Q: Hi, We have some large capital gains crystallized this year, as a result of trimming of some overweight holdings and rebalancing of our Taxable account portfolio. The two securities, we have some losses in, are DRX and TVK. We are toying with a plan to sell those positions in full ( 2% and 1.75%, respectively) in order to book some losses to help us offset the large gains.
We also intend to buy back full or partial positions, after 30 days, as these are some of highly recommended companies by 5i.
Considering that both stocks are trading close to their recent lows, do you see any merit in this strategy ? Are there any catalysts, in the near term for these companies, which could be favourable to stocks but pose a risk to our buyback plan ?
Thank You
We also intend to buy back full or partial positions, after 30 days, as these are some of highly recommended companies by 5i.
Considering that both stocks are trading close to their recent lows, do you see any merit in this strategy ? Are there any catalysts, in the near term for these companies, which could be favourable to stocks but pose a risk to our buyback plan ?
Thank You
5i Research Answer:
We generally encourage tax loss harvesting. Typically, the average stock does not move anywhere near to the degree of tax savings realized within a 30-day period. In this case, the only likely near-term catalyst is TVK earnings, estimated July 30. DRX should be later. TVX though only moves an average absolute 2% on earnings releases, so we would still consider such a plan viable.