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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: I'm in the process of looking at my total portfolio and I would like confirmation on my reasoning. My four stock portfolios comprise 67%; my commercial and residential real estate holdings comprise 27% and my private equity investment in an Industrial corporation comprises 6% of my total investments. I don't consider my personal home or my cottage an investment but their estimated values are included in the above. I do not own any publicly owned stocks in the Industrial or Real Estate sector in my Stock Portfolio. Should I be considering my total portfolio for sector weightings? For example my IT sector is 26% of my stock portfolio but it would only be 17% of my total portfolio. I am retired and the investment income from my commercial real estate holdings and private equity investment provides sufficient income. I currently own some dividend paying income stocks and wondering if I should continue to own these? I know you don't provide personal advice but looking more for guidance. I know my Real Estate holdings are high at 27% but I will not be disposing of any of those properties.
Read Answer Asked by stephen on August 05, 2020
Q: I often see/read commentary ahead of earnings for a stock that it misses/beats a certain % of the time. This is often followed by a percentage of sensitivity or average strength of a move after earnings. My question is if you know of a source for both US listed and TSX stocks that shows each of these figures? As an example, Livongo and Guardant Health both report next week. Is there a source that can tell me how often GH beats or misses and what a typical % price move would be? The % move post earnings is the more important part of this question. It would seem to be helpful in setting a price point to buy on a post earnings dip or to sell into good news.
Thanks as always!
Read Answer Asked by Tim on August 05, 2020
Q: Adjusted earnings is a scam! (in my opinion). It blows my mind how much attention people pay to adjusted earnings vs GAAP earnings. Management of any company is probably in the most biased position and has the most incentive to paint a rosy picture. This is why GAAP and IFRS exist...to stop management from being able to go into this fantasy land where they can pretend any expenses/cash outflows they don't like never happened.

One of the adjustments I understand the least is the elimination of stock based compensation from expenses when calculating adjusted earnings. Lets pretend there are 2 identical companies. The only difference is company A pays its CEO in stock, and company B pays its CEO in salary for an equivalent amount. Company A will finish the year with higher earnings, however there will be more shares outstanding. As a result, earnings per share (which is what actually matters to an investor) between both companies will be the same (excluded tax impact). This is why it makes no sense in my view for company A to adjust its earnings higher and show higher adjusted earnings vs the identical company B.

The other point I find comical is that companies claim to adjust earnings for 1 time items...yet there are 1 time items every single quarter.... perhaps these 1 time items are part of running the business then?

The worst example might be excluding the write down of Goodwill. News flash manager...that means you made a mistake and over paid for a business...and now you want to pretend it never happened by excluding the write down from earnings?...

My question is surrounding the history of adjusted earnings. How long has this been around for, and is it possible that these (always higher) adjusted earnings are giving the illusion that companies are less over values then they actually might be?

Thanks,
A concerned CPA....

Read Answer Asked by Joel on August 05, 2020
Q: What percentage of the stocks purchased is by pension funds, private equity etc. vs small investors like myself?
Clayton
Read Answer Asked by Clayton on August 04, 2020
Q: further to your answer on USD vs Gold price. Thanks for your clarification. Does printing money increase the Money supply?
With more money available BoC buys government bonds increasing Govt to spend more, is that responsible for Asset prices to rise, ie real estate which is limited and of course Gold which is also limited.
I most appreciate your expansive replies on this subject.
Art
Read Answer Asked by Arthur on July 31, 2020
Q: what happens when USD/CAD etc is devalued "over night" as it happened many decades ago when the Israeli Pound was replaced by the Shekkel. People holding cash lost a fortune but those that had not sold their homes, (my wife's relative) were sighing in relief.
QUESTION: If the USD were devalued over night what happens to share prices quoted on the NYSE in USD.?? The value of the company who had issued the stock may not have changed much in terms of profit potential as an economic entity??? unless it held a huge amount in cash then it would suffer the same as the common folks.
Art
Read Answer Asked by Arthur on July 31, 2020
Q: With the price of some of the stocks at extremely high valuations, when do you decide to sell or do you just keeping on trimming back once stocks gets to 10% of portfolio
Read Answer Asked by Nick on July 30, 2020
Q: Hi 5i experts,

I noticed this penny gold mine stock has very high deposit potential of 1.6M Ounce. One question though is the high institutional holding. Why there are over 50% institutional holding for this penny stock? I heard before that institutions normally only buy stocks above $5. I checked other gold mine stocks and most of the penny stocks have high insider holding but very few institution holdings. Does the high institution holding means a lot of fund managers see this stock as a good upside potential?

Thanks,

Adam
Read Answer Asked by Adam on July 29, 2020
Q: WHAT IS THE DIFFERENCE BETWEEN BOOK VALUE AND TANGIBLE BOOK VALUE
Read Answer Asked by John on July 29, 2020
Q: Next Thursday, 11 companies (which I hold) are reporting their earnings either before market opens or after market closes. This is a record for me. Curious, what procedures do you or other 5i team members use to deal with even more companies reporting their earnings on the same day in a timely manner? Thank you.
Read Answer Asked by Karen on July 28, 2020
Q: Question asked by Terry: "What was the price of Fnv and the price of gold at the end of 2011?" Canada Stock Channel will give compound earnings on $10,00.00 with and with out dividend back to 1995. Just enter the stock symbol and date range. https://www.canadastockchannel.com/compound-returns-calculator/
Read Answer Asked by Roy on July 28, 2020
Q: Further to the question related to the dividend cut for CDZ, is it safe to assume the cut is related to the associated dividend cuts from the underlying securities? And if that is true, then can we assume that once these securities reinstate their dividends, then the CDZ dividend will, in turn, rebound?

OR, is it a case whereby the ETF is periodically reconstituted and it is a fresh start for the underlying securities and we have to wait for the natural progression of dividend increases related to these "new" underlying securities? In this case how long does an individual security have to be "off-side" to be turfed from the ETF?

Thanks for helping me understand...Steve
Read Answer Asked by Stephen on July 28, 2020
Q: With Tesla hitting 4 quarters of profitability along with the other criteria, they are now eligible for consideration to be added into the S&P. I understand the S&P committee meets on a quarterly basis to rebalance the index, and the next meeting is scheduled for the third Friday in September. What is the time frame post the Sept meeting we can expect an announcement to be made that Tesla is to be added.
Read Answer Asked by John on July 27, 2020
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