A holding company discount is a well-known phenomenon in finance. It represents a special kind of hidden asset and source of potential profit for investors in holding companies. A holding company is a company that owns all or a substantial part of a variety of different businesses. These businesses may be private companies, or publicly traded. Holding companies may own all, or a majority or a minority, of companies in which they invest. The one thing most holding companies have in common is that they trade for less than the combined value of their holdings. A holding company discount comes into play when holding companies sell assets or break themselves up into their constituent parts. In other words, holding companies can usually sell their assets for fair market value, rather than at a discount. In addition, fair market value may turn out to be more than analysts figured they were worth. Savvy investors can take advantage of a holding company discount and benefit from the fact that even without a break-up, buying a holding company at a discount to its asset value puts more assets to work for you for each dollar you invest. Investors should note, though, that this holding company discount strategy can take years if not decades to be realized, so it's only for long-term investors. At TSI Network, we recommend using our three-part Successful Investor philosophy for long-term investing:
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Canadian Utilities helped its holding company, ATCO, more than double its profit in 2016 despite weaker revenue.
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] and ACO.Y [class II voting]; www.atco.com) gets most of its earnings from its 52.8% stake in Canadian Utilities (Toronto symbol CU).
It… Read More
We’ve long recommended Canadian Utilities as a top pick for income seekers when you consider its high-quality assets that provide plenty of cash flow for dividends.
We also like its parent company, ATCO. Essentially, it lets you buy the same businesses as Canadian Utilities but at… Read More
Canadian Utilities and ATCO offer investors two ways to buy essentially the same businesses.
We like both stocks, but income-seeking investors should pick Canadian Utilities for its higher payout. Value seekers, on the other hand, should buy the parent, ATCO, for its holding company discount.
CANADIAN UTILITIES… Read More
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $47 and ACO.Y [class II voting] $47; Income Portfolio, Utilities sector; Shares outstanding: 114.3 million; Market cap: $5.4 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.atco.com) gets most of its earnings from its… Read More
We still think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong business prospects.
These are companies that have leading positions in healthy industries. They also have strong management that will make the right moves… Read More
Value stocks are usually good bargains, but not all bargain stocks are good values. The search for value stocks that will rise—and hold their value—begins with sound fundamental investing. You look for stocks that have what it takes to be successful in… Read More
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $39 and ACO.Y [class II voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 115.0 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.atco.com) gets most of its earnings from its… Read More
In addition to TransCanada (see page 41), we like the outlook of these four utilities.
Like TransCanada, Emera and Fortis are expanding in the U.S. These purchases cut their reliance on Canada, and should enhance their earnings and dividends for years to come.
Canadian Utilities… Read More
Revenue for both divisions of Calian Technologies jumped in the last quarter. The timing of new and recurring business from existing clients will help to sustain the stock’s high dividend yield.
CALIAN TECHNOLOGIES (Toronto symbol CTY; www.calian.com) has two main divisions: … Read More
Digital ad revenue for Tegna Inc. – Gannett’s broadcasting and Internet business – jumped following its purchase of an auto website. The media company is now using the cash to pay down debt, buy back shares and purchase TV stations. Tegna is… Read More
Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' FREE Special Report from The Successful Investor.
Canadian Blue Chip Stocks:
Bank of Nova Scotia, CP Rail, CAE Inc. and more.
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Changes to this Policy
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