anything in the open market.
It seeems like there were quite a few institutional investors keen to get out at nearly any price due to the widening NAV discount over the years and the lack of liquidity in the shares.
To me it looks like the Jackmans are delighted with the discount and they would pay as little as they can for the rest of the float. This is of course normal to a certain extend but in some other companies minority shareholders are treated more like partners while here they are just the patsy that holds the remaining chips on the table.
The company at this point is more a family office than a public company.
I wonder what are the incentives of Jackmans to keep this company public.
To me the most likely scenario is if the discount remains attractive, the Jackmans (through buy backs and direct purchases) will aim to control 90- 95% of the company (currently they own around 80%) and at that point they will try to take it private. Probably not offering even NAV at that point.
So in my most likely scenario the return would still very attractive in the next 3-5 years if this plays out.
Any thoughts on this?
Full disclosure: I don't own any ELF shares anymore, I had bought them during the March panic and I sold them just after the shareholder meeting for the reasons I exposed here and I moved the capital to BRK shares  because I was impressed with Buffett's comments and presentation at the Berkshire meeting and i thought the negativity in BRK was really overdone after the meeting
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 07, 2020, 03:07:42 PM
My estimation of book value as per the close yesterday is at 1486 CAD per share after all the buybacks.
That is the same as it was at year end and that is after the 26.5 CAD per share dividend it distributed at the end of March.
It is now at close to a 55% discount to NAV.
I watched the Shareholders meeting online, it was the first time I have watched Duncan Jackman speaking and my impressions were good in general as he seems to be a good CEO and the team around him seems quite competent as well, on the other hand I had the impression that they do not care much about minority shareholders.
It isn't so much about what Mr. Jackman said as his tone. Somebody commented about having 100% of their assets in ELF and he was adamant that nobody should have 100 % of their wealth in any one company including ELF. Also somebody thanked them for the stewardship of the company through the years and It seemed to me that he was a bit uncomfortable with the praise.
This is only my subjective impression reading the tone and the body language.
While it is, of course, very good advise not to keep all your wealth in any one company ELF is very similar to a diversified close end equity fund with a modest amount of leverage so it is not as risky as investing in the equity of a company operating in one sector of the economy.
They have completed their 5% buyback in less than 3 months and it was nearly all of it in blocks so they almost didn't buy anything in the open market.
It seeems like there were quite a few institutional investors keen to get out at nearly any price due to the widening NAV discount over the years and the lack of liquidity in the shares.
To me it looks like the Jackmans are delighted with the discount and they would pay as little as they can for the rest of the float. This is of course normal to a certain extend but in some other companies minority shareholders are treated more like partners while here they are just the patsy that holds the remaining chips on the table.
The company at this point is more a family office than a public company.
I wonder what are the incentives of Jackmans to keep this company public.
To me the most likely scenario is if the discount remains attractive, the Jackmans (through buy backs and direct purchases) will aim to control 90- 95% of the company (currently they own around 80%) and at that point they will try to take it private. Probably not offering even NAV at that point.
So in my most likely scenario the return would still very attractive in the next 3-5 years if this plays out.
Any thoughts on this?
Full disclosure: I don't own any ELF shares anymore, I had bought them during the March panic and I sold them just after the shareholder meeting for the reasons I exposed here and I moved the capital to BRK shares  because I was impressed with Buffett's comments and presentation at the Berkshire meeting and i thought the negativity in BRK was really overdone after the meeting

I wouldn't necessarily assume institutions selling is some sort of rebuke on ELF's strategy. The fact is that a lot of shareholders needed liquidity at that time due to redemptions or to buy something else they owned that was going down faster. Those shareholders might be back and the float is now 20% smaller.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on June 07, 2020, 03:42:09 PM
This may or may not be relevant for ELF, but I sold my EVT because I strongly suspect that the capital gains inclusion rate in Canada will be raised from the current 50%, probably to 75% to help pay for the COVID-19 deficit spending. Any company sitting on a large amount of unrealized capital gains (as EVT is) will see a large hit to their book value.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: JPerez on June 07, 2020, 03:47:47 PM
I am not saying that the selling is a rebuke of their strategy.
I assume most of the shares have been sold by funds that were looking for liquidity and ELF was a good candidate because there was somebody in the market looking for blocks of shares, but they also chose to sell these shares over other ones in their portfolio because their investment thesis is not working out.
I would imagine that value funds bought these shares because it is a well managed company growing NAV at a good clip and the shares are very cheap relative to their value but as over the last 10 years the NAV keep growing and the share price is not going anywhere they are wearing out the shareholders.
Look at these numbers:
In 2007 the share price was around where it is now and the NAV was 675
In the years 2013 to 2016 the share price was also in the 650-720 range where it is now and the NAVs were 2013 (872), 2014 (970), 2015 (1089) and 2016 (1159).
And here we are in 2020 with a NAV of close to 1500 and the share price still at 685.

Of course eventually this should matter and the gap will close, all I am saying is that many shareholders are worn out and they were keen to sell when they found a bid from the company even if it was at less than half NAV.
During the market panic you could say they sold because they had to because of redemptions but who was selling to the company in May and who is selling now at these prices with the stock market back to near all time highs?
Of course this is great for the majority shareholder as they can buy their own portfolio at less than half its value and they are not trying to correct it.

Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: no_free_lunch on June 10, 2020, 07:40:48 PM
My 2 cents, I have more confidence in management now than at any point since I bought in a few years ago.  The share repurchases are real.  The special dividend is real. If the plan was to screw over shareholder I don't think they would do these things.  Sure it's still trading at a crazy discount but I can't blame management when they are taking steps that would normally narrow the gap.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 18, 2020, 04:48:31 AM
Does anyone else think this could be setting up a SIB?

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-200-million-offering-of-4-000-senior-unsecured-notes-due-june-22-2050-858546685.html

It’s what makes the most sense to me but I am generally an optimist.

Last year at the AGM, Duncan was reluctant to buyback shares because he thought the discount would close too quickly before they could buy anything meaningful. Fast forward a year and the family loaded up its holdcos in the fall. Then they announce a NCIB and special dividend in March. They shockingly max our the NCIB in two months! Also one of the family holdcos then appears to have used its special dividend to buy even more stock.

To me a SIB makes the most sense but happy to hear other ideas.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on June 18, 2020, 05:27:07 AM
Does anyone else think this could be setting up a SIB?

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-200-million-offering-of-4-000-senior-unsecured-notes-due-june-22-2050-858546685.html

It’s what makes the most sense to me but I am generally an optimist.

Last year at the AGM, Duncan was reluctant to buyback shares because he thought the discount would close too quickly before they could buy anything meaningful. Fast forward a year and the family loaded up its holdcos in the fall. Then they announce a NCIB and special dividend in March. They shockingly max our the NCIB in two months! Also one of the family holdcos then appears to have used its special dividend to buy even more stock.

To me a SIB makes the most sense but happy to hear other ideas.

Maybe raising money to take EVT private?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 18, 2020, 09:53:34 AM
Does anyone else think this could be setting up a SIB?

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-200-million-offering-of-4-000-senior-unsecured-notes-due-june-22-2050-858546685.html

It’s what makes the most sense to me but I am generally an optimist.

Last year at the AGM, Duncan was reluctant to buyback shares because he thought the discount would close too quickly before they could buy anything meaningful. Fast forward a year and the family loaded up its holdcos in the fall. Then they announce a NCIB and special dividend in March. They shockingly max our the NCIB in two months! Also one of the family holdcos then appears to have used its special dividend to buy even more stock.

To me a SIB makes the most sense but happy to hear other ideas.

Maybe raising money to take EVT private?

Could be but it would be nasty on taxes wouldn’t it?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on June 18, 2020, 10:07:27 AM
Does anyone else think this could be setting up a SIB?

https://www.newswire.ca/news-releases/e-l-financial-corporation-limited-announces-200-million-offering-of-4-000-senior-unsecured-notes-due-june-22-2050-858546685.html

It’s what makes the most sense to me but I am generally an optimist.

Last year at the AGM, Duncan was reluctant to buyback shares because he thought the discount would close too quickly before they could buy anything meaningful. Fast forward a year and the family loaded up its holdcos in the fall. Then they announce a NCIB and special dividend in March. They shockingly max our the NCIB in two months! Also one of the family holdcos then appears to have used its special dividend to buy even more stock.

To me a SIB makes the most sense but happy to hear other ideas.

Maybe raising money to take EVT private?

Could be but it would be nasty on taxes wouldn’t it?

I don’t think there would be any taxes to pay if they just took EVT private. Maybe if they liquidated it they would incur capital gains. But if they left it intact I don’t think so.
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: SafetyinNumbers on June 18, 2020, 10:54:24 AM
I’m thinking of the family controlled holdcos that control EVT. I guess they could be part of the group pursuing the acquisition so their shares would never be sold?
Title: Re: ELF.TO - E-L Financial Corp. Ltd.
Post by: Rod on June 18, 2020, 11:14:11 AM
I’m thinking of the family controlled holdcos that control EVT. I guess they could be part of the group pursuing the acquisition so their shares would never be sold?

I can’t see any reason they couldn’t do it that way. But I’m no expert on takeover rules.