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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 all,
I'm trying to understand what I conceive as price discrepancy between the atlantic power preferred shares and their convertible debentures. AZP.PR.B is a rate reset presently yielding 12.5% (17.5% after tax consideration) and the longest term (2019) debentures (atp.db.d) yields 13.92% to maturity. Is the 3.6% spread simply due to the added duration (preferreds could be reset indefinitely in theory) and the fact that they are lower down on the balance sheet. Or, is that fact these preferreds were originally issued by Epcor, and are really a held in subsidiary of Atlantic Power corporation. How would this effect the preferred shares in the event of a default.
Thanks again.
Emile
Read Answer Asked by Emile on March 18, 2014
Q: Hi 5i,

Could i get your updated views on RDM (RC-V)?
Read Answer Asked by Sasha on March 18, 2014
Q: On March 7th I asked a question on Clarke (CKI) but did not get a reply. However you did reply to another member's question on CKI which covered 75% of my enquiry so I won't repeat my question. Instead I will ask you to compare Clearwater (CLR) to High Liner (HLF). I own CLR in a registered account and have had a good run up since early November but it has pulled back in the last month. HLF has been in a trading range for the last three months and is currently at the top of its range. I am thinking of swiching from CLR to HLF if HLF moves above its 52 week high. Which stock has greater upside in the next two years? I am looking for capital appreciation rather than income and have a medium to high risk tolearance.
Thanks, Tim.
Read Answer Asked by tim on March 18, 2014
Q: Peter isn't one of your criteria for selecting good stocks the fact that they rarely issue shares? The reason I am asking this is that AVO -- Avigilon seems to be issuing a LOT of stock when they don't need the cash. I know your team has answered a previous question on AVO about this by saying that they probably have a big acquisition that they want to do BUT I have been invested in companies before that have done this and it always seems like they think the shares are over-valued and they want to benefit by selling at a high price.

Do you have any concerns about the way that they are selling a lot of shares without needing the cash?

Thanks
Read Answer Asked by ken on March 18, 2014
Q: has there been any substantial activity by insiders in WIN lately, buy OR sell ?
Read Answer Asked by tony on March 18, 2014
Q: Hello Peter....My energy sector positions makes up about 20% of the portfolio. This weighting is about 5 times the weighting of the 5iR model portfolio. With this in mind, I considering right-sizing, decreasing the weighting? And at the same time, this would consolidating the positions rather than having a number of borderline 1% holds that for me, likes spread the risk among a number of similar holdings in the energy sector.

Here are the positions with weightings. Badger 1.1, CanElson 1.2 PHX 2.4, Lundin Petro 2.4, Vermillion 1.4, Baytex, 1.1, Cenovus 2.0, Energplus 1.2, Painted Pony 1.4, Surge 1.0 and Tourmaline 3.4. These are held in a growth/capital appreciation non-registered account....that is now more fairly sector diverse since being a follower of 5iR.

What weighting or allocation % for energy would you suggest for this economic environment? And what stocks should I continue to hold or stocks that should be the core ones? (Could Badger be classified as Industrial?)

Many thanks.....Tom M
Read Answer Asked by Tom on March 17, 2014
Q: Wow a busy day with questions. I am writing for your assessment of badger's financial today. They appear to be great but management seems to have the most conservative comments in light of their result. l was disappointed not to see a dividend increase could that be staged for the end of the month to give the stock a second bump. Happy St. Patrick's Day Mike
Read Answer Asked by Mike on March 17, 2014
Q: I have set up two trust accounts for my teenage children. The intention is to buy a couple of dividend paying stocks with a drip, the idea being to set them on a path to financial literacy since I'm not convinced they will learn this at school. As they turn 18 I will transfer the proceeds into their first TFSA for them. I will research my own portfolio for ideas - PKI comes to mind - but would you have an stock recommendations that meet these criteria:

1) 5I approved
2) div of min 4%
3) with a DRIP

Thank you!
Read Answer Asked by Kim on March 17, 2014
Q: Hello Peter and Team,
I have held HNL for about 2 years. Every year it seems that they have a stumble of some kind (loss of major customer, leaking information), but the stock seems to recover. I have been thinking about switching to BDI instead and was wanting your opinion on such a move or should I just hold on to see if things settle down with this company. Thanks for your terrific service.
Read Answer Asked by Rudy on March 17, 2014
Q: My question is about Enbridge. After having your read your report, I quickly looked at its P/E value which was in the 80s. For such a large company, I figured it was a bit extreme and quickly concluded (possibly to quickly) that this was a bit of line. However, I put it on my watch list and slowly watched it creep up a few dollars.

Tonight I decided to give a further look and although the company has a huge moat, excellent revenue increases over the years, I also realized the following:

- Net income, free cash flow, EPS, ROE, ROA, Gross Margin have been consistently going down over the past 5 years (some of which had quite large decreases)
- Long term Debt, Shares outstanding have gone up over the past 5 years.

What is it that makes this company attractive? It appears to
be a well liked company, for today and for its medium and long term prospects. However, key financial metrics appear to give a different story. Naturally, there must be more than financial metrics that make a company worth investing in or accountants would all be rich. What is that I am missing?

Thank You.
Read Answer Asked by Walter on March 17, 2014
Q: BEP.UN This is not urgent.

In your research report you mention the related party transactions as an advantage, but are they not also a risk?

Seems that there could be instances where interests between ordinary shareholders and the parent could be misaligned (buying less-than-necessary services from the parent for example - I work for a complicated multinational - this does happen). A quick Google search to try to find the ownership structure for Brookfield companies yielded this:

http://sirf-online.org/2013/03/11/paper-world-of-brookfield-asset-management/

I'm not saying the article has everything right but I'd be interested in your comments.

Basically I would never consider buying this if it wasn't for the 5i conflict free pledge because I can't figure out the structure of it all and with the related parties I wouldn't ever be sure I was getting unbiased advise. Given you're rating, however, that makes me think it might be a unique opportunity if you've done your homework... Hence I am very intrigued to know how you assess the stock in context of the bigger Brookfield picture.

As this is one of your assessed and top rated companies, hopefully you can provide a fairly thorough response as I suspect others might be interested too as an addendum to the report.

Thank you
Read Answer Asked by Andrea on March 17, 2014
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