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Street pares outlook for CI


CI Financial Income Fund reports third-quarter financial results today, but analysts caution the numbers may not be as important given October's stock market carnage, and the fund company's decision to convert back to a corporation.

What are the expectations?

The consensus estimate for CI is 47 cents a unit, according to Thomson Reuters First Call.

"The past two months have decimated the outlook for the asset managers," Dundee Securities Corp. analyst John Aiken said in a report.

"We do not believe it is prudent to assume the assets that have disappeared over the past two months will be recovered in the near term.

"Consequently, we have reduced our estimates, with our forecasts for 2009 now down by over 20 per cent on the back of the lost assets under management."

CI, a wealth management company that owns brokerage Blackmont Capital Inc. and financial planning firm Assante Corp., had total assets under management of $55.9-billion at Oct. 31. That's compared with $63-billion at the end of September.

Like other trusts converting back to a common stock company, analysts have been expecting that CI would experience pressure on its unit price after announcing its plans on Oct. 15.

Units of CI fell to a 52-week low of $14.31 the next day, but have rebounded 10 per cent to close yesterday at $15.76 on the Toronto Stock Exchange.

CI chief executive officer Bill Holland said the fund giant wanted to convert to a corporation by the start of 2009 because the income trust structure had frustrated CI's attempts to make several acquisitions over the past year. Unitholders vote on the conversion on Dec. 19.

CI has said it would not pay a distribution for December, but would pay an additional 4 cents a share for the year ending March 31, 2009, so that shareholders would receive 16 cents a share at that time.

Mr. Aiken, who has a "buy" rating on CI, recently lowered his one-year price target to $19 a unit from $23 based on his revised 2009 earnings forecast. He is now projecting 40 cents a unit for the third quarter.

GMP Securities analyst Stephen Boland is estimating 43 cents a unit in the quarter. That's below 48 cents reported by CI in the second quarter, and 50 cents a year ago.

Mr. Boland, who has a "buy" rating on CI, reduced his target to $20 a unit from $24 based on its asset decline in September.

© 2007 The Globe and Mail. All rights reserved.

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