Wealth Managers Still on Target

Followers of this blog will have noted that I have been of the view that: 

• While the shape or pace of a recovery is not necessarily predictable, I believe that there will be a recovery and that we are still relatively early into that recovery; 
• Well capitalized Wealth Managers provide positive leverage during a recovery and have the ability to sustain recessions.

Earlier this week, Dundee Wealth Inc. reported its results for the quarter ended September 30, 2010.  These results stood as evidence in support of the two views noted above.  Year over year, Revenues increased 30% and Earnings per Share increased 107%.  The annual dividend was increased 114% and changed to a monthly payout of $0.05 per share.

Like all Wealth Managers, DundeeWealth suffered revenue and earnings declines during the 2008 market crash.  Unlike most other Wealth Managers, Dundee Wealth also had a banking subsidiary which suffered relatively heavy losses on asset backed commercial paper. Its stock price closed at $4 per share on November 20, 2008 – On November 5, 2010, the closing price was $19.  I see the rebound in its performance as indicative of: 

• The economy and markets have been recovering and continue to recover; 
• Wealth Managers are able to withstand extreme adverse conditions; 
• The returns and earnings of Wealth Managers are positively leveraged to a recovery.