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Manulife Financial Corp. broke the silence on its exposure to Lehman Brothers Holdings Inc., American International Group Inc. and Washington Mutual Inc. on Tuesday evening, removing some uncertainty for investors. The tally: $810-million (U.S.).
Manulife shares were down 3.8 per cent in mid-morning trading on Wednesday, despite management's attempts to put the potential losses into context. (“These amounts, in aggregate, represent approximately one-half of one per cent of our Cdn $164 billion in assets,” said Donald Guloien, Manulife's chief investment officer.)
Then again, Manulife's shares appeared to be trading more or less in line with other financials, which indicates that the aggregate exposure might not be seen as such a big deal after all, and that investors don't get uppity until they hear the word "billion." The Canadian financials subindex was down 3.2 per cent and, more specifically, Royal Bank of Canada shares were down 3.3 per cent.
Two analysts who have weighed in on Manulife on Wednesday both maintained their previous "buy" recommendations on the stock, and their earlier 12-month price targets. Mario Mendonca, an analyst at Genuity Capital Markets, kept his $41 target. Colin Devine, an analyst at Citigroup, kept his $45 target. The shares traded at $34.79.
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