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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: Good morning,

Looking for your insights on a number of preferred shares that are nearing reset in the next year or so and whose prices have been driven down given the recent bank of Canada rate cut and decline in 5 year Canada's. Do you feel these declines represent a buying opportunity in these shares? Also in terms of reset options, the 5 year canada and 90 day bill rates are maybe 20 bps apart, does this make the floater rate the more logical choice, given the redcent compression/ flattening of the yield curve?

With thanks,

Thank yo for your insights.
Read Answer Asked by Brad on January 29, 2015
Q: Hi Team,
I was considering buying this ETF for yield and relative safety for the next couple of years. Can you share your thoughts. I am assuming that it has declined because the recent BOC rate cut?

Thanks as always for your reply.
Read Answer Asked by Douglas on January 27, 2015
Q: Comment to David's question this morning:
Assuming that the 5-yr BoC rate (used to determine the reset rate of the preferred shares) at the reset date of March 2016 remains at today's (historically-very-low) value of 0.82%, a discounted cash flow analysis indicates, that at the current bid price of $14.10,the long-term yield of FN.PR.A is 5.3%. This is OK but perhaps a bit on the low side for a sub-investment grade preferred ("Pfd-3").

On the other hand, if you believe that the 5yr-GoC will rise to 1.10% (still low by historical standards) by March 2016, the yield-to-perpetuity increases to 5.8%.
Read Answer Asked by Gregory on January 26, 2015
Q: Hi There
You seem comfortable with the common stock, based on a couple of recent questions. I'm wondering, before I buy some, why the pref has been on such a steady long term decline . Am I missing something with the generous pref yield?

Thanks
David
Read Answer Asked by David on January 26, 2015
Q: follow up dumb question, then i'll go away...does a company ever chose to redeem preferred shares if the price falls below the issue price? or put another way, in most cases what is the motivation for a company to redeem its preferred issues?
Read Answer Asked by Curtis on January 23, 2015
Q: the BNS.PR.C has fallen sharply in the past couple days, is this due to the BOC cut? i was told to also expect share price declines in other rate reset pref's when the US starts to raise their rates...do pref's only move one way? thanks as always...
Read Answer Asked by Curtis on January 22, 2015
Q: Are the dividends on these preferred shares still safe with Bombardier's recent financial problems?
Read Answer Asked by Robert on January 17, 2015
Q: Would you consider the new IPO for NPI convertible debentures 4.75% to be an acceptable investment for aTFSA?
Thanks Guys
Read Answer Asked by Warren on January 14, 2015
Q: I have relatively balanced portfolio and have some GICs coming due soon, which I’m considering replacing with preferred shares. What do think of ENB.PR.B ? It’s down quite a bit recently. Do you know why it’s dropped so much and are there any preferred share that you like better?
Read Answer Asked by RICHARD on January 13, 2015
Q: I currently own some M.PR.A preferred shares in my TFSA (since they are interest-bearing and hence not eligible for the dividend tax credit). They appear to be true perpetual prefs (i.e. no issuer redemption or shareholder retraction provisions) offering $1.00 in annual interest. At their current price of $10.05, this is nearly 10% p.a.

Given their attractive interest rate and "seniority" to the common shares, as well as the seemingly diversified nature of Mosaic's underlying business, I am considering purchasing more. Can you provide me with any indication as to the risks associated with Mosaic and these preferred shares?

Thank you!
Read Answer Asked by Gregory on January 12, 2015
Q: Hi Peter and team

Today, Jan 2, Rob asked for information sources re: preferred stock. I would recommend prefinfo.com published by Hymas Investments It lists all Canadian preferreds by ticker symbol with dividend information, redemption dates, retraction dates (if applicable),type(perpetual, retractable , etc) and misc info such as whether the dividend is cumulative or not. Also in the comments, there is sometimes information on the rating. I hope this helps. Note the symbol is a place holder as your format requires a symbol.

Ross
Read Answer Asked by Ross on January 04, 2015
Q: Happy New Year to All
Would EIF's improved status as a company justify an inclusion of any or all of the E,F,G convertible debentures as this years TFSA contribution?
Thanks
Read Answer Asked by Warren on January 02, 2015
Q: With regards to Rob's question about preferred information, he might consider http://www.prefinfo.com/ by James Hymas as a useful source.
Read Answer Asked by richard on January 02, 2015
Q: Hello,
I am learning about Preferreds and am wondering if you know of any websites or books that are a good starting point. Does anyone compile a lot of real-time data on the features of various issues, brand new issues, etc? Thanks.
Read Answer Asked by Robert on January 02, 2015
Q: I was looking to invest some money for 6 months in our RESP. I was considering Canacol Energy Convertible Debentures maturing June 30, 2015. Do you have any concerns about the solvency of Canacol? Is it likely I would get the face amount back at maturity?
Read Answer Asked by Robert on December 31, 2014
Q: 5-year 7%-coupon debentures from GuestLogix started trading yesterday (GXI.DB). Already they have fallen to nearly 90 cents on the dollar, giving a yield to maturity of roughly 9.5%. Do you think that the risk associated with the creditworthiness of GXI is adequately compensated at 9.5% (+ the chance of much higher gains if the stock moves up significantly in the next 5 years) ? Thanks!
Read Answer Asked by Gregory on December 23, 2014
Q: Convertible question (asked by Kelly)on Dec 22, 2014

The 5i response of Advantage AAV) convertibles being OK
is questionable as the bonds redeem on Jan 31/15 and trade at the redemption price. Publish at your discretion.
Read Answer Asked by Russ on December 23, 2014
Q: Hi, I purchase Longrun Convirtible Debentures 1-2 years ago. The current price on them is well under 100. I don't expect capital gain of course, but how much risk is there to losing capital on these? Could they default or don't I need to worry about it? Along that vein, could some oil company CD's be undervalued right now, and how would you find a bargain versus ones with high risk?
Read Answer Asked by Kel on December 23, 2014
Q: Hi Peter
Was planning to lower my preferred shares end of year and when I glanced at a TD report , five of mine showed a due date of today so I figured I would be looking to buy some as that was more than I wanted to lessen the weight by. None were deposited today...Does perpetual mean they can keep renewing them without notice?
The ones I am talking about are BBD.C , CIBC.G WN.C,WN.D and POW.D . Is there a place to find out what the intentions are and/or which would you expect to be redeemed soon if any.
Thanks for all you do.....best of the season.
Read Answer Asked by Dennis on December 22, 2014
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