Investment Q&A

Q: Hi Peter and company,

With Pacwest being the latest troubled regional bank, are there any high quality regionals being sold down in sympathy? Feel free to suggest any others not included above.

Thanks for the great service,
Angelo

Q: I noticed that Brookfield DTLA, a BAM subsidiary, has defaulted on a series of office building morgages with their preferred dropping from $30 to $0.50. Also I have read frequently that Brookfield's financial structure is highly integrated and complex.
Do you see see any risk here or should I maintain my position. Thanks

Q: Hi Peter,

Paul Holden of CIBC Capital Markets raised his recommendation of Royal Bank of Canada and National Bank of Canada to outperform. He cited their capital levels, earnings diversification, and lower relative credit risk as the basis for his favourable recommendations.

However, he acknowledged there are risks to that assumption and that central banks could overshoot by tightening too aggressively and thus tip economies into recession; or they could move too cautiously and allow stagflation to take hold.

Holden’s models show the Big Six banks, could see their Fiscal 2023 earnings per share tumble 33 and 31 percent, respectively, in the recession and stagflation scenarios.

“Canadian bank stocks are not being priced for the same economic risks that have already been incorporated into the bond market and U.S. bank stocks. We are not calling for a 2023 recession as our base case, but we cannot simply dismiss that possibility as inconsequential. Our analysis shows there could be (roughly) 30 percent downside should a recession scenario transpire,” he wrote.

Do you agree with Paul Holden’s recommendation concerning the Royal Bank and National Bank as the best of the Big Six banks to own today? Please explain your rationale.

Second, in the event of a recession or stagflation scenario in Canada, do you agree with Paul Holden’s prediction that the Big Six bank stocks will tank by about 30%? Please explain your rationale.

Thanks

George

Q: I am about a 1.5 years away from retirement. Across all my my registered portfolios I have all 5 major banks, pretty well in equal %. An independent financial advisor suggested cutting this back to 2 banks.

My question to you is can to rank these 5 banks in order of what you would consider selling?

Thank you.

Q: Tonight, I saw on TV that TD has become the target of short sellers.
Is this something to be worried about?

Q: This person took the words right out of my mouth, as the saying goes. Well done 5i

"Q: You have taken some heat on WELL and some other small caps, so I thought we would throw in a comment for some balance. In mid March I was thinking of taking a flyer on FRC and you were very cautious about such an idea. You said, and I paraphrase, 'we don't like stocks than can potentially go to zero'. That was enough to keep me on the sidelines. Now, FRC is down about 65% since then, and might not make it through the weekend. I wanted to thank you for your advice, and sometimes the 'don't buys' are good as or better than the buy ideas. Thank you for your service and keep up the good work."

Q: I see that CI sold some companies and that they are looking at selling others where they have no control with high %,. Of investment.This should bring debts lower.What effect will this have on their price and is there listing in US still going ahead.Will the dividend continue
.

Q: Can you comment on this company? Is it a good investment thanks

Q: Hi Peter and Team,

My understanding from the news is that Brookfield defaulted on some buildings recently. Given the significant tightening of interest rates, the collapse of a 6th bank, and the increased reluctance for institutions to lend and drop in liquidity, how do you feel about the safety of levered companies involved in realestate and commercial realestate?

Have you looked at what obligations Brookfield has that might face mark-to-market losses? Are people confident that the assets and therefore the equity are properly valued?

The building defaults seem like a "canary in the coal mine," don't they? Developers walk away from the building because it costs more to finish it than the building is worth, right?

Thanks!

Q: Could you explain this equity .How safe is the payout?and how much is there down side risks?
On another note ..any idea who bought the shares @ spb in the dump?

Q: You have taken some heat on WELL and some other small caps, so I thought we would throw in a comment for some balance. In mid March I was thinking of taking a flyer on FRC and you were very cautious about such an idea. You said, and I paraphrase, 'we don't like stocks than can potentially go to zero'. That was enough to keep me on the sidelines. Now, FRC is down about 65% since then, and might not make it through the weekend. I wanted to thank you for your advice, and sometimes the 'don't buys' are good as or better than the buy ideas. Thank you for your service and keep up the good work.

Q: Can you tell us when GSY reports, and what the numbers might be.
Also, can you tell us if GSY is expected to increase earnings this year and next, or is this too difficult to accurately forecast with the changes from the budget.
Thanks

Q: I note that CITI Group looks cheap with a P/E of 5.7X. It also has a nice yield of 4.16% and a Book Value twice that of it's share price. I would appreciate you opinion of this company as a long term hold. Also, I would appreciate your opinion regarding the significance of P/E and Book Value.

Q: Then it looks as though you lost one; perhaps you could reply to the question I have just framed?
ECN; their role in and the banks difficulties resulting from the rapid rate hikes?

Q: Is not the RY a super buy right now?

Q: Can you give me the risk level of investing in either of these 2 financial products? Should the yields scare me or is this an opportunity? Looking to put in my income portfolio.

TY.

Q: I would like dividends & preservation of investments for long term
which banks would you recommend?
thanks

Q: Risk to reward seems pretty good currently on this one ?

Q: Hi 5i,

Pretty sure I know your answer based on past questions, but I have so many questions to use from being a long time satified member.

Would you swap MG for DOO? Please provide some comparison metrics for the next 3 to 5 years to justify switch.

Again, using same question above, compare a BNS to TD switch.

Thanks again for your valuable insights over the past several years!

Q: Can you clarify the business models of the above for me. I am worried about the prospect of commercial real estate defaults affecting the share prices of the above. I own both.
As I understand it, BN actually owns commercial real estate that could potentially default, whereas BAM doesn’t. Can you confirm this? In the case of BAM, they simply take institutional investor money and invest it for them, in many different asset classes, of which commercial real estate is perhaps 5-15% roughly? And by investing institutional money in this class, they earn fees. So defaults in commercial real estate would probably only somewhat indirectly affect BAM because they might still get institutional investors wanting to allocate money to the class even if prices were low, and they therefore would still earn fees on this? Perhaps BAM would (eventually) earn less ‘carry’ on the commercial real estate investments, down the road in the case of some kind of commercial real estate decline? Thanks.