Investment Q&A

Q: April 11/17 ? asked by Terry re large block
trading:
'Dark pools' are private networks which do not have to report trades to the consolidated volume till after completion. In the US, Goldman Sachs, Barclays, Citibank and others have them and apparently account for as much as 40% of the volume. What is the situation re 'dark pools' in Canada? Also, what is the situation with TSE trades reported as 'anonymous' broker?

Q: How do you interpret this news about SNA? ... (April 5) .. "delisted from the TSX Venture Exchange ("TSX-V") after the close of trading on Thursday, April 6, 2017 and will be listed on the Canadian Securities Exchange ("CSE")" .. and a little jump in the price today .. what does this move from one exchange to another mean exactly? .. is there anything significant here? thanks

Q: I have heard that at higher incomes dividends can be taxed more heavily than capital gains. If true, at what income point does it make more sense to hold dividend paying stocks in a non-registered account instead of in an RRSP?

Q: TFSA
I should only put Canadian investments in it.
If I put in US dividend stocks I will have an issue with the 15%
withholding tax.

Q: What happens to shares that are not tendered but the 50% target is achieved. Do share still trade as today? Can you still expect to get the 1.95 after April 20th?

Q: Are you aware that Ryan Modesto is on Market Call on BNN at noon today--watch and support.

Q: Hi 5I, I need some clarification on time horizons and when to switch out and/or sell a company. If one says that they are holding long what time frame are we looking at? Sometimes I hear 3 to 5 years, other times 5 to 10 years. But in all of your portfolios what is the design factor? If one is long term investor and a stock has gone up 40%+ why would you need to sell it if the time horizon has not been completed? Timing has not done well for me. So I know that re balancing a portfolio means not going over a certain weighting per stock or sector for safety but what are you usually looking at to get out of a stock. Sometimes you say you are comfortable in people getting into a stock for long term but then you might turn around and move it out of the portfolio. So should I follow a multi-year hold, or follow the portfolio with the recommended in's and out's as you try to make the model better. Thanks for your advice.

Q: Peter, as a former portfolio manager, how do you buy large volumes of shares? Would you execute the order yourself or would you have a team to do this? My personal portfolio is over 8 digits so I always question myself on how to execute positions. I currently only buy companies greater than $400 million and always calculate the average daily volume multiplied by the current price to see if my trade will change the market. I take a current price and discount it by an educated guess % and enter the whole trade in and let it sit and the market move into my buy. This way I am not bidding up the stock. The bank has offered block trades, but I am not in control. In your experience what is the best way to enter and/or exit a large position?

Q: Hi 5i Team:
While I have a good sense of how my overall portfolio is performing I am struggling to find an uncomplicated method of assessing the contribution of individual holdings. When I try to apply a formula for CAGR say, I find myself stymied in almost all cases by having bought and sold shares over time,or having return of capital issues, or at the very least not necessarily re-investing the dividends in the same stock over the time frame in question but just somewhere in the portfolio. Can you suggest a workable way to bring some discipline (objective "hard numbers") to assessing the contribution of individual holdings to the overall portfolio given the above types of complications (and more)? If the answer is too involved/lengthy for Q&A perhaps you would consider the topic for a future blog?
Thanks,

Q: As a new member, I am puzzled by the composition of the Coverage Summary spreadsheet and accompanying 70-company report database. Perhaps I am missing something, but it seems to me that the research database would be more useful to an investor if it contained 70 companies all of which are highly rated. I don't understand the rationale for including companies that are rated lower than B. There must be more Canadian companies that would fall into the A or B categories. It also puzzles me that many of the companies in the model portfolios are not covered by the research.

In summary, would it be possible to include some notes on the website or accompanying the spreadsheet/database explaining how the 70 companies were chosen, how this research is to be used by an investor, and how and when companies are added or removed from the coverage.

Thanks in advance.

Q: Assuming you can't afford institutional IT (eg. Bloomberg), what is the best service for maintaining a watchlist; ideally, one that you could set to send alerts when price targets are hit or a stock is up or down a certain percentage? I am a 5 star client with BMO but their alerts are 15 min delayed (at best).

Q: When I see a company say that they are redeeming senior notes for example due in 2021. What does that mean? Is that good for the stock. Is it something they do because they may be putting themselves up for sale at a future date and don't want to have any debt outstanding? Please excuse my ignorance but I need to be educated on why a company redeems senior notes or whatever other notes early. Is it just because they have the cash to do so and it reduces the cost of their debt? Thanks.

Q: Please help me understand how an investor would go about buying some of the new shares being offered at $38.00 instead of buying existing shares on the market at today's price, most recently $40.00. If I wanted some, or in my case, more, shares of KBL, why would I buy in the market instead of the new issue?

Q: Some stocks like GSY OR RPI.UN seem to be decent performers but trade very light.Could you expand on that.

Q: Hi 5i, As one who remembers double digit interest rates, I've been wondering if and when the worm will turn again. It sounds like expectations are becoming pretty entrenched for higher rates in the US, and if that turns out to be true would expect Canada to follow with a year or two lag. Is there a typical pattern or approach that suggests which sectors and investment types benefit in a rising rate environment?

Thx for your excellent service!

Q: Hi Peter and the super team!! I know what a PE ratio is....but I have heard reference made to a "normalized PE ratio". What kind of beast is this? There are also forward looking PE ratios...and possibly others. Could you give a brief run down of the various PE ratios and their definitions? Cheers, Tamara

Q: Hi I am seeing a few dividend questions popping up. Here is a good dividend info site (especially the excel sheets) to pass on if you think appropriate.
http://www.dividendgrowthinvestingandretirement.com/canadian-dividend-all-star-list/

Q: Enbridge issued a press release regarding an unsolicited mini-tender offer made by TRC Capital to purchase up to 2,500,000 common shares or Enbridge at a price of $53.38 per share which is 4.47% discount as of April 6, 2017 closing price. This type of mini-offers has happened to other publicly traded companies. What are the possible reason(s) for a company such as TRC Capital make an offer at a discount below market and believe this offer would be accepted? Perplexed… Thank you.

Q: Do you know of a good site to get a list of the largest market gains and losses during the trading day. It would seem like a relevant piece of data, but I haven't been able to locate it.
In addition, do you know a site which shows the list of largest absolute dividends paid by Canadian and us companies? In Canada the banks must lead the pack. In. The us I'm thinking xom or the big telcos. If not, wondering if other readers know. Thanks in advance.

Q: Hi 5i, I noticed sometimes the gold stocks went down when gold price is up , same as energy, just my curiosity want to know why? What's the reason behind that? Thank you.