Investment Q&A

Q: CRH is taking a real beating today. Do you have any idea why beside the fact of the sector it is in. You previously described this as high risk but also continued to like it. I also remember you saying don't get nervous an a bad Friday afternoon.
thx for any help

Q: BNN reported that they are having a hard time raising the debt is this as bad as it sounds?

Q: How much worse could this media nightmare get?

Reading everything that I can get my hands on, re: Concordia, the consensus is that "everything is fine" in the accounting department, and once the media flak settles down, this is still a good company, overall. We may all be in for quite a ride, but it will survive. That's what everyone is saying.

Nonetheless, does this not beg the question why they did it at all, and why they did it this way? The more I read, the more it makes me think that this is a case of the cobra swallowing the elephant: everything is digestible, but how long will it take; and while things are being digested, will the cobra survive, or starve on its own cleverness?

Q: Hi Peter and team,

You mentioned in your answer to Gordon "Bloomberg has a note indicating the debt issue is having a tough selling process, but the financing is there from the backers..." I just want clarification, does this mean if Concordia cannot sell enough of it's debt issue, the "backers" (financial institutions?) WILL FUND the remaining money owing so the acquisition deal can go through?

It is reasonable to assume that if the deal does NOT proceed Concordia's balance sheet would look more favorable in the short term? That they would then have cash on hand to wait for another acquisition or pay down debt? It would seem to me that either scenario (although very volatile in the short term) would be OK for a patient investor in the long run.

You quoted $4.25 USD per share earnings for 2015 before the deal; does Concordia not give an earnings price range (i.e.: $3.75-$4.50 USD) or just a single target number?
I'm also assuming that if the acquisition added say only $0.80 USD per share and you picked up the stock at $35 CAD which looks possible, and it got back to trading at 10 times earning, that you might see a 30%+ return in the next year. Or even a multi-bagger in the next 2 years? Not suggesting or endorsing to load up of course!

I have more questions on Concordia but I will put them in a separate submission. Please and THANK YOU in advance for answering all these questions as accurately and detailed as possible! I think your responses will not only greatly help myself but all your members who have been asking so many questions on this deal. I think I can speak for everyone when I say that I find your services invaluable and irreplaceable!!!

Thanks again, Shane

Q: Hi there,
Do you think this is a good entry point for XLV.US for a 2 year hold? Any opinion on this ETF?
Thanks,
Kerri

Q: Hi Team
This company is setting new lows daily with increasing volume.What is the possibility of fraud?I rely a lot on insider buying and at these levels no insider buying.What would change your bullish view on this company.

Q: In Donville's most recent ROE reporter, he notes that he remains committed to Concordia. He says this:

"...at current valuations, I think the company is
worth a lot more than $50 a share. On our numbers, CXR trades on 4.8x 2016 Cash Earnings and 1.1x BVPS, while earning a 24% ROE."

Are these valuations in line with 5i's research, including the AmCo (Amphidarm) deal?

Q: What is your assessment of the update released by CXR this morning of the AMco financing and Capital Structure post AMco Acquistion? Do you think the share price will recover with the closing of this deal Oct 21st? Do you see CXR being impacted by the events happening with Valeant in US? Thanks

Q: Concordia revenues are divided into 3 categories: Legacy Pharma, Orphan Drugs, Special HC Distribution. Could you explain what products make up each category? Legacy Pharma is far and away the biggest in $ volume.

Q: Hi 5i,

How do you feel about CRH at current levels? I like the company as it generates real FCF (1-2M per month), but I am concerned that their could be a structural shift outside of healthcare as companies continue to blow up (e.g. PHM, CXR, VRX, NHC).

Would you recommend CRH as a pick in the junior healthcare space? Do you think it will play catch up and drop down to its peers performance? Seems to be holding here at the 4 dollar level.

Thanks in advance.

Q: Had my eye on CXR for a while and thought I was cute by buying when they announced the placement pricing (at around $84 CAD) and we all know what has happened since. I caught a bit of your response yesterday to a caller on BNN regarding averaging down. My original purchase was a third to half position and makes up approx 1% of my portfolio. Thinking of adding to CXR here and bring my weighting up to 2% and see what happens. I may have also read that one reason for the share price decline was the possibility of having to do another share issue to pay down some debt? Is that a high probability? If so should I hold off buying the rest of my position?

Q: For your readers:

https://www.bloomburton.com/research/CXRX20151012.pdf

Research report dated Oct. 12 from Bloom Burton (investment bank specializing in Healthcare in the US) regarding CXR. Please note that valuation is in USD in the report. A $78USD target price would imply ~$100CAD.

It appears there is a massive disconnect between CXR's current share price and its earning potential. The selling is become almost ridiculous at this point. Thoughts?

Q: Hello,

I own NHC and am down 50%. I was planning to hold for the long term as fluctuations are common in small caps, however, I just read that two US law firms are now investigating them for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.Can you please explain what this violation is? And what does it mean when a law firm gets involved? Does it mean there is a problem or the law firm is just looking to make some money?

Sadly this is my largest small cap holding, I bought way too much in it, about 5% of my total portfolio. Should I sell now or hold?

Best,

Carla

Q: Any outlook on Shire?

Q: In my Scotiabank brokerage account the news section tells me some firm in the US "Rosen" I believe wants to sue someone for causing the short selling on Nobilis and the losses by ordinary shareholders. They want me to sign up and they will be working on a contingency fee. What do you think about that?

Thanks,
Charlie

Q: You may have read an article posted on Seekingalpha regarding Nobilis. It is basically an all out attack on the co. (in my opinion). Is this an orchestrated short attack, or is there merit to some of the alleged issues? The author has stated they are short NHC so there is that. Earnings are due next month I believe.

Q: what happened to nobilis today

Q: Peter & Team, NHC is down 25% and was twice circuit breaker halted today. Would you care to comment on a Seeking Alpha piece attached? I can find no other news.

http://seekingalpha.com/article/3561556-nobilis-about-to-fall-from-nobility-part-i-65-percent-downside?app=1&auth_param=cnfd0:1b1fjrl:a319bf57fbddf7c8bc89b0fac7269511

Thank you.

Q: Nobilis is the latest healthcare stock to take a swoon. An article on Seeking Alpha is probably to blame:

http://seekingalpha.com/article/3561556-nobilis-about-to-fall-from-nobility-part-i-65-percent-downside

Would you continue to hold?
Thanks.

Q: Hello Peter,
Regards your response to a question today, swould the increase in credit spreads on its debt affect its ability to raise the $950 million, or make the terms for the debt unfavorable for the company thereby impacting the bottomline for the next 6to 8 quarters? Has the risk increased and the probability of a bounce reduced thereby making the current price appropriate rather than attractive?
Regards
Rajiv