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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: Hi 5i team, The recent run-up in the shares of WIN. Is it a result of: (1) a change in the market's sentiment toward the company and is therefore broadly based or (2) a few big investors including maybe hedge-funds buying for a fast flip or (3) someone buying a stake for a bid or for activist influence? Afterall, the stock was at $8 plus when the company's situation was't that different from now. Thanks as always. Henry
Read Answer Asked by Henry on August 28, 2014
Q: Hi there,
I am fairly young with a high risk tolerance. I have quite a diversified RRSP portfolio with lots of 5i companies and a mix of others. I'm looking to add a new stock and am considering DHX and SJ. I'm looking for your opinion on which will give me a better return. I'm also quite patient so can ride out periods of volatility. DHX has risen quite a bit lately while SJ has been stagnant for some time. Any comments to help me with my decision would be appreciated
Thanks
Read Answer Asked by Bryan on August 28, 2014
Q: Hello 5i team,
This is more a comment than a question on THI.
I bought THI early in 2014 in my RRIF account because of its very high ROE and because I felt there was some modest growth left in Canada and a larger one in the US even though I was also cognizant that the same store sales were in constant decline; so I thought I'd be happy to make 20% pa for the next 2 years.
Enter Burger King with its questionable motivation, with a questionable rationale, backed by very smart people motivated by fast money.
I could no longer recognize the new THI (the risks associated with its future) and decided to take advantage of the very generous offer. I sold all my holdings for a 50% profit in just a few months and will move on; in so doing, I more than met my profit target.
Regards,
Tony
Read Answer Asked by Antoine on August 28, 2014
Q: Hi Peter and Team,

Would really appreciate your comments on the article in today's Globe and Mail re Burger King.

http://www.theglobeandmail.com//globe-investor/investment-ideas/think-carefully-before-biting-into-burger-king/article20227396/

The author is less than positive about this proposed merger.

Thanks in advance.
Read Answer Asked by Jerry on August 28, 2014
Q: I tried to submit something similar to this yesterday but I think it timed out so if this is a duplicate just ignore.

I think I can offer something to Jeremy's question on Questor. I work in oil and gas.

There are 2 reasons operators use incinerators:

1. To replace a flare of unsellable natural gas for public concern or environmental responsibility (hide the flame from view, get more complete combustion). There is no monetary benefit to incineration in this instance - it's an added cost. Reasons for doing are public image, environmental responsibility, and sometimes regulatory.

2. Using natural gas as fuel to burn up an undesired product such as hydrogen sulphide. This is the application where the payback Questor talks about comes in to play through using less fuel.

The North Dakota example would be primarily category 1. This also probably represents the big growth area.

Questor's marketing materials don't differentiate between these applications clearly. They could also probably do more to show how their incinerators are better than other ones and not just flaring.

I agree with Jeremy's point on not seeing a clear catalyst for growth after a number of years of slow growth but am relying on the 5i analysis here that the growth is materializing. Despite being sceptical for that reason, I do hold QST as I believe they are a supplier of choice in the field.

Hope this is helpful to some.
Read Answer Asked by Andrea on August 27, 2014
Q: peter, just to let you know, I hold 20000 css that we will not tender. I phoned rbc and they said doing nothing means you are not tendering.
I could buy 20000 more to help the cause, what is my downside. 20 cents. what do you think. dave
Read Answer Asked by david on August 27, 2014
Q: When will the next report on Capstone(CSE) be available as I notice the last one was in March 2013? Would the rating still be a C?
Read Answer Asked on August 27, 2014
Q: The revenue numbers for BKW reported in the Financial Post don't make sense: only $1.1bb vs 3 times that for THI which has one third of Burger King's location numbers. If the combined company is going to be #3 worldwide, revenues would have to be a lot closer to the SBUX level of $16bb. Is it possible the revenue numbers are small because they reflect only franchise fees and not total sales? I note also that 2013 net earnings for THI are twice those of BKW which doesn't appear right for an acquirer; what is the potential for the new company in generating growth here? Thanks, J.
Read Answer Asked by Jeff on August 27, 2014
Q: I noticed your aug 12 bloomberg article on AVO posted. I am under water on AVO & wonder if you are bot into the presidents strategy of short term pain for long term gain or is he over optimistic & have it wrong. In other words, is this a good time to buy into a real growth story a year or 2 from now or is there any chance they will see competition by then? On a side note, I believe there is a huge demand for more survelience and an acceptance from the public.
You also posted a list of 90 charts, first one being the SSEC-I which has already passed the marker the auther suggests will mark a breakout. Can you elaborate on your feeling of whether his assumptions are correct & what sectors this would impact, IE; commodities-base metals, oil, etc??
Read Answer Asked by LJ on August 27, 2014
Q: Hello Peter,
I am not clear as to why the market is paying 89 per share(current share price) for Tims when the overall deal will provide an investor more than 89 per share. Can you please comment? From the various answers provided, it appears you are in favour of holding onto the Tims shares. Am i correct in my understanding? Also, what is your view on DHX at this point as it has gone up alot in my portfolio. It does not represent more than 4 percent of my weighting. Should i trim or hang in there? Much appreciate it. umed
Read Answer Asked by umedali on August 27, 2014
Q: THI represents 3% of my overall portfolio, and it happens to be in my TFSA. I am up 44%. There are various options available to THI shareholders , in addition to selling the stock now.

From tmx.com
Under the terms of the transaction, which has been unanimously approved by the Board of Directors of both companies, Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share. Based on Burger King's unaffected closing stock price as of August 22, 2014, this represents total value per Tim Hortons share of C$89.32 and based on Burger King's closing stock price as of August 25, 2014, this represents total value per Tim Hortons share of C$94.05. As an alternative to the default mixed transaction consideration described above, each Tim Hortons shareholder will have the ability to elect to instead receive, for each Tim Hortons share held, either (i) C$88.50 in cash; or (ii) 3.0879 common shares of the new company, in each case subject to pro ration.


THI stock is trading around $89.32 now, but if you take the cash and stock option based on yesterday's closing price of BKW it is supposedly worth $94.05. And if you take shares in the new company it is supposedly worth $100 (according to BNN).

What option is best for an investor in THI? Should I wait for the deal to close later this year, or sell now?

Paul J.
Read Answer Asked by Paul on August 27, 2014
Q: BKW.US: Should I buy this stock now in anticipation of the deal going thru and the new company making big bucks in the years ahead?
Read Answer Asked by Donald on August 27, 2014
Q: EQI.New shareholder,Smoothwater been buying some $322k shares @ $9.45 to $9.50 from Aug 19 to Aug 25 according to Canadian Insider.Please provide your expert advice on whether it is an entry point now CSS.Really confused & disturbed by the instructions In my humble opinion,the instructions should be FOR or AGAINST.Are the brokers biased as there maybe equity financing coming by TFI for the purchase of CSS BNS.The market today reacted unfavourably to its results.Did it make a loss provision for its operations in the Carriben It s bigger than that of CIBC($500k provision in the last Qtr) & Royal(sold its operations at a loss at beginning of the year)Both BNS & TD are the favourities of fund managers.I am waiting for an entry point Thanks a lo
Read Answer Asked by Peter on August 27, 2014
Q: Hi Peter & team, I have shares of Tim Hortons (Canadian dollars) that I bought few years ago for my non-registered account. Should I understand that Tim Hortons will no longer be listed on the TSX? Will it be replaced by shares of Burger King (US dollars)in my account? If so, when will that happen? I prefer to keep US listed companies in my RRSP account. Thanks, Gervais
Read Answer Asked by Gervais on August 27, 2014
Q: Why has ahf.to gone up so much, about 30% in the last two weeks? Time to buy some more shares or wait till it settles a little? I have a 2% position right now. Thanks
Read Answer Asked by Jeremy on August 27, 2014
Q: In regards to Contrans (CSS) at BMO Nesbitt Burns there are two options. Option #1 take cash (sell shares). Option #99 Do Nothing (Default). Get your broker to select option #99 in this case to have your voice heard that you don't support the deal. Even though it's the default option it still makes sense to have your broker input the data, this will send a strong message other than do nothing becasue doing nothing can be interpreted in different ways.
Read Answer Asked by Chris on August 26, 2014
Q: As of now you can see North Dakota from space due to the flaring from the oil and gas drillers. There is pressure to reduce the emissions from this area in particular from Government. Are Questor's incinerators (QST) the best option to reduce this flaring? Or am I wrong with this assumption? With only a 4 month ROE on the incinerator...why do you think the O&G producers are not using them as the go to name? I know that they are small client concentration. But I would have thought since 1995 that they would have been able to distribute their technology more effectively. Thanks for your help. Jeremy
Read Answer Asked by Jeremy on August 26, 2014