Financial 15 Split Corp.'s NCIB: A Strategic Play to Close the NAV Gap and Boost Investor Confidence

Financial 15 Split Corp. (TSX: FTN) has launched its latest Normal Course Issuer Bid (NCIB), signaling a bold move to repurchase up to 10% of its outstanding shares across both Preferred and Class A classes. This strategic capital allocation initiative not only reflects management's confidence in the stock's undervaluation but also underscores a commitment to maximizing shareholder value. With a portfolio anchored in top-tier financial institutions and a history of disciplined dividend distributions, FTN's NCIB could catalyze a narrowing of its persistent discount to Net Asset Value (NAV). Here's why investors should take notice—and act now.

The NCIB: A Vote of Confidence in Undervaluation

The NCIB, effective June 2, 2025, authorizes the repurchase of 6.1 million Preferred Shares and 6.2 million Class A Shares, representing 10% of their public floats. Management's decision to pursue this bid—particularly after a prior NCIB that only modestly repurchased Class A shares—highlights a calculated shift in strategy. By targeting shares at current prices, the company is directly addressing a stock that trades at a historical discount to NAV, a metric that has persisted despite strong fundamentals in its portfolio of 15 major banks (e.g., Royal Bank of Canada, JPMorgan Chase).

The Board's rationale, advised by Quadravest Capital Management, is clear: FTN's shares are undervalued relative to the intrinsic worth of its holdings. As of May 2025, the stock's price of $9.16 sits within a “weak rising trend,” offering a prime entry point before anticipated valuation convergence.

Strategic Capital Allocation: Reducing Dilution and Enhancing Returns

Buybacks reduce the share count, boosting per-share metrics like earnings and dividends. FTN's NCIB is particularly compelling given its low-cost capital structure and robust dividend history. The company has distributed $27.19 per Class A share and $12.47 per Preferred share since inception, with monthly payments of $0.12570 and $0.07083, respectively. By repurchasing shares, FTN can further concentrate returns for remaining shareholders, a move that aligns with Quadravest's conservative, income-focused strategy.

Market Sentiment: A Catalyst for Closing the NAV Gap

The psychological impact of buybacks cannot be overstated. When management commits capital to repurchases, it sends a clear signal: the stock is undervalued, and insiders are willing to back that claim with their own resources. For FTN, this is especially potent given its exposure to financial services stocks, a sector that has underperformed broader markets in 2025. As banks like TD Bank and Citigroup trade near multi-year lows, FTN's portfolio—diversified across Canadian and U.S. institutions—offers a leveraged play on sector recovery.

The NCIB's timing also coincides with improving macroeconomic conditions for banks, including stable interest rates and resilient loan portfolios. This backdrop reduces risks tied to the portfolio's holdings, further supporting the case for FTN's shares to climb toward NAV.

Technical Analysis: A Setup for Short-Term Gains

Technical indicators paint an optimistic picture for FTN. The stock's short-term rising trend and positive buy signals from moving averages suggest upward momentum. Key resistance levels at $9.29 and support at $8.75 frame a potential 5.75% gain over three months, with a 90% probability range of $7.93–$9.82.

Act Now: The Clock is Ticking

With the NCIB set to expire on June 1, 2026, investors have a limited window to capitalize on FTN's undervaluation. The ex-dividend date on May 30 may temporarily depress the stock, creating a buying opportunity near $8.75. However, patience may be rewarded as the NCIB's execution—and broader market recognition of FTN's NAV discount—fuels a re-rating.

Conclusion: A Rare Opportunity in Financials

Financial 15 Split Corp.'s NCIB is more than a routine repurchase program; it's a strategic move to close the NAV gap and bolster investor confidence. With a disciplined management team, a fortress balance sheet, and a portfolio of top-tier banks, FTN offers asymmetric upside for those willing to act before the market catches up.

Recommendation: Buy FTN shares near $9.16, with a stop-loss at $8.92. Monitor the NCIB's execution and sector sentiment for further catalysts. This is a must-watch name for income-focused investors seeking both yield and capital appreciation.

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