“I believe I had my first Coca-Cola in either 1935 or 1936. Of a certainty, it was in 1936 that I started buying Cokes at the rate of six for 25 cents from Buffett & Son, the family grocery store, to sell around the neighborhood for 5 cents each. In this excursion into high-margin retailing, I duly observed the extraordinary consumer attractiveness and commercial possibilities of the product. I continued to note these qualities for the next 52 years as Coke blanketed the world. During this period, however, I carefully avoided buying even a single share, instead allocating major portions of my net worth to street railway companies, windmill manufacturers, anthracite producers, textile businesses, trading-stamp issuers, and the like. (If you think I'm making this up, I can supply the names.) Only in the summer of 1988 did my brain finally establish contact with my eyes.” -- Warren Buffett (1989).

There are a great number of investors who quote Warren Buffett, follow his investment activities and attempt to walk in his footsteps in the hope of achieving success. I was taught some time ago that investors all too often neglect stocks with a reasonable valuation and dominant fundamentals in favour of buying companies with discounted valuations and less dominant fundamentals. I’ve learnt this by taking the time to study the best, the brightest and the most fallible of investors in my pursuit of understanding their behaviour, motivation and investing process.

What Buffett is talking about in reference to his eventual investment in Coca-Cola (KO) after staring it in the face for over half a century is the concept of Enduring Value. The label of Enduring Value is often easy to recognize after a corporations decades of solid performance and successful global achievements, but difficult to identify in the early phases of a company’s history.

I was reminded of this quote by Buffett the very first time I read through the 2004 Annual Report of Manulife Financial (MFC). At the time I was just beginning my mentorship under a great investor and looking to apply the early lessons I had crafted on stock analysis. Beyond the numbers, financial statements and discussions on investments stood a business that was superbly managed and growing. Manulife had only been a publicly traded corporation since 1999 but almost immediately I gained insight into not just where the company had been but where it was going. The presentation of the company was clear, the expectations from management were evident, a strong financial base sustained and a wonderful track record of accretive acquisitions implemented effectively.

The Manufacturers Life Insurance Company (Manulife) dates back to 1887 when Sir John A. Macdonald, Canada’s first prime minister, was elected president of the company. Manufactures Life was then one of the first companies to offer women life insurance on the same basis as men – a highly controversial and innovative decision at that time.

In 1893 Manulife sold its first insurance policy outside of Canada beginning what would later become a tradition of expanding operations internationally. By 1897 Manulife had expanded into Asia and from 1900-1950 had operations to the Philippines, Indonesia, The United States and United Kingdom. By 1980 Manulife was operating joint ventures in Singapore, acquiring US & Canadian insurance operations and in 1996 opened China’s first joint venture life insurance company. The company currently has global operations in Canada, The United States, Asia & Japan selling a diverse portfolio of insurance and investment products.



In 1994 Manulife announced the appointment of Dominic D'Alessandro to Chief Executive Officer and who later led Manulife on its acquisition path that in 2004 purchased Boston based John Hancock Financial Services for $10.4B.

I have always believed that great business is conducted by great people and that integrity, values and discipline are the hallmark of any great leader. Manulife not only has had a great leader, but a collection of great people running operations of their business around the world. In a top-down approach the values of the company are prominently demonstrated by its leaders. Through his executive track record, charity and attitudes towards the business he expects his company to conduct Dominic D’Alessandro will be a substantial loss for the company when he steps down in May of 2009. His replacement will be Donald Guloien, currently Chief Investment Officer of Manulife. Donald has been employed with Manulife since 1981 and was responsible for integrating the investment operations of Manulife with John Hancock during its 2004 acquisition of the company.

One of the first things that I always notice whenever I read the annual reports on Manulife is the clear and concise definition of corporate culture. The company’s values are described publicly through the acronym PRIDE which stands for Professionalism, Real value to our customers, Integrity, Demonstrated financial strength and Employer of choice.

Investors should realize that values, corporate culture or a mission statement can mean little if not executed or demonstrated in a top-down approach. Management should demonstrate not on a “do as I say” but a “do as I do” modelling of how a company conducts itself both internally and externally.