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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: Not sure I understand the following line from your April report on GC: "Where we do find some comfort is with
the close ties (and revenue contributions) to governments as well as Brookfield. GC will have access to support, finances, and might even be a go-private candidate. For this reason, we are maintaining our rating at ‘B+’." Not sure of the relationship to Brookfield, or what it means. And do you mean that government revenue is such a priority that casinos would open up sooner? Not sure what going private would mean in terms of price. Would private equity be looking for a "bargain." Also, not sure where GC's revenue mainly comes from: slots, black jack, hotels, poker tables, etc.? I could see slots returning to action with masked players, but have trouble seeing poker players packed around a table, even with masks. Although, I don't believe much revenue comes from poker tournaments; cash games may be a different story. Sorry about this rather confused question. It's just that if I had to pick a company that would be clearly negatively impacted by a Covid-19 shut down, it would be a brick and mortar gaming company, especially one with hotel and entertainment destination sides. Any clarification much appreciated. Thanks
Read Answer Asked by Gordon on May 20, 2020
Q: Have you changed your opinion of this company? It wasn't too long ago when 5i was recommending purchasing the company at $39, yet now you are saying that $50 is a long way away. I know that times may have changed, but many of the Tech stocks are hitting all time highs, and with LSPD having enough cash to last 12 years or more, isn't the current price a very good price vs. fair value?
Read Answer Asked by stephen on May 20, 2020
Q: LSPD's business is focussed on small-medium sized retailers, restaurants and the hospitality industry. These are amongst the worst sectors in the economy and may be permanently impaired. Does this not change the investing thesis for LSPD? Is this not a case of sell now and consider buying at a potentially higher price down the road if they can confirm that growth has returned or at least stabilized?
Read Answer Asked by Joel on May 20, 2020
Q: As a retiree with a balanced portfolio, I hold SIS and wonder if there are better longer term opportunities in this market. I like SIS's demographic market position and strong balance sheet. Covid-19 may entice more seniors to stay at home longer, which could help SIS. But I have concerns. The firm's international growth will challenge their Board and management to deal with greater complexity. They have a new CFO and SIS did not have much to say about the person in their announcement. The CEO owns a large share position, and the company's payout ratio seems high. All in all, I'm wondering if I should move on and sell. What do you think of my assessment? Anything else I should be considering? Thank you.
Edward
Read Answer Asked by Edward on May 20, 2020
Q: If you had to put a fair price ( or range ) on the stock today - what would it be? If you want to wait till after the quarter to answer the question that is okay. I don’t trust analysts but I trust you. I am trying to decide at what point I want my average price to be. I have $20,000 in cash to add to my position and the investment now will have very substantial profits in five years which I know the price will be significantly higher than it is now. I am usually NOT in favour of averaging down but I know they will get to the other side intact. Currently my average price is just north of $32, which I thought was good 45 days ago.
Clayton
Read Answer Asked by Clayton on May 19, 2020
Q: 2 Questions on Lightspeed, the stock has of course dropped like a rock and rebounded significantly from the lows 6 weeks ago, but even still if it were to head back to February highs it would be an increase of 80% from todays price.

I am trying to understand how much revenues can and are being disrupted by their clients business closures at least in the short term. They list in the most recent MD&A, software and payments revenue (cloud-based software subscription licenses and recurring revenue sources including payments solutions) accounted for 89 % of the previous 9 months revenue. Also noting that most clients are on 12 month contracts with monthly payments. With lightspeed payments only being introduced in the previous quarter there cannot be much revenue lost yet as it was more of a future revenue potential not a current revenue driver. I don’t think they breakdown what their cut would be with the current payment partnerships but they would of course lose out on payment fees potentially similar to SQUARE whose Payment volume was down 39% their final 2 weeks of the quarter, but how much do you think that could change Lightspeeds revenue?

Just a quick browse on their website shows they offer and excel in e-commerce for businesses, so some or most clients would be online and able to operate, if not they should and could be scrambling to add the capabilities to operate online, so this should be a net positive for this type of company (omni-channel commerce SaaS) in this changing business landscape due to COVID-19.

With lots of cash on hand to weather the short term storm, a high % of recurring revenue and the desperate need for businesses to be online would you not think Lightspeed for a long term play or even short term is one of the best options out there for growth?
Read Answer Asked by Michael on May 14, 2020
Q: I am hoping that you can shed some light on the revenue streams for CAE. I don't expect the airline industry to show much growth for a couple of years and but I am wondering how much this affects this company. How much of their revenue is generated from training brand new pilots, pilots on new aircraft, regular ongoing training for pilot license maintenance etc.? I know you like CAE and I normally don't pay that much attention to timing as I am a buy and hold investor. However, I am wondering if in this instance are growth revenues still two years away or do they maintain fairly even cash flow? I am assuming that the medical division is still a minor contributor to cash flow.

Appreciate your insight.

Paul F.
Read Answer Asked by Paul on May 14, 2020