Investment Q&A

Q: I missed Peter Hodson’s talk at the Canadian money show. Do you have a link for a replay?

Thanks

Q: I want to be better prepared for the next big market correction. I have been keeping ten per cent cash that can be deployed when I correction happens and I know where I want to add to positions and start a couple of new ones, for instance Microsoft. I have never shorted an individual stock but I might consider an ETF that shorts an index. Where should I start my learning? Most of our money is registered accounts which complicates shorting. I am not suggesting I want to do it now but if the market gets forthy next year and the federal banks start to raise interest rates to comabt inflation there is going to be carnage. Thanks for the good service. Glad you informed me about Constellation Software five or so years ago What I gem!!

Q: Hi,

I was wondering if I could get your thoughts on a general trading/investing strategy.

Over the years, I have seen my valuations go up and down, up and down-yet I stick to the buy and hold strategy knowing I am not smart enough to time the market.

I am now thinking of adopting this strategy: selling approx 30% of a security position when I think it looks frothy. If the prices goes up, I still have 70% holding to benefit... BUT if it goes down, I would buy back that 30%.

I am not referring to day trading in and out-this would be a rebalance once/twice a year. What do you think in general of this strategy?

Thanks as always for your sage advice.

Q: Peter et al,
This question is directed to Peter, because I need an answer from someone who has seen many takeovers. In the case of the acquisition of IPL by Brookfield, I opted to receive exchangeable trust units for as many IPL shares as possible. The trust units, as you well know are used to effect a tax deferral on the IPL shares.An allocation factor was used and " X " number of units were allocated. The remaining shares were given the cash value of $20.00 / share. This total was then divided by the VWAP of the BIPC shares for a five day period. The resulting price was higher than the $80.00 ( 4 x IPL price of $ 20.00. ) This resulted in fewer trust units received. If there was any fractional shares remaining , they were rounded down, and no payment received.My questions-- How common is it to use a VWAP instead of the offered price as the divisor, especially as the equivalent Bipc shares fell shortly after the 5 day period. This price must have been supported? How common is it to round the remaining share or shares? I have always got paid for fractional shares.It is fine and dandy to say that Brookfield are good allocators of capital, and good managers, but they certainly are not shareholder friendly. Comments please?

Thanks as always,
Ben.

Q: Could you explain how this works and how much correlation we should expect between the CDRs and the original stocks? As of this writing, midday, for example, AAPL is up 2.4% but its CDR version is down .2. Amazon is up 2.37% in the US but it's CDR is only up .63. GOOG is up 2.21 but it's down .35 in Canada. And MSFT is up 2.34 in the US but only .19 in Canada. Disney is down 1% but its Canadian CDR is down 3. 84.

Q: When you refer to a " long term holding period ", can you be more specific to the time period in years? The reason I ask is some of the research I have done on Morningstar referrs to greater than 9 months as long term. Thank you.

Q: What do you think is going on with the Canadian tech sector? Today is a perfect example with US tech companies climbing (not surprising given that the NASDAQ is up 250 points) while the vast majority of Canadian companies remain in the red (eg. AT, STC, CTS, LSPD, SHOP, TOI, CGY). I appreciate that our companies (less SHOP) are much smaller but something doesn't seem quite right here. Could it be that short positions have been opened up by international investors against the entire sector?

As always, would appreciate your analysis.

Q: Peter,

I would be quite interested in your very knowledgeable opinion on the Sat article in the Globe re the Bridging Finance Inc fiasco. It smells of Madoff of the North. I find it ironic that they would lend to mid-sized companies that had been ignored { declined } the banks , but the banks were then pushing out the end product as a recommended investment. How with any common sense would the spin sent out by the Sharpes ever pass the sniff test when they claim they were in essence lending to companies that banks would not touch , yet had zero writeoffs. I must be missing something.

How as retail investors are we to protect ourselves when the " experts" look like they were hook line and sinker into a pile of garbage.

Thanks

Paul

Q: Hi folks
Ok...so I woke up this am to world markets down....I decided to buy a bit more BNTX for obvious reasons. It was already up to its highest of the day and I thought it would go up more but that's OK.. my question is...how can a small investor like myself get in before a stock soars? Who are these early, ahead of the game buyers? Seems unfair to me!
Thanks for your steading support and have a warm weekend

Q: Hello Peter,

With the uncertainty created by the new variant likely to impact the economy and delay interest rate hikes I am preparing for extreme market reaction in the margin account where I might have to lighten up the portfolio.
I would appreciate if you could grade the sectors and subsectors to reduce first, from the list below.
Industrials, Technology, Digital payments/lending, Faangs, Online Retailers/commerce and in general high growth(&value) companies that have taken a hit over the last week or so.
I apologize if the question has got jumbled up, but would appreciate your rationalized response.
As always, your opinion and suggestions are highly valued.
Regards
Rajiv

Q: Hi 5i team,
I just received notice from PFB that the board wants to sell out to
PFB Bidco for 24.10/share, a small premium to the current trading price. Am I correct in seeing this as just a way of taking the company private? Would that indicate that the trading price has been too low in their opinion? Any general lessons I should learn from this? (I'm in a profit position, but I was holding under the belief that there was still lots of upside.)
As usual, thank you so much, 5i, for your investment help and opinions.

Q: This company advertises that both Eric Sprott and First Majestic are investors. Are the size of these investments significant enough to indicate a fairly strong conviction?

On the Insiders report on your site I see the following during Sept 2020:
Shares Traded: 4,621,241
Transaction: Buy under a prospectus exemption at $1.40 per Share
Value: $6,469,737.00
Shares Held: 0

There are three separate transactions listed with the same figures, except that one shows Shares Held as > 0.

What should this tell me? Why is "Shares Held" = 0 after two of the transactions?

Thanks,

Q: I have had some very volatile price swings in after hours trading ( positive and negative) and I'm wondering what the rationale is for this activity given the much reduced volumes. Today anaplan is trading 16 percent down after hours ( minutes before they release earnings) that seems odd. Why would an investor (including firms) want to sell after hours? Seems risky and results in seemingly large price moves. I see that in Canada we do not allow after hours trading is that correct?

Q: Other than the investment being hedged in Canadian dollars is there any advantage or disadvantage in buying a cdr in disney?

Q: Can U recommend a good book to explain transferring a RRSP to a RIFF
THANKS RON

Q: Greetings 5i team.

As follow-up to Grants Q of Nov 17, please go into more detail re: the substantial issuer bid LNF announced. It appears to put a floor on the downside through Dec 30th at 24.30 and caps the upside at 25.05. Is this correct? Are they doing this based on actual shares traded that we see, or do they intend to buy most of this through block transactions? The average daily traded shares do not appear to add up to the number they are trying to purchase.

Many thanks for your help.

Q: Peter,

Not a question, just a comment. In a recent question about banks you mentioned you have been wrong about BNS. In my opinion admitting this is a huge credibility boost for you and your service. The easy thing to do is to give the political answer and never admit you are wrong. That " Nadal" spin is what turns me off of politicians. That is so easy to see through. As Greg Bonnell once mentioned on Market Call any advisor is going to be wrong 30% of the time. It the ones that you get right { You have had a lot of them } that chart the real course. Your service has put a LOT of money in the pockets of the subscribers.

Thanks

Paul

Q: Hello, I am looking for an answer to a difficult question about evaluation of risk for fixed income assets.
I understand that for a long time, it was anticipated that the long decline of interest rates and correlated bond rally has ground down and the current prevailing question surrounding interest rates is how fast they may rise.
With this in mind, could you please offer thoughts on the relative risk of bonds? How much downside potential is there, and is it justifiable to buy their low volatility, even if it is believed to be a (apparently) horrible investment with no future potential, just for those two percents of yield?
Your thoughts are greatly appreciated.

Q: I added 400 shares of VEDL in my wife's Spousal RRSP ---Vedanta Limited American Depositary Shares, after reading your answer to David On Sept.28/21--Nov.10/21 I received a notice from ITRADE, stating the company is deemed to be a non-qualified investment (NQI) for registered plans under the Income Tax Act. ... CRA may levy 50% penalty of the market value of the NQI ... Understand now delisted as a ADS. Can you help me to understand this mess? Also what red flag would be raised so I don't buy stocks That CRA rules NQI
Thank You
Cec

Q: Hello, in the answer to a member’s question about “fraudulent activity” you say: “We would exercise more caution on foreign entities due to accounting differences. Over the counter small companies should essentially just be avoided.” My question is related to the Vanguard FTSE Emerging Market VEE ETF that contains 5250 stocks, out of which 37% are from China. Is it possible that many of the VEE stocks fall into the category stated above? Thank you