Investment Q&A

Q: What do you make of the take-up on the ALC tender offer? I recognize that there were severe tax disadvantages involved but in a TFSA, RESP, RRIF, RRSP one would not care. 25% take up was even less than I expected. During 2017 there have been 2 dividend increases and the tender offer. Do you think they might be signaling improved operating performance?
Also, with respect to Bob Rose's question regarding the strategic review of ADN, it came to naught. Please refer to the Q1 2016 report of May 9, 2016.

Q: If i was to take a position in Algoma Central, which of the above two is the best to purchase ?

Q: We own approximately 4000 shares in ALC composing about 2% of our portfolio. We have held the shares for a number of years and have certainly experienced the ups and lately downs of any commodity based stock - even though the company is supposed to be in the industrial sector. We are currently negative on the stock but their fortunes seem to be improving as the price of iron ore seems to have stabilized. Of course it is hard to trade the stock when times are bad since they are such a thin trader. A "haircut" is a certainty if one really wanted out. Now ALC seems to be offering to buy back shares through a "Dutch Auction". Since the buy back will be prorated I suppose we won't be able to tender all our shares. I don't really mind that we are negative since I like the dividend and 2018 may bring better times. (The mantra of any "buy and hold" investor)! My guess is that management thinks that 2018 will also see improving revenue. I wouldn't characterize the offer as "low ball", I believe it to be fair but maybe 12 months too late to really be taken up. ALC doesn't have much float so they may have trouble taking up too much stock. Any float they do take up will make the stock even more of a thin trader than it was previously. If we were to tender I would tend to purchase SQM as a replacement even though the dividend is lower. Our material sector exposure is on the low side - just AEM having a 2.5% weighting. Our industrial sector weighting is 23% (NFI, WSP, SIS, MAXR, LGT.B and ALC).
Any suggestions on what to do? If you think we should consider taking up the offer what ask price should we go in at? The ask needs to be between $13.80 and $14.75. If we go in at $13.80 do you think there is a chance we could sell all our stock? I realize this is a complex question so please deduct as many credits as you think appropriate.
Thanks
Jim

Q: Please comment on ALC's latest earnings. Revenue appears to be up but earnings lower possibly due to one time items which boosted earnings in 2016.
Thank you,
Jim

Q: With free trade between Europe and Canada, which port city's will benefit(Montreal, Halifax)? Also what should we be looking for to benefit from this, shipping companies, port terminals, rail, warehousing,....? Any ideas on this?

Q: They are offering convertible debentures paying 5.25% - attractive since I think by 2024 ALC could be much higher than $13. However, the conversion is at more tan $20 per share. The extra security would mean giving up more than 50% upside. Does this seem an usually high conversion price? Do you think it is an attractive offering?

Q: Would you mind commenting $75 million covertible debenture issue. I think the market likes the issue. It appears the new debenture will be replacing an expiring debenture at a lower interest rate so I suppose that should be good for the company's bottom line. The news release states the conversion price is $21.15 per share. Pardon my ignorance but how exactly does the conversion work? Does a debenture act in a similar fashion to a bond? If interest rates go up does the price of debenture go down? How would the debenture act in effect of a market crash?
Thank you,
Jim

Q: Please comment on their latest report.

Thanks

Q: interested in your view re tax loss purchase season regards alogoma central and vecima

Q: Understand business conditions are poor And ALC is a really good company in a very bad business. The political climate on free trade and energy concerns suggest there may be no recovery in demand for ALC bulk carrier shipping business any time soon. I noticed there is some shipping industry consolidation underway in Japan and perhaps other countries. Do you think industry consolidation is an option in North America and could it be helpful to ALC outlook. What would you do with this stock as tax loss selling gets underway. Thanks.

Q: what's your take on this companies senior management? Do they get it!!

Q: Hello 5i,

What are your thoughts on Algoma Central Corp?

Q: Hello, I have held this company , Algoma for a long time. Unfortunately, it has been uninspiring for quite a bit. I understand it is reflecting the stagnant economy, but with warmer weather coming is it worth holding, or time to go?