skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Just a comment about ALA's changed circumstances. During the conference call management made reference to changed circumstances in relation to access to capital and cost of capital for funding its growth plans. In addition to changes in interest rates over the past couple of years, a significant aspect of the capital equation is that its share price has basically been halved since the announcement of the WGL transaction. Recourse to capital through an equity raise would likely further reduce the share price and have a relatively greater dilutive effect on per share earnings and cash flow than it would have had when the share price was $33. The result is that the answer to the question of what is the most prudent means for the company to raise money has shifted. Though it's market cap is around $4.5B, according to the Q3 balance sheet ALA has about $23B in assets against about $12B in liabilities. Under those circumstances, if it can get anywhere close to 'value' for its assets, its cheapest access to capital by a longshot is simply through the monetization of some of its own asset base. If it can create further increased value by reinvesting that capital in its preferred growth projects, that can still be a very attractive proposition and set the company up well for the future. But in the meantime, the resulting reduction of the asset base for funding purposes will mean that it will have diminished cash flow from operations, and it is that cash flow that is required to pay/maintain/raise the dividend. As a long-time shareholder, I have taken a significant loss on my ALA exposure but I don't think there needs to be recourse to suggestions of fraud to explain the circumstances that the company has come to today. My view is that ALA may well rise again and be successful but that it would be further in the future than I had been looking for, there will probably be a (prudently) reduced dividend in the meantime, and the present market conditions are setting up better near-term opportunities elsewhere for loss recovery and profit, through companies that are not in the doghouse when the market comes definitively out of its corrective phase. ... for what it's worth.
Read Answer Asked by Lance on November 02, 2018
Q: Hello,

I’m attempting to make sense of the current ALA situation. For months, the market has been suggesting that the ALA dividend is in trouble, as the yield continued grow. With this in mind, in September I asked my financial advisor if a cut was probable, and he replied that it was more likely that the dividend would increase rather than be cut, and that ALA should be ok for my income portfolio. Now, less than two months later, he’s stated that a cut is probably on the way.

I’m confused. Did ALA hide information (which has now been revealed) ? If the answer to this is “yes”, then I can understand how people have been hoodwinked. If ALA did not hide information, and the share price had been signalling trouble, I am tempted to say goodbye to this advisor and move my money, as this has cost me a substantial sum.

Did ALA hide information from the market that you are aware of ?
Read Answer Asked by Mike on November 01, 2018
Q: Hi Guys: I hold an Altagas Preferred (ala.pr.e) which is down significantly over the last year. I hold it principally for the yield so I am not too bothered by the drop, unless of course I begin to believe that the company will have to default on its debt obligations. This seems (to me at least) a pretty unlikely scenario, notwithstanding all the current drama with its debt and stock price etc. Please give me your opinion in this regard. With thanks, Don
Read Answer Asked by Donald on November 01, 2018
Q: Earnings 52 Week Low
Yield (%) Price % Diff
Badger Daylighting 6.7 22.37 15.90
CCL Industries 5.3 52.01 5.59
Methanex 8.7 62.30 28.27
I'm looking at buying one of the above companies. Based on today's stock price, I am torn between what is a more useful metric, Earning's Yield (MX) or 52 week low (CCL.B) or a combo approach (BAD) for an entry point. In your view which metric is more relevant for a 5 year investment horizon?

Read Answer Asked by LARRY on November 01, 2018
Q: Good morning,
I sold the above in early October to capture tax loss, and can rebuy next week. Are there any among these 4 that you would pass on for now.?
Thanks for the hand holding.
Ted
Read Answer Asked by Ted on November 01, 2018
Q: Hi,

I heard a term this morning, "accidental high yielders" which was used to describe companies whose stock price had come down so much that their yield (presumed very safe) was "accidentally" high. The example was British Petroleum who apparently yields 6%.

Gluskin Sheff now yields a whopping 9% which doesn't even include their special dividends. You've said before that they have a good cash position, and that their dividend is safely covered, thus I might argue they are an "accidental high yielder".

Do any others come to your mind that might yield 5%+ after the recent sell off and have very good balance sheets and cash flows?

Cam
Read Answer Asked by Cameron on October 31, 2018
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!