Investment Q&A

Q: I like CPG for a long term hold but am currently significantly under water due to the falling oil prices. I have Capital gains in other stocks that I would like to offset. I am considering selling CPG for the tax loss and buying it back 31 days later. In the meantime I will buy a energy ETF with the funds to protect me if oil rebounds in the short term. If all stays the same or worse, I will sell the ETF after 31 days and buy back CPG. Your thoughts?

Q: Hi Peter and team, could you please comment on the debt/equity ratio? What is the ideal ratio for a company? Is a ratio of 1.5 too high? Thanks, Gervais

Q: Hi folks: I like to find stocks prices that are consolidating. Is there any info available regarding stock consolidation on the web, or do we have to check stock charts one at a time?

Q: The US dollar has risen substantially lately. The S&P 500 has risen 50% in 3 years. I understand that both of these have climbed due to the foreign influx of capital seeking the haven of the reserve currency of the world. Can the U.S dollar and markets continue in this manner alone while other countries languish? Do you have any concerns regarding the strength of the U.S. dollar or the strength of the S&P 500?

Q: Following up on your recent answer re H&R distributions. You note that 58% of the return is "return of capital". I have always considered "return of capital" as giving me my own money back in the sense that it changes my adjusted cost base by the same amount so that I end up paying tax on it when I sell the shares. ie it is giving me my own money back because the company did not earn enough to fully cover the dividend and is therefore not a real earning.
Can you enlighten me on this? ie is "return of capital" really a benefit in the long run?
Thanks

Q: Re the trading of etfs which typically consist of a NUMBER of stocks, what factors dictate a rise/fall in price? Plz compare with the rise/fall of an individual stock.
Thanks

Q: I have no US exposure and am thinking of buying VIG US dividend fund, as you recommended to another member. My question (and therefore a concern) is; are the dividends charged as income since the Canadian dividend tax credit is not available?

Q: I thought this article by Rob Carrick (Oct 23rd) would be of interest to your Members.
Any comments on it from 5i would be welcome as CBO is often recommended on the site as providing a 4% + return.

Thanks in advance:

"You're probably not getting the yield on bond ETFs you think you are"
Oct 23, 2014 by Rob Carrick


"Some of the most stubborn investors out there are the ones who believe they’re getting yields of as much as 4 per cent on their mainstream bond ETFs."

"Consider the popular five-year laddered corporate and government bond funds offered in BlackRock Canada’s iShares family of exchange-traded funds (CBO and CLF). If you find quotes for them on Globeinvestor.com, you’ll see yield of 4.2 per cent for the corporate bond ETF and 3.6 per cent for the government bond ETF. For comparison’s sake, a Government of Canada five-year bond yields about 1.4 per cent a 10-year Canada bond gets you just short of 2 per cent."

"I am continually surprised by the number of investors who don’t question these bond ETF yields further. They insist on believing they are getting double the yields available on government bonds. Think about it, people. If bond ETFs offered such outsized yields, wouldn’t investors have piled into them and driven the yields down? As prices rise for bonds and bond ETFs, yields fall."

"If you’re in the group that takes the published yields for bond ETFs at face value, let me direct your attention to the yield to maturity numbers displayed on the fund profiles for CBO and CLF on the BlackRock website. CBO clocks in at 2 per cent, or 1.7 per cent after fees. CLF comes in at 1.4 per cent, or 1.2 per cent after fees."

"The yields you see in bond ETF quotes is the distribution yield, which is based on the previous 12 months’ worth of interest payments and the current share price for the bond ETF. If the price of a bond ETF stayed put, then distribution yield might mean something. In fact, the price of CBO and CLF units have been falling in recent years. Globeinvestor.com shows a three-year cumulative drop of 3.6 per cent for CBO and almost 5 per cent for CLF. A lot of the bonds held in these ETFs have been trading at prices that are above their value at redemption. As these bonds approach maturity, they decline in price."

"If you want to know what yield you’ll get from a bond ETF on a total return basis – that’s interest paid out combined with changes in the unit price – then check yield to maturity. The distribution yield is a much happier number, but it’s not the whole picture."

Q: From your experience when does most tax loss selling end?

Q: I have $125,000 to invest, I am looking for a combination of growth and income. Would you invest all in your model portfolio or with you put a portion in US and or emerging markets, I would problably use ETF's for US and emerging market portions.

Q: Good Morning All,
This is not an investment question, but I'm hoping you can shed some light. Huntingdon Capital Corp has been sold to Slate recently & I have been viewing news releases for Slate (on TD Waterhouse site & SEDAR) stating that they have purchased 100% of the outstanding shares of HNT at $13.25 and that the shares are expected to be delisted from the TSX on NOV7, 2014. I have over 1000 shares of HNT in a TD Self Directed RRSP. I have received no notification from either TD or HNT to tender my shares. The HNT website is down, TD can't give me an answer and I can't get in touch with investor relations at Slate. I'm becoming very concerned.
Please comment on what is the protocol in this situation; in the past I have had the brokerage call me for instructions in these situations.
Thanks in Advance,
Tom Brandsma

Q: Hello Peter & Co,
I (age 71) have recently made adjustments to my RRIF portfolio (for 70% of my retirement income)
2014 ytd return 22%, yield vs book 3%, beta 0.40
Consumer discretionary (5%) LNR,MG
Energy (10%) BTE,CPG,HWO,TOU,VET,WCP
Financials (8%) BNS,EFN,HCG,TD
Health (11%) CCT,CXR,DND,GUD,RX,XHC
Industrial/Transport (7%) CHE.UN,CCL.B,CNR
Infrastructure (6%) BIP.UN,SJ,STN
Materials (3%) IFP,WEF
Pipelines/Midstream (11%) ENB,IPL,KEY,PPL
Retail (4%) ATD.A,DOL
Services/Media (8%) BYD.UN,CGX,DHX,FSV
Technology (13%) CSU,ESL,GIB.A,MDA,OTC
Util/Telco/RE (9%) ALA,BCE,BEP.UN,TCN
Cash (5%)
As 5i Research has rated many of these holdings, a general commentary would be sufficient.
Thanks,
Tony

Q: Hi Peter and Team,

2 questions for today. Firstly thank you for your continued advice - I have and will continue to subscribe to it, as I find it invaluable for the Canadian market.

My questions arise from 2 sources, firstly that my investments are currently 100% Canadian, and secondly Mr. Poloz' recent letter to the CCPPP (link below) titled "The legacy of the financial crisis – what we know, and what we don’t". I think it's time to diversify out of Canada a bit.

Here are the questions:
1) Can you recommend a US 'no conflict of interest' equity research firm similar to 5i that I could check out?
2) I take the overall message in Mr. Poloz' letter to be Diversify out of Canada. Would you agree?

Thanks!
Keith

link:<http://www.bankofcanada.ca/2014/11/legacy-financial-crisis/>

Q: Just a note of thanks for your weekend advice to sell my CRP.RT holdings on Monday morning. I sold at 43 cents, and this morning CRP.RT is trading at 4 cents! (As well, the CRP shares themselves are now at a much more interesting entry point.)

Thanks!

Q: In regards to typically Canadian commodity stocks: as the $US increases in value against the $CAD & many others, what companies will benefit the most in your opinion in the peer groups for various producers? Such as base metals, precious metals, lumber & oil/gas.

Thanks for your great service

Q: Avigilon reports Net INCOME ,EPS and EBITDA with both GAP and adjusted data. To study EPS. ROE or PEG which should a person use , adjusted or not adjusted?


Regards

Q: Markets have been in a nasty downturn for a couple months ago. This may be an easy question, but how often do you recommend the average investor monitor his or her portfolio, assuming there is sufficient diversification? It really hurts to see some declines in some stocks, particularly energy.

Q: Hello...I was just searching the website for the recommended financial books for increasing base knowledge...can you point me in the correct direction

Thanks again
Matt

Q: This is more of a tax question than a Baytex question. I sold Batex Energy on October 9th and it had a settlement date of October 15th. I sold for a loss to offset some capital gains. I sold it at $38.00 and had purchased it at roughly $46.00 On what day can I purchase it back and still get the tax loss and is there any rush to buy it back? Thanks so much.

Also this service is amazing. Thanks for the awesome research.

Jimmy

Q: Hi Guys, my self directed portfolio totals $ 350,000 over 4 accounts, TFSA wife, TFSA mine, non registered and a corporate account. Will you look at them as one (which is the way I manage them) and advise accordingly?
thanks again
Jim