Investment Q&A

Q: Och Ziff (OZM.us) has been plunging in recent weeks, and got beaten up a lot more this week. Markets appear to have been priced in the litigation risks OZM faces: class action suits; corruption charges; and misdemeanors in southern Africa). I have checked some financial sites, including key news sources in London and Frankfurt.

I have some OZM in an RSP . It was selected as a 2014 pick in January by Sabrient. Sabrient and its affiliate Gradient Analytics are generally good, notwithstanding they got this one wrong.

With the price drop in OZM , its dividend yield now screens sky high. Industry wags (T-Reuters, Research Team, Value Engine and 2 analyst houses I looked) still rate OZM as a buy.

OZM price and now looks too good to be true. One gets an uneasy feeling about it, but I don’t see any new info that wasn’t already in the public domain a month ago.

If you are able to comment on OZM, I would appreciate it very much.

Dr Adam Okhai
New York

Q: I know you are not really into u.s. Stocks but if you had to recommend 2 or 3 mainly for growth what would they be. I own gilead and bank of america and just on cdn. Dollar weakness i am doing fine, i expect the cdn. Dollar to continue lower, so why not a few more u.s. Stocks .dave

Q: Could you please give me an updated opinion on ESRX? Could you also recommend 2-3 large cap US stocks for long term holding, likely to provide some growth and some dividend payment (my US holdings are ESRX, MMM, HCLP, JNJ, NVS and IWO)? Thank you for your excellent advice and congratulation on your charitable work.

Q: GE seems to be divesting its low margin businesses and becoming more of an industrial company again. I would expect a smaller and more profitable GE going forward. It's PE is below the general market and pays a good dividend. Is this a pound the table buy considering its fundatmentals and growth profile?

Q: Hi Peter, I have some US funds I would like to use in the healthcare sector (no exposure at this time). Could you give me your take on Walgreens WAG, IBB and IYH. Which one would give me the best long term hold?
Thanks
Gary

Q: This fund pays out a dividend of 9.3 cents per month - 9.47% at today's share price. It has what seems to be a low beta of 0.22. ( Is that relevant for this tuype of stock?)
How would you rate this stock as a reliable component of the fixed income portion of my US dollar portfolio?

Thank you.

Q: What are your thoughts on RCKY : NASDAQ

Q: Can you please provide an update on FNMA.US and FMCC.US Thanx

Q: What are your thoughts on SPTN : NASDAQ

Q: My US exposure is underweight. I am looking at Barclays (BCS), Lloyds (LYB), National Bank of Greece (NBG) as 3-5 year holds with the wishful thinking that they may return to their previous and glorious highs of 2007. Am I dreaming?
Alternatively, can you suggest any US regional banks for a similar timeframe and which large cap US bank, if any, is your favourite?
Thanks.
Steven

Q: Hello 5i,
My strategy is to buy and hold dividend paying companies for the long term and I’m currently looking to pick up another financial company for my portfolio. I already own 12 companies in this sector, which of the companies listed below would you chose.
Mercury General Corp (MCY), Oritani Financial Corp (ORIT), HSBC Holdings (HSBC), Banco Latinoamericano de Comercio Exterior (BLX).
Thanks,

Q: Hi Peter & Team,
Re: Drone Manufacturers / UAV-UAS

I have found these big manufacturers of UAV-UAS:
1) AeroVironment, USA (“AVAV”- Nasdaq)
2) Aeron Labs, Waterloo, On.
3) Prioria Robotics, Florida
4) Aerosight, Oregon
5) Textron (NYSE - “TXT”)

Questions:
1) Do you see future growth in using drones (not just military use)?
2) Is it too early to get into this area?
3) Which company would you recommend? (I guess my list is partial)

Q: Hey Team

Your comments moving forward please.

Thanks for all you do

Gord

Q: can you suggest a good way to invest in US dollar strength for Canadians as in uup or a convienent alternative.Thank You.

Q: Hi Guys
What is your opinion of Loews corporation, and do you feel their subsidiaries ,CNA Financial, Diamond offshore, Boardwalk, Highmount exploration, and their Hotel chain were
good acquisitions and lastly do you find this an attractive entry point for a long term hold.

Q: Hello,
For the past year I've held a position in KORS which has done well but the last earnings report indicated slowing sales and weaker margins. Also, the technical chart doesn't look very promising and I'm considering selling. Any thoughts on this company?
Thank you

Q: Hi Team

In looking at employment data, housing starts and a number of other indicators, it appears the US economy is moving forward in a positive direction.

I am thinking US Banking has to be in a positive light moving forward over the next 3 - 5 years.

Presently I hold Wells Fargo and have done quite well. I am looking at adding a second bank and was wondering if you would comment on USB vs Citibank & BAC (Bank of America)

I realized I am asking allot and am hoping you know how much I appreciate the help.

Thanks for all you do

Gord

Q: What's wrong with this story?

This is a Global Construction and Engineering company which appeared to have good momentum in the O&G sector, had a strong backlog earlier in the year, and is relatively cheap as per your May comment when it was trading at $74.

As of closing today it is at $67.65 and is down almost 30% on it's high for the year. Do you have any explanations for the poor performance? Is this a good opportunity right now?

Thanks for all you do

Gord

Q: What are your thoughts on Activision at this point. I am thinking of adding to my holdings once it appears to have bottomed here. What are your thoughts (ignoring issues of balance and other holdings)?
thanks
Joe

Q: Peter and company,quick pick on Alibaba.
I always wondered why a Chinese company would relinquish some ownership ''just'' to have the dubious privilege of an American listing.
Well I got the answer via 'Wall street on Parade' yesterday: they simply don't give up anything and that makes much better sense for them. Does it for you?
If you are interested, read on:

The concerns about this Chinese company’s opaque structure as a Variable Interest Entity (VIE) in the Cayman Islands are so serious that a U.S. Senator, Bob Casey (D-Pa), issued two letters this year to Mary Jo White, SEC Chair, demanding answers.

In a July 11, 2014 letter, Senator Casey drilled down to the core of the stock ownership problem, writing:

“…American investors in Chinese companies often do not enjoy the same protections and legal guarantees that they are afforded when they invest in American firms. Most Chinese firms that list in the U.S. use a structure known as a variable interest entity (VIE). VIEs are shell companies that give investors contractual claims to a firm’s profits but do not legally grant them ownership of the company. For example, according to Alibaba’s securities filing, Americans who invest in the company will not be buying stakes in Alibaba’s profitable e-commerce business, but in a related Cayman Islands shell company. These structures allow companies to circumvent Chinese regulatory restrictions on foreign investment.

“More concerning, given the Chinese government’s interest in restricting foreign ownership in certain industries, it is far from clear that the contractual claims underlying VIEs are enforceable. In fact, in recent years Chinese courts and arbitration boards appear to have invalidated VIE contracts and similar arrangements. As a result, VIE structures pose significant risks to American investors accustomed to the idea that shares sold on stock exchanges amount to legally sound ownership stakes in revenue-generating companies.”

The VIE structure for Chinese companies trading in the U.S. sounds more like an international lawsuit waiting to happen than an ownership piece of the corporate pie. If you think VIE shareholders have any right to elect the Board of Directors of this company, think again. Here’s a revealing section from the Alibaba prospectus:

“Risks Related to Our Corporate Structure

“The Alibaba Partnership and related voting agreements will limit your ability to nominate and elect directors.

“Our articles of association, as we expect them to be amended and become effective upon completion of this offering, will have the effect of allowing the Alibaba Partnership to nominate a simple majority of our board of directors…

“The interests of the Alibaba Partnership may conflict with your interests.

“The nomination rights of the Alibaba Partnership will limit your ability to influence corporate matters, including any matters to be determined by our board of directors. The interests of the Alibaba Partnership may not coincide with your interests, and the Alibaba Partnership or its director nominees may make decisions with which you disagree, including decisions on important topics such as compensation, management succession, acquisition strategy and our business and financial strategy.”

The history of Chinese companies listing here in the U.S. hasn’t exactly been a rose garden for investors either. Senator Casey notes the following in his July 17 letter:

“In the past three years alone, the SEC has charged a number of China-based companies with fraud, including China Sky One Medical Inc., AutoChina, SinoTech Energy Limited and China MediaExpress. The sheer number of fraud cases involving China-based companies listed in the U.S. reveals systemic problems with many Chinese companies’ legal structures and accounting practices. Indeed, earlier this year, SEC Administrative Law Judge Cameron Elliot ruled that the Chinese units of several large accounting firms could not audit U.S.-listed companies due to their willful failure to disclose information to U.S. financial regulators.”

This seems to be more the realm of traders than the one of your subscribers, don't you think so?