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Gerald Sheff, co-founder and chairman of Gluskin Sheff + Associates Inc.

Fernando Morales/Fernando Morales/The Globe and M

CIBC World Markets Inc. analyst Paul Holden today downgraded Gluskin Sheff + Associations Inc. to "sector underperformer" after its latest quarterly results revealed a shrinking asset management base and rising costs.

The wealth management firm's assets under management have contracted 21 per cent over the last two quarters, significantly worse than many other mutual fund companies. At the same time, operating costs are going up.

"We expect earnings growth will lag the other asset managers," Mr. Holden commented.

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He also believes the current valuation, with the stock trading at 13.4 times 2012 estimated earnings, is hardly compelling. The industry average for Canadian asset managers is 13.0 times.

Downside: Mr. Holden downgraded his rating to "sector underperformer," and cut his price target by $3 to $17.50.

Torstar Corp. reported decent third-quarter results, but the outlook for the company "remains cloudy" amid a rather gloomy macroeconomic environment and shaky markets, according to CIBC World Markets Inc. analyst Robert Bek. Advertising markets had a weak start in the fourth quarter and investor sentiment is weak. "The shares remain cheap, but future catalysts are limited in the current industry environment," he commented.

Downside: Mr. Bek trimmed his price target by $1 to $14 and continues to rate the company as a "sector performer."

Related: Torstar profit rises on revenue gains

CIBC World Markets Inc. analyst Robert Sedran has slashed his forecasts for Industrial Alliance Insurance and Financial Services after the company reported significantly weaker-than expected third-quarter earnings amid low interest rates and recent market turbulence. "One of the reasons we have viewed this company favourably was its fairly clean story in a sector with few clean stories. That is less true today," he said.

Downside: Mr. Sedran reduced his price target by $5 to $33 and affirmed his "sector performer" rating.

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Superior Plus Corp. slashed its annual dividend 50 per cent to 60 cents a share, cutting its payout ratio in half to 50 per cent while accelerating its debt reduction plan. But National Bank Financial analyst Patrick Kenny still sees significant downside risk for the stock, which has risen nearly 10 per cent in the past month. "We believe SPB's high-yield oriented investor base will give little credit to the revised low payout policy," he commented.

Downside: Mr. Kenny downgraded the energy services, specialty chemicals and construction products distribution company to "sector perform" and cut his price target by $1.50 to $7.

Related: High-yielding Superior Plus not suitable for seniors

HudBay Minerals Inc.'s third-quarter earnings were below Street forecasts, which Desjardins Securities Inc. analyst John Hughes attributed to a shortfall in expected copper revenue and zinc production. But the company reaffirmed its copper, zinc and precious metals production guidance for 2011.

Downside: Mr. Hughes cut his price target to $19.40 a share from $20.60 and reiterated a "buy" recommendation.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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