Morgan Stanley today writes that Europe-targeted exchange traded funds are underweight large caps and overweight small and mid-cap companies. We are guilty of the same bias, mainly because I think we are more likely to hit a home run with a stock others are not piling into for analysis or investing.

But while StarMine data shows that Q1 results at small and microcap companies have missed estimates 56% of the time, large companies in Q1 were 52% likely to match or beat estimated earnings. They are better covered and they massage expectations better, to be sure, but they also gain because they have more financial clout than the little guys.

Overall, MS says, you should buy companies growing faster than the broad market while sporting a lower price-earnings ratio. An example would be BASF, which we sold because it lacks access to cheap gas for its petrochemical plants compared to US rivals. I am not sure I am convinced.

MS says that in the present low-inflation, low-growth economic environment, large caps should be gainers because they offer attractive yields. Moreover, they are sitting on cash piles they may put to work with acquisitions. That counts as a word from our sponsors, of course, since investment banks like MS make money by advising companies on mergers and acquisitions.

Still, I am taking a few steps to increase the size of our portfolio holding companies.

More follows including a stock holding switch today, and news from Canada, Spain, Sweden, China, Colombia, Mexico, Brazil, Britain, and Ireland.

*Bank of Nova Scotia is buying up the 40% of shares it doesn't now own in Aurion Capital from the employees for an undisclosed amount which is "not material". It is thereby expanding its in-house asset management business. My belief is that this is only a 1st step. BNS also owns 36.8% of C.I. Financial Corp., one of Canada's largest investment fund manager companies. I expect CIX-TSE, which also trades in the US as CIFAF, is likely to also become a target for its parent. currently the highly profitable wealth management firm is not consolidated in BNS accounts. It trades at a p/e ratio of nearly 20x expected 2014 earnings, in part because it is growing fast, and in part because it is expected to be taken over by its Halifax-based parent bank.

CIFAF is expected to earn C$1.81/sh in 2014 according to The Investment Reporter (of Canada) which is 20.7% higher than its profit/sh last year. So its growth can justify its high price. In 2015 its earnings are expected to hit C$2.15. The fast growth is because Canada's population is aging (like ours) and there is increased need for wealth management services. That is also why I expect BNS to snatch CIFAF. Note that this fast growth is recent and its average over the past 5 years was ony 12.4%.

CI return on equity is a health 23.75%. It also has become a TIR "dividend aristocrat" because it upped its divvie in each of the past 5 years, starting with a mere 63 loony cents back in 2009. At the present price the yield is 3.24%, not quite enough for it to be in the yield portfolio with its parent. But the dividend is expected to continue to rise.

While nobody knows when and whether BNS will pounce on CIFAF, Canadian banks are all moving hard on wealth management expansion which is very profitable. Obviously if BNS makes an offer for CIFAF the share will rise sharply. Such a deal would be material and public, unlike the Aurion Capital one. Moreover I expect the loony is near its bottom. BNS bought its 60% stake in Aurion in 2011 when it acquired Dundee Wealth Management for C$6 bn.

BUY CIFAF as a buy and hold share at around $33.03(US).

*To make room sell the spun off half of Liberty Global K shares, also in the buy and hold portfolio. The economics of quadruple play in European markets is not necessarily safe, despite the hooply by LBTYA-LBTYK backer John Malone. We sold off an earlier batch of K shares received from the takeover of Virgin Media last year. The new share issues are financial engineering, not operating gains.

*Covidien has bought Zephyr Tech, maker of the bio-harness wearable sensing monitor. Price was not disclosed. COV earlier bought New Wave Surgical in April but price was not disclosed either. A bio-harness is a chest strap that monitors the wearer's heart rate, breathing, ECG, and even posture, and is used also to train athletes, astronauts, and special forces soldiers as well as in therapeutic usage. (Source: Fiercemedicaldevices.com)

*Abengoa, the Spanish sustainable energy firm, is reportedly going to create yield funds for some of its holdings. But in the interim it is adding to them, with an announcement today that it bought a quarter stake in Beijing's GreenTech, a water and waste-water company. This is subject to review by the Chinese government and is expected to go ahead by midsummer. Greentech, founded in 2004, recycles water for the municipality and for industry. ABGB already has major investments in China, notably its first reverse-osmosis seawater desalination plant, operated as a public-private partnership whose output is sold to Qingdao Water. ABGB also has water projects in the US, Latin America, the United Arab Emirates, Algeria, Ghana, India, and, of course, Spain.

I had been regretting our sale of waterless waterworks Saneamento Basico de São Paulo of Brazil and was considering buying into less dynamic Euroland competitors to ABGB. But this is easier.

*Ecopetrol has been hit hard by the drop in throughput of the Cano-Limon oil pipeline as a result of 33 FARC attacks in Q1. EC is restricting output because its oil storage facilities are full and the pipeline running to the Caribbean coast is inoperative. The attacks by Colombian rebels continue in spite or because of talks between the FARC and the Bogota govt in Cuba. Cutting Colombia's biggest export earner, oil, gives the FARC more negotiating power. Apart from the FARC, EC is being kept from repairing the pipeline by hostile U'wa Indians who want it to be rerouted away from their land for environmental reasons. They believe that oil deposits hold the spirits of their ancestors, so even this may not satisfy them.

*Writing in Seekingalpha.com, Alexander J. Poulos claims that GlaxoSmithKlinehas an annuity-style operation in vaccines (13% of sales prior to taking over meningitis B vaccine from Novartis in their planned asset switch.) He also argues that GSK's consumer health division (current sales over $8 bn, or 20% of the total) will gain about 50% post-NVS in sales and boost profits because of economies of scale and leverage with retailers. He calls it another annuity-type business. The remainder of GSK is pharma, the largest lump of which is respiratory drugs, accounting for 40% of total sales. He is optimistic on Advair delaying generics competition and expects that the new Breo and Anoro asthma and chronic obstructive pulmonary disease drugs will gain market share once they get FDA approval for their new delivery system, the Ellipta device.

He also is upbeat on GSK HIV and diabetes drugs.

We are only here for the beer--the yield which is now ~75 cents per quarter, of $3/yr (depending on the sterling exchange rate) vs $2.41 last year and $2.48 in 2012.

*Indonesia is blocking high-grade nickel exports in order to develop its own downstream nickel processing industry. Ukrainian unrest is holding back exports from the 2nd largest nickel mining country, Russia, whose Norilsk Nickel is a major exporter. The impact on the price of nickel has been dramatic. This helps our Brazilian mining giant Vale whose sales last year were 10% of nickel, mostly produced in safe old Canada. Nickel, like its chief product, iron ore pellets, is used to make steel. Metal analysts note that after jumping 18% in price YTD, nickel has further to go, and there may be another price hike of 20% this year as shortages hit, bringing the price to $22,000 per metric tonne from $18,250 now. Nickel futures traded in London are even higher because of commodity speculation.

*Iamgold reports at 4 pm EST today. Hebba Investments LLC predicts output will drop to conserve cash by 40% but that delayed project Westwood will come online later this year adding 1 mn oz to production in the following 2 years. Other delayed projects will stay on hold however. Hebba says debt risks have been overblown because repayment won't start until gold prices recover in the next 3-4 years and further cost cuts are possible bringing the cost per oz of gold produced down to $1022. I am not sure the gold price rise we have seen this year will stick. When we get the Q1 report we will check out these estimates by the real-assets Hebba analysts.

Fund news follows:

*Canadian General Fund, CGIRF, reported its largest holdings as of April 30:Dollarama Inc. 4.6%; Enbridge 3.7%; Canadian Pacific Railway 3.1%; Bank of Montreal 2.9%; Element Financial and Methanex ex acqueo 2.6%; Royal Bank of Canada2.5%; and Brookfield Canada Office Properties, Stantec, and Home Capital Group, ex acqueo at 2.3%. It trades at a ridiculous discount from net asset value.

*Fibra Uno today closed on the takeover of the Garza Ponce industrial real estate portfolio for $274.6 mn, of which $92.6 mn was in cash and the rest in its shares. Moreover, the seller has the right to receive a further $6 mn if in the next 6 months it leases a further 15,550 square meters to tenants. The holdings are in provincial sites in Chihuahua, Coahuila, Nuevo Leon, San Luis Postos, and Tamaulipas. The total is 345,544 sq m, with a 91% current occupancy rate generating $19.7 mn in net operating income to FBASF. Garza Ponce also has a landback of 274,000 m sq of development sites for industrial park projects in Monterrey and elsewhere.

*JPMorgan China Region Fund, JFC, will run a webcast with portfolio mgr Emerson Yip on Thursday at 11 am along with a Q&A. My first question will be why JFC doesn't publish its net asset value weekly the way other closed-end funds do.

*Investor AB at its annual meeting declined the proposal that it liquidate presented by shareholder AB Leif Malmborg but did allow the board to purchase and transfer both A and B shares in IVSBF under a long-term variable remuneration program, social security, and the allocation of synthetic shares. Two men with the last name Wallenberg sit on the Swedish holding company board and don't need the money (there may be more with different last names.)