What are we looking for?
Canadian-listed companies with more than 50 per cent of total shares outstanding held by strategic entities, and who are returning value to shareholders either through share buybacks or in the form of dividends.
The screen
Investigating the ownership breakdown for a company can be an insightful technique to see who is actively trading the stock and what their true intentions may be. Sometimes, a large portion of the shares outstanding for a particular company may be held by strategic entities that invest to gain a particular controlling business stake such as voting rights or a seat on the board of directors. Examples of strategic entities include corporations, holding companies, pension funds, individuals and governments. We screen for companies trading on a Canadian exchange that have strategic entities owning more than 50 per cent of the shares outstanding. Then we take a more in-depth look at companies that are returning wealth to shareholders, whether in the form of a dividend yield greater than 5 per cent, or a "relative valuation buyback yield" score of at least 80. This metric scores companies on a 1-to-100 percentile ranking, with higher scores showing positive share buyback trends.
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What did we find?
The screen yielded 11 results varying in both size and business classification. IGM Financial Inc. was the only company on the list that met both the criteria of a relative valuation buyback yield score of at least 80 and a dividend yield of at least 5 per cent. The Canada-based financial-services firm has more than 64 per cent of its outstanding shares owned by Power Financial Corp. and operates multiple distinct businesses itself, including Investors Group, Mackenzie Investments and Investment Planning Counsel. Canfor Corp. has the highest percentage of strategic ownership, with approximately 44 per cent of shares outstanding held by Great Pacific Capital Corp., and another 44 per cent held by Canadian investor and philanthropist Jim Pattison.
This commentary does not provide individualized advice or recommendations for any specific subscriber or portfolio. Investors should conduct further research before investing.
Ryan Gottschalk works in the financial and risk unit of Thomson Reuters and specializes in asset management.