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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: Hello Peter and 5i team members,

I have CGI group in my portfolio representing about 4% of my RRSP account.Now I would like to add 1 or 2 names in IT sector to bring up my sector weighting to about 10 to 15%. Could you please provide some recommendations for a long time holding (say 5 to 10 years)? Thanks.

Wish you and every one of your team a very merry Christmas and a happy new year!

Lin
Read Answer Asked by Lin on December 21, 2015
Q: Hi 5i Team
I note your last comment was on 11/03 for this stock. I bought it in 03/14 and am down 46% [av 1.71].It just bounced off a .90 low.

On 09/29/15 it entered into a MoU with China Communications for Auto deploying satellite systems.
1] will anything develop from this in the near future

On 12/20/15 they issued 550,000 grant options to D/O exercisable @$1.14. Earlier in the year Oak Financial was granted 400,000 exercisable @$1.25 & 1.75 over the next 2 yrs.
2] your comments on these grants.

3] is it worth waiting for any potential or significant growth in the next 2-4 years

4] any other observations or comments.

All the best of the season to all!
Cheers
Hank
Read Answer Asked by Henry on December 21, 2015
Q: Hi, after watching for almost a year, I started a position @43.05 in WSP global, this week. The move was based on the fact that there was no apparent reason for recent pullback. Several months ago WSP did a secondary offering @42.50 (I think). During recent past, stock price touched a high of $49.18. The stock has a dividend yield of 3.50% and will perhaps benefit from infrastructure spending plans of new federal Govt. Incidentally, WSP was also a Top Pick on Friday Dec 18, 2015 Market Call tonight by Keith Richards, a Technical Analyst and BNN guest. As per his comments, this stock sees occasional pull backs and a purchase along its trend line ($42.50-$43)should be a great opportunity. Would appreciate your comments, please. Thanks
Read Answer Asked by rajeev on December 21, 2015
Q: Hi Peter I held this stock since I was first a member of 5 I I have never once been above water on this stock and it seems it is going from bad to worse .
Does 5 I still see merit in this bank or should one cut his losses and move on .?
Kind regards Stan
Read Answer Asked by Stan on December 21, 2015
Q: I'm thinking of selling BNS (4.5% of total portfolio) while I'm still up 8% and redeploy the cash.
I currently have PWF (1% Holding and down 10%), TD Bank (3.5% holding up 34%), MFC (1% holding and down 5%),
DH (1% holding and down 10%). Would you recommend holding on to BNS or sell and add to one or all of these other financials. Open to other suggestions as well. Merry Christmas
Read Answer Asked by Luca on December 21, 2015
Q: Just a note I recall reading approx. 1.5 years ago about SJ that came from SJ themselves.

SJ who makes hydro/telephone poles & railway ties out of wood said that the ~25 year life span of these items (my bad memory, but I think it was 25 years or it could have been a little longer) would need replacing starting in the next year or so, N.A. wide in general. This represented millions of pieces.

Since SJ is a major player in this industry SJ predicted , as could almost anyone who was aware of this scenario, that SJ would have increased volume and profits as a result for the next few years, which typically grows their stock price as we have started to see.

Ya, SJ.

Have a great day.

Also Loving the volatility of many stocks these last few days. Easy to make 5% to 15% in a few days with some extra cash based on technicals, for now rather safely.
Read Answer Asked by Stan (1) on December 20, 2015
Q: You have previously discussed allocating higher weightings to particular companies with strong growth prospects, a strategy which I like to employ in my own portfolio (i.e. I am comfortable holding as much as 20% of my portfolio in a single name). I have favoured FSV and XTC for the past few years, and have seen great results. I am looking to take profits and bring those two positions down from around 35% of my portfolio to 20% (10 each). Currently DH looks like an attractive candidate for an overweight position of 15%. Is this a company you would be comfortable overweighting heavily? Or are there other companies you would prefer at the moment (maybe 1-2 others)? Risk tolerance wise, I am looking for aggressive growth, and can hold for as long as 5-10 years.
Thanks
Alex
Read Answer Asked by Alexander on December 18, 2015
Q: Hi,

Why is it that BEP is rising despite another down turn in oil? And why is it that in a previous question you preferred ENB to BEP? They are such different companies. Finally, would you recommend either of these companies now for a two year hold?
Read Answer Asked by Graeme on December 18, 2015
Q: I'm quite impressed with the pop today (finally!). Were there a lot of short sellers in this stock?
Read Answer Asked by wendy on December 17, 2015
Q: The MD&A provides an explanation for the decrease in revenue.

"Revenue for the Q1 2016 was $15,276,822 a decrease of $4,407,391 or 22.4% from $19,684,213 as
recorded in the first quarter of fiscal 2015. When compared to the three months ending July 31, 2015,
revenue increased by $1,325,387 or 9.5% from $13,951,435. There are a number of factors impacting
revenues between Q1 2016 vs. Q1 2015:
- The revenue growth at TIO and its subsidiaries.
- One-time revenues related to the Company’s kiosk program, which included sales of kiosks to
an existing biller customer and a removal fee charged to another biller customer for the
removal of low transacting kiosks.
- The strengthening of the US dollar from quarter averages of 1.0927 in Q1 2015 to 1.3163 in Q1
2016
- The change in revenue resulting from the migration of TIO’s largest biller’s entire customer
base from one billing platform to another
Page 7 of 18
This migration affects the Company in the following ways:
1- Historically, the vast majority of transactions processed by the Company for this biller carried
a front-end consumer funded convenience fee of $3.00. The Company historically has
recognized this fee as its revenue and shared the proceeds of this fee with both the retail
partner and the biller itself. Once migrated from the CDMA to the GSM platform, the
customer no longer is required to pay such a fee. The Company’s margin is now paid as a
back-end fee directly by the Biller and in the same amount ensuring that the Company’s per
unit economics are not affected as it relates to gross profit generated per transaction.
2- In Q1 FY 2016, an immaterial amount (approximately $10K) of this billing partner’s bill
payment transactions for its branded retail channel (which excludes 3rd party locations)
resulted in the Company collecting a $3.00 front-end fee. As noted in Q4 2015 virtually all of
its gross transaction revenues from this billing partner is earned through back-end fees. A
typical back-end fee from this partner is expected to generate 1/12th the revenue of a typical
front-end fee, however at a significantly higher gross margin percentage. During August 31,
2015, we had less than 3k monthly bill payment transactions with a front-end fee for the
branded retail channel; the legacy CDMA service was disabled at the end of August. This
transition has significantly reduced the recognized gross revenue while having no impact on
gross profit on a per transaction basis as our largest billing partner’s transaction volume
reached the maximum discount level allowed in the tiered pricing structure. This zero
consumer fee structure may also incentivize more customers to pay using the Company’s
services.
3- As a result of this revenue model transition, TIO experienced a decline in transaction revenues
generated by its largest billing partner from Q4 FY 2014 through to Q1 FY 2016. However, at
the same time the gross margin percentage of the revenues generated by this partner
increased significantly to a range of 90-95%. Due to this billers growth, TIO saw transactions
and total gross profit dollars generated by its largest billing increase despite the significant
reduction in gross transaction revenues. Throughout this transition, investors and analysts
were reminded to monitor the total transactions, gross margin percentage and absolute gross
profit generated by TIO as the best indicators of growth in TIO’s business."
Read Answer Asked by Richard on December 17, 2015