Investment Q&A

Q: Hello 5i Team

I currently hold E-L Financial (ELF), Economic Investment Trust (EVT) and United Corporations (UNC).

Ultimately the total value of these three holdings is 2.84 % of my equity holdings with ELF (0.77 %), EVT (0.66 %) and UNC (1.41 %).

E-L Financial and the controlling family shareholder holds approximately 25% ownership of EVT (through direct ownership) and approximately 53 % (through indirect subsidiaries) with a resulting public float of 21 %.

E-L Financial and the controlling family shareholder holds approximately 55 % of UNC and approximately 23 % (through indirect subsidiaries) with a resulting public float of 21 %.
Through Normal Course Issuer Bids and Substantial Issuer Bids, E-L Financial is very slowly increasing its control (approximately 1 % per year).

I understand all three securities have extremely low trading volumes (less than 500 shares per day and some days no trades). I am looking at a long-term holding period (> 5 years).

Questions

1 – General comments on ELF, EVT and UNC.

2 – Given the very slow creeping takeover (i.e. 20 years to complete takeover), does it make sense to retain holdings of EVT and UNC and sell my holdings of ELF? The ultimate goal is to reduce the number of holdings in my portfolio.

Thank you

Q: Assuming a few better years for bonds ahead, insurance should do well. How would you rate ELF, and what would be your favourite in the space.

Q: Hi Guys
Looking at their most recent Quarterly I see El Corporate reported a loss of $462 Million on their investments. Should this raise alarm bells?
I was under the impression insurance companies invested their float very conservatively.
Thanks Gord

Q: Can you comment on why ELF is such a slow dividend grower
Thanks Gord

Q: Hello 5i Team
Canadian General Investments (CGI) and United Corporations Ltd. (UNC) are “closed end funds” with a discount to book value and low trading volumes. Both of these entities have been around since the 1930’s.
The primary reason for holding them would be long term growth and stability and not dividend income. I would view them as “ballast” in the portfolio to maintain stability (i.e. low volatility).
In addition, since they hold foreign stocks, it eliminates issues with Foreign Holding reporting (Form T1135) and potential US Estate taxation.
Questions are:
1 – What are your thoughts on either of these as a long term holding in a non-registered account?
2 – Which company would be the better choice?
3 – Would it be better to hold E-L Financial (ELF) instead of United Corporations (UNC) since ELF owns approximately 52.5 % of UNC?

Q: Your answer to Francois's Mar 19 question on EL suggests that they lost money in 2019... I believe that's incorrect and it looks like last yr they likely had one of the lowest if not the lowest of PE's of the companies compared. That being said I understand your reasons for preferring SLF.

Q: Could you give us an updated opinion on EL. I don't mind the lack of liquidity and low yield, but i d like to know if represents better value than other in the field. Compared to SLF or POW . I also would like to know how you d compare it to fairfax. With fresh money, would you at this point buy ELF, FFH, Ifc or SLF.
Thank you.

Q: Follow up to Maurice. ELF is a portfolio of global public equities with a market value equal to $926/shr net of debt (300 mm of prefs). The other part is Empire Life with a BV of $380 per ELF share and ROEs of 11 - 12% over the past 3 years so probably worth 1.3 times book or $494/ELF share for a total value of $1420 per share. The question is what holdco discount is reasonable because control is not in the market

Q: Please provide an opinion on E-L Financial.

Q: Hi,

What is 5i's opinion of EL Financial (ELF) as a long-term hold?

Thanks,
IF