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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,
Just a comment: I’m not sure exactly what to conclude from CRH’s price move today. We have a one-day share price decline of over 18% on something like 6x average volume (possibly more because I don’t think my broker’s site picks up all volume), which appears to have been motivated by a rumor that an un-named hedge fund manager has circulated a negative report and short recommendation on the company. At the time of my writing, trading for Friday is closed and I still can’t find any mention of who supposedly issued this negative report and recommendation, let alone a copy (or even a second-hand description) of the report, to begin informing myself and critically evaluate. Nonetheless, based on the reported size of the individual sales, the initial appearance is that today’s sell-off was fueled significantly by retail investors, who would likely be in no better position to evaluate the situation than I am, rather than by large block sales from institutional investors. Of course with a stock like CRH having tripled fairly quickly from the $4 level, it was ripe to be sold. Anyone holding over that period could hedge out by selling half their position in the $10-$12 range, crystallizing a profit, and be left with only winnings on the table to play with. Investor sentiment may be influenced by fundamentally unrelated confidence issues, such as events and trading around HCG over the past few days, among other items. And there may be many holders of CRH who still can’t say exactly what separates it from being another PHM. But without even any allegations to look at, shareholders are exhibiting a “sell on the rumor of a rumor” mentality, and CRH is worth nearly $163,000,000 CAD less (by market cap) than it was at this time yesterday.

Meanwhile, SHOP was attacked by a negative report with a “Zacks Rank 5 – Strong Sell” rating slapped on it at the end of March, supposedly based on valuation getting too far ahead of fundamentals. Shortly thereafter the stock plunged from above $97 CAD to below $90 CAD in two days. Almost 3 weeks later, with no specific fundamental news in the interim, SHOP closed today above $103 CAD. Zacks Rank today? “3 – Hold” (https://www.zacks.com/stock/quote/SHOP ).

Yeesh!
Publish only if you want to.
Read Answer Asked by Lance on April 24, 2017
Q: Your recommendation to "do nothing" with CRH is probably the main reason why I bought and continue to subscribe to your service. Understanding you won't always be right it's comforting to have a professional opinion on matters that would often lead to panic decisions. Thanks.

On that note, why did you lean towards "do nothing" as the appropriate action? How did you weigh this decision? What criteria? Is this a gut decision? Is there a strategy at play with upcoming earnings (i.e. determining if results fit in with your long term investment thesis)?
Read Answer Asked by John on April 21, 2017
Q: While topical to CRH today, this is more of a general question. My concern has always been that CA firms have done their audit and interim reports are being printed just prior to the release of numbers (in this case next Wednesday). While I acknowledge CA firms have a reputation to keep, I just have to believe a lot of eyes get to see these numbers before they are published. In your opinion, is there some reason to be worried that a major drop in a stock just prior to numbers being made public, may be a sign someone with loose lips has seen the numbers and is advising insiders to bail before the release? Or should I simply stop playing detective?
Read Answer Asked by Barry on April 21, 2017
Q: Hello Peter,
CRH is down considerably. Based on your previous replies, it appears there were a few large blocks of shares sold (over 20K shares). I am not sure if that caused the stock to take a hit. However, on March 24, 2017, a director sold a large amount of shares ($5M plus). As well, there were other directors that sold in March and yet no impact on share price. I am not clear why such as drastic move today unless something is going on that is not reported yet. Any comments. Thank you
http://www.watchlistnews.com/crh-medical-corp-crh-director-sells-c5525000-00-in-stock/1168444.html
Read Answer Asked by umedali on April 21, 2017
Q: Hi, I have the above stock in non registered account. As of today I lost $4000 US , bought it at 102 and now $67 $ US. What do you recommend? Sell it and claim loss or wait till it recover or add more to it. I added to it when it became $70 US. But it seems it is not doing well. I appreciate your ultimate decision on it or if there is any US solid stocks that you recommend. Thanks
Read Answer Asked by Adam on April 19, 2017
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