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Investment Q&A

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

Q: I hold ALA common shares at a small loss (bought just under $30), and am surprised that it has not been able to get back up near the $31 receipt issue price. I am considering selling ALA and buying back the same number of shares as ALA.r, at a slightly lower price. Is it correct that if the deal does not go through, the receipts are cancelled at $31 per receipt, and if the deal does go through, the receipts become ALA shares on a 1 for 1 basis?

My thinking is that if the deal fails, then I have a capital gain on the receipts (including claiming the current loss on ALA), and if the deal goes through, I am essentially in the same position, whatever the share price. I guess the downside is that if the deal fails and the market really likes that, ALA common shares could go above $31. Am I thinking straight here, and do you have any comment on this plan or the potential market reaction to the deal failing.
Thank-you
Read Answer Asked by grant on January 22, 2018
Q: Medical Facilities Corp says it has an agreement with Kansas-based NueHealth LLC to form a joint venture and acquire seven ambulatory surgical centers from Meridian Surgical Partners of Brentwood, Tenn. The joint venture, will be majority-owned by Medical Facilities. Medical Facilities says its portion of the $46.5-million (U.S.) total purchase price will be funded by cash and a draw on its credit facility.
What do your overview of this purchase by DR and using their cash and credit facility? How soon is it accretive to cash flow, is the dividend safe and does it mitigate some of the concerns in the past regarding competition moving into the areas where they currently have operations?
Thanks
Gordon
Read Answer Asked by Gordon on January 22, 2018
Q: The Constellation Software debentures, CSU.DB, seem like such a great investment, I wonder what the hidden downsides might be. They pay 6.5% plus CPI inflation – currently about 2% - which is a very high rate compared to ETFs like CLF, CBO, CPD and XHY and also compared to other blue chip corporate bonds in Canada. Moreover the inflation protection is an increasingly attractive feature. There is of course the risk of losing principal if CSU goes broke, but it is a great company with lots of sticky revenue and this seems highly unlikely, at least for the foreseeable future. The price of these debentures has been bid up, but the yield to maturity is still quite high. Are there other reasons not to give CSU.DB a large weight in one’s fixed income allocation?
Read Answer Asked by Philip on January 22, 2018
Q: Hi there,

I currently have a blend of your Balanced and Growth portfolio - mostly switching out the large, higher yielding names with small to mid cap growth names (which were suggested to me by your team in an earlier question). It has performed well in 2017 and I am happy with the results - however, my entire portfolio is TSX based. I am looking for diversification but don't want to sacrifice the growth tilt, which sometimes ETFs tend to lead to. Based on my existing holdings, which ETFs would you recommend that would be more growth tilted and add a broader global exposure? Also, what weighting would you consider making these holdings?

Thanks for your great service!
Read Answer Asked by Michael on January 22, 2018
Q: I have been watching both AW and PZA drop substantially in recent weeks. Do you think the sell-off is warranted and/or soon to stop? How sustainable are the dividends and how significant are the debt positions? AW appears to have a much higher P/BV, but I know you seem to like it better. Do you think one of these would be suitable at this time for a retired , dividend-oriented investor (probably a 2-2.5% position), and if so which would be your choice.
Read Answer Asked by grant on January 21, 2018
Q: Do you follow income trusts? If you do, what is your opinion of Capital Direct? The company advertises high yearly income returns (over 7%). Just wondering if it is a legitimate company to invest in.

Thanks
Read Answer Asked by Glen on January 21, 2018
Q: As a place to park short term money what percentage of a portfolio would be consider a maximum or prudent? Although not Money Market what are the main plus/misuses for using it over M.M. or T.Bills?

A general question on your responses: A response to a question I posted on Fairfax India specifically about the fact it appears as CD but converted to US upon purchase was responded to as private. Unless I hit the wrong button by mistake, are there reasons you might decide to respond that way?


Thanks
Mike
Read Answer Asked by Michael on January 19, 2018
Q: I have been holding STN for a while and it has been going sideways for about 4 years with mediocre fundamentals. Do you think a switch into CAE would make sense at this time or do you find CAE too expensive? Would you recommend any other replacement or better stick with STN?
Thanks
Read Answer Asked by Yvonne on January 19, 2018
Q: Hi 5i - which stock (PKI or CGX) would you add at today's price for the current yield and long term capital appreciation? Or is there another stock in the portfolios you would add before these two? Thanks, Neil
Read Answer Asked by Neil on January 18, 2018
Q: I am retired living on dividend income. Over the past 4 months I have bought 1/2 positions in the following stocks because they are in the 5i portfolios, and they are down (some substantially). My question is should I add/hold/sell the following stocks:
CGX -20%!
GS-6%
KWH.UN -6%





Read Answer Asked by Curtis on January 18, 2018
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