Investment Q&A

Q: I have just discovered a valuation metric NCAV -Current Assets minus Total Debt...which to me is a significant moat for a Company...if positive. Surprisingly when I look at the Companies I follow, most have a positive NCAV. I assume a high growth Company with positive NCAV would be a good investment...a negative NCAV bad. Can you comment on the pros & cons of this metric.

Thank you and all the best to to i5 team in 2007.
Brian

Q: Hi Peter and Team,

I find that we need to buy some more in the Utilities sector, to keep to a 10% weighting. We presently have about a three-quarter position in each of AQN, BEP.UN, and FTS. Do you think that INE would be a good addition to this mix or is it too similar to AQN and BEP.UN? We can buy and sell XUT commission-free, but I notice that ZUT (not commission-free) has a better chart. Should I increase our positions in each of the three we already have, buy a new one, or top up with XUT/ZUT? Or is there a US ETF in this sector that looks compelling? Or perhaps in the present "climate", could the utilities sector weighting be reduced below 10%? What sector should take up the slack?

Thanks for all your great advice which has been and continues to be very valuable. A Merry Christmas and Happy New Year to all of you at 5i and the members as well.

Q: Please let me know if the following thesis is correct.
1. Interest Rate increases affect Utilities ( and they are likely to rise in the US )
2. Share prices of Cdn Utilities will likely be hit as US interest rates increase especially Enbridge and TRP which rely on massive loans for operations and expansion .
3. With this prospect , Enbridge sits in the model balanced portfolio because you feel it is one of the top utility companies, yet it ( and other pipelines ) will likely be taking a hit when these events occur .
4. I have a full position in this . Should I be be selling or keeping it through December .

Thanks

Q: I've read and heard a lot of pundits caution about the stretched valuations of Utilities, Consumer Staples and dividend payers as the market looks for yield. What I'm having a hard time understanding is that if that were true, then I would expect yields on those assets to be pushed down as price increases, but these assets still seem to be yielding higher than historical averages. Am I missing something?