MFC

MFC and SLF, Manulife and Sunlife.

Hamilton

Sunlife and Manulife are both  relatively “sleepy” insurance companies. Manu is the bigger of the two at about 22 bln whereas Sun clocks in at about 15 bln. Both demutualizes perhaps 10 years ago or so and, as is almost invariable the case, it is after all in the nature of man to be more reckless with other people’s money than their own, both got a wee bit more aggressive, but Manu much more so. We all know that morbidity and mortality only change with the speed of a glacier so there was no need to call the home office to check the latest premium, the big mistake, on the part of Manu, was to assume that this might also apply to stock markets. Quite amazing considering that the market had just before the introduction of their “prime plus” product experienced a whopping loss during the tech implosion. Anyway, here are both charts;

slf mfc sept 2011

Sunlife is on the left and Manu on the right. The counts shown are neither perfect or beyond doubt, but that of Sunlife follows the pattern observed with many other financials, that is an A-B-C up followed by a drop back to the level of the B-leg (not quite) Manu should have had the same count, which arguable it did except that the whole thing is distorted and skewed to the downside. The C wave failed miserable (we warned about this several times!) and with the stock at $11.12 we are within spitting distance of the lows at $9+. The problem is that the last down-leg cannot possible be complete. Barring some miracle the stock is going in the direction of $5-6. Could we possible be looking at SuMa as the next big event after Confed??

MFC , Manulife update

Hamilton

mfc aug 10

As explained before, Manulife is one of the best barometers for the market as a whole. They bought their own sales talk and believed the rather unscientific statistical nonsense that there had never been a 10 year period during which the market went down. This was one of those six sigma events that could only happen once every 10,000,000 years. As luck would have it took only two or three years for the proverbial s…. to hit the fan.

Lately the Fed’s policy of keeping rates low for another two years is causing a “perfect storm” for the insurance companies. For MFC this may just be the straw that breaks the camel’s back. The break shown above, makes a triangle formation not entirely impossible but very unlikely. Probable the stock will simple proceed down without a bounce. The old low around $9 looks like it can now be broken. A possible target would be $5, but something will happen before we get there, but that something probable will not help existing shareholders..

MFC, Manulife update.

Hamilton

It should be pretty clear that I am not very fond of this stock, the canary in the coal mine. Again it is at an interesting point;

MFC aug 7 2011

My pencil is not sharp enough, but should the stock drop through $12.70, it will drop straight down and so will the market (the causality if, of course, in the other direction). If $12.70 holds the stock may climb, perhaps to about $16, then it could drop by about $11/$12.

MFC. Manulife

Hamilton

This stock was always interesting as it could serve as a barometer for our market, given it’s exposure to the equity markets, interest rates etc. Late last year we still entertained the possibility of at least a $5 rebound from the lows then of about $11. We got the $5 but the stock simple did not do what it should if the market was O.K. Unequivocally we recommended getting out of the stock, and perhaps the market in its entirety on March the 6th (the blog is under “canary” on this website because of the dead bird picture). Here is Manu today;

mfc aug 2011

Often it is more important to observe what a stock does NOT do, than what it does do. The expectation, or at least a  probability of the stock doing an A-B-C as shown in red, was reasonable. But in early March the stock just would not above a narrow range, a dead give-away that something was wrong, so we advised to get out. (by the way, if your broker does not keep track of stocks bought for you , perhaps you should get a different one!).

We are now at $14 and would have given back any gains from$11. As mentioned then this could deteriorate rapidly.