Investment Q&A

Q: Preference shares
How does the market value preference shares? Disregarding variables such as credit quality and characteristics of different issues, these shares strike me fundamentally as a series of cash flows discounted to a present value. I suspect that the market is driven by institutional traders who are guided by a particular benchmark to establish a discount rate to determine the value of the cash flows If I am correct, what benchmark rate do the market makers use and does it vary? For example, do traders always use a benchmark of x bps over Canada bond yield for equivalent terms and is there an established amount for x which doesn't change over time? Without predictability in this regard, there would be no way to assess whether reset shares will trade at par on their reset date.

Q: Just a comment on the answer to the question regarding companies that were deleted from the portfolios (and why) ... the time and effort to answer this question is detailed and obviously took some time to muster. I think just a sign of your continuing efforts to care for 5i members.TY.

Q: Are you able to reasonably estimate when a company will produce positive (EPS) earnings per share (i.e 1-3 year out)? If so, when will GEI (Gibson's Energy) have positive earnings? Are there any services /sources out there that does this type of projection?

On a different matter, are my question credits carried over should I not use all my question credits by my renewal date?

Q: Good morning 5i team,
Richard Croft has mentionned a kind of bond alternative by writing covered calls on a company like BCE. He says BCE works something like bonds in a rising rate environment and so, I suppose, would tend downwards. In writing the covered call for say next January you get the healthy dividend and you have also protection from the downside. Wondering what you thought of this strategy and whether you know of some other Canadian companies with which it would work?

thanks

Q: I have recently raised cash in my portfolio and am wondering if you could suggest a good place to park it for some kind of return over an undetermined period of time. Are money market funds still my best bet?

Q: Good morning
I purchased TD preferred rate reset shares TD.PF.G at $25 par in the IPO just over a year ago. The shares now trade at about $27. The initial dividend was set at 5.5% until April 30 2021 at which date either the shares will be redeemed at par or the dividend reset at the 5 year Bank of Canada rate plus 4.66%. The renewal rate seems to be quite high so I suspect the shares will be redeemed in 2021. If that is the case, the yield to maturity is approximately 3.1%, so I am considering selling and moving on. Is this analysis flawed?
David

Q: Please explain the reason for the huge increase in the pre market daily volumes for canadian large caps on Jun 16. Examples are CNR, Banks, ENB, etc. Thanks

Q: Hi Peter, Is there a co-relation between growth factors and share price. MY screener shows some stocks with great growth ratios Like EPS, SALES AND INCOME growth in double digits but very poor performance ( LIF). Also, some with 2/3 negative growth ratios have stellar performance (BLX).
Am I missing something or the correlation is not straightforward? Which is the more reliable indicator? What is your favorite screening things. Thanks.

Q: Hello 5i
With talk of capital flow rotation, Pundits claiming dooms day freely in the media, some stocks and sectors seeing chart patterns rounding out in topping formation........and all the other market topping signs,

what are the portfolio review activities an investor should be conducting today?

As you can imagine, some of my longtime winners are giving back gains and other stock prices have stalled. It will be disappointing to me if I just sit and watch as my gains evaporate.

Short of telling me you are not market timers, do you have thoughts on what an investor is to do in the current environment to hold onto profits, while managing behaviours and emotions?

Portfolio is widely diversified including pension split between CAD, US and EAFE. There is very little fixed income utilized given expected low and negative bond returns.

Thanks
Dave

Q: Hello,
I'm not happy with the new DESJARDINS trading platform and thinking for a switch.
In your view what is the best for a retire guy with a income portfolio (600K), 5 to 10 trade a month. I need real time quote and good charts. And easy to use....
Thanks.
Francois

Q: Hi 5I, I need your help in explaining the difference between "Min. rate-reset" and "Rate-reset" preferred. Also, how will int.rate increase effect them, suggest some you favor, and recommend to buy.

Q: Good morning gents,

Please forgive me if this question is out of bounds.

Currently started my investment career in April. I have all stocks in the Beport covered to a T. I also hold a large holding in CNR form employee share plan which is double the Beport holding, 400K. I am looking at the growth portfolio and don't know if I am extending myself to thin.

I was interested in a 50k start and was wondering if this is appropriate given the amount I have in equities.

I have a 5 yr timeline to retirement with a decent pension plan. Thanks for the terrific insight to a formerly very cautious, see bank account investor. Risk level has gone from scared sh-tlless to moderately confident.

If this is two cumbersome or difficult. a question please disregard.

Q: HI 5i,

I unfortunately bought into Shopify and Apple right before the big tech sell off on Friday and today, and as such I am down quite a bit.

I know the financials and growth prospects of both companies are VERY strong and a rebound is likely within the next month, so I am wondering whether this is an opportunity to buy these stocks at a lower price. My sector weighting in tech is currently 12% (I am in my mid twenties with a higher risk tolerance), so I am also wondering whether you think I should instead sell to cut my losses if you see this correction continuing long term.

Thanks,

Grace

Q: Good morning gentlemen,

I have fairly large gains in the fang stocks as well as with Apple. With the Nasdaq taking its second consecutive beat down today, Would you be inclined to take profits. With Apple being down close to 8 percent in two days ( due to downgrades, ostensibly), in your experience. Does a stock like this rebound the following day? Also, do you think the sector shift away from tech could be an enduring trend?

All of the aforementioned positions are at 5-6 percent holdings.

What I'm getting down to is : sell today, or wait for a rebound ? I understand the former involves a degree of market timing, but surely with your many years in the industry, you must have some flair for such events.

With much appreciation,
Karim Rahim

Q: My daughter has $15K she will be putting into her TFSA with another $1500 per month following (at least, could be up to $2500). She has another $11000 that currently is with a fund manager that is a mutual fund that we will not touch. She will be using this a down payment for her first home in 14-18 months. She is OK with a little aggression as she is aware of the volatility. Are there some ETF's, stocks or other that may be suitable for some growth over that short time period?

Q: Hi 5i super team!! I have a hypothetical question...I am a dividend investor. I do not subscribe to automatic dividend reinvestment, rather, I collect the cash and then selectively reinvest the cash in the stock that seems to have the best value. Suppose I own stocks A B C D E...all are overvalued except C which is a bank. Even though, the price of the bank is at the higher end of its 52 week range, and even though the stock potentially faces future head winds, do I keep reinvesting the dividend cash into this stock? If it holds a higher than7% presence in the portfolio at what point do I stop reinvesting the dividends into it and perhaps selecting to invest in the next best valued on the list? I am looking for a rule of thumb here if there is one. Hope you have a great weekend! I hear it is going to be a hot one 😎😎😎

Q: Hi,

Finally opened a TFSA 6 months ago. Contributed $10K so far and expect to be contributing $1,000 - 1,500 per month for the indeterminate future.

Currently hold AQN (28%), MFC (24%), GUD (10%), PHO (7%), PEO (6%) and cash (25%). Looking at the following to use up the cash: ENB, SYZ, ITC, OTEX, SIS. I am open to any of your recommendations. Should I wait a couple of months to accumulate more cash?

Thanks.

Q: Hi 5i team,

Im just wondering what determines which company gets reported. I see some have multiple coverage while some haven't had any.

Q: RE: June 08, 2017 - Asked by Jerry - NEO >>>>

Looks like I won't be getting quotes directly from Google any time soon. Received the following reply to my email from NEO:
Thank you for your market data inquiry. I can confirm that we have engaged Google Finance with respect to making NEO Exchange market data available on their platform, but they have been less than responsive. Most global data vendors do currently support NEO data. If you are inclined, please feel free to contact them directly with your request, as there are no applicable fees for them to make NEO data available.

Q: As I am over 55 and live in BC I qualify to defer my property taxes until sale of our home. I will have to pay .7% interest on the deferred funds this year and the rate can change yearly. I was thinking of depositing the equivalent funds (about $2500 per year) my TFSA each year as i have unused room and I was wondering what recommendation you would make for a reasonably safe investment for these funds for the long term until sale of our home when they will come due along with interest.