Investment Q&A

Q: I have done some calculations for me re selling or holding ECN that others may be interested in doing. My ACB for ECN is $3.75/sh and a sale at $11 would result in a $7.25 capital gain/$3.63 taxable and about $1.81/share taxes to be paid.
If I hold, the $7.50 dividend would result in my ACB going to zero (3.75-4.15) and a $0.40 capital gain and a 0.10/share tax liability plus the $3.35 special dividend would likely require about 32% tax payable (AB) or $1.07. So total tax payable by keeping the shares for me is about $1.17/share. Since I want to own the ECN shares after this, it is cheaper for me to hold the shares than to sell and rebuy. Interesting to me that my ACB will be zero after this. I hope this helps others do the math.

Q: I currently own ECN in a TSFA. If part of the special dividend will be ROC ,it appears that will not be a positive result for me, and the loss in stock value after the dividend is paid will possibly take years to recover. Would I just be better off selling today and foregoing the dividend? Thoughts?
Philip

Q: Once we receive the dividend from ECN would you recommend using the funds to purchase the shares of ECN, why or why not?

Thanks for your service!

Q: Can you comment on the tax considerations of the ECN special dividend in a non-registered account? I am up almost $2 currently but will receive a $7.50 dividend. From a tax perspective I feel I am better to sell now and pay the capital gains on the $2 instead of taxes on the $7.50 dividend . I can always buy it back later. Assume I am in a medium to high marginal tax bracket.
Thanks

Q: Please comment on quarterly earnings vs expectations because the business they sold to Truist wasn’t included in the quarterly results. Did the remaining 2 businesses meet or beat expectations of analysts?

Q: What is the case for buying ECN? It hasn't done much since the announcement. You will get a whopping big dividend eventually but that's basically just being chopped off the value of the company so the stock value will plunge by around the same amount. Maybe the new remaining company will be worth more - or maybe not. But you can buy that after the split anyway if things are positive. Am I wrong here? Why should I buy ECN as opposed to something else which has strong momentum and performance?

Q: Do you know (or make an informed guess) the timelines of the ECN asset sale and the subsequent dividend payout? Thanks.

Q: What type of account is best suited for beginning a position in ECN?

Q: I am puzzled by their recent $75m bought deal when they have such a large amount to come in. Any thoughts?

Q: I hold TTD In a growth focused portfolio at a small profit but looking for more torque. Would you swap it out for AT?

Same situation for a position with ECN and adding those funds to small positions of DND and EGLX.

Q: HI 5i, What are your thoughts regarding this company? A couple of months ago this company sold 2billion dollars of shares to another company. With the funds they were going to pay out a special dividend of $7.50 per share to shareholders. I would like to know when I will receive this dividend?
Look forward to hearing from you.
Bob

Q: What three companies in the growth portfolio would you have no qualms of starting a position today?

Q: Hi 5i Team - I have shares of ECN in both my non-registered and TFSA accounts. Could you tell me if the special dividend of $7.50 will be treated by Revenue Canada as a regular dividend by a Canadian corporation. If so then there will be a percentage added to the amount of dividend for total income purposes which could affect my marginal tax rate. Is it better then to move the non-registered shares into my TFSA (in spite of the dividend tax credit) which will trigger a capital gains of 50% of the profit. Thanks as always for the great service!

Q: Hi,
In respect to the question from Brad in regards to small caps, you responded as:

"We have seen some studies showing the group is cheap (relatively) than it has been in 10 years. The 4Q is often good for the sector.

Could you name 3 to 5 small cap stocks that you would recommend?
Thanks,

Q: Thank for the answer yesterday and appreciated Garth’s Q&A.
Just to make sure I am not entirely mistaken, but at $3.00 ps there would (after sale) $2.00 ps in cash?
Of course the caveat on the transaction, but do you know how long Truist Bank has had a friendly relationship with ECN?

TIA

Q: In Dan's comment on Aug.13/21 he quotes some earnings and growth numbers that show the remaining part of ECN have both value and some pretty good growth numbers { Triad 72.5% and KG 30.6% }.... First could you confirm Dan's numbers ? And then take a stab at an estimated share price based on the remaining company and what you think of management, valuation, future growth, and whatever else you deem prudent in making such an evaluation ?

And second I realize 5I doesn't like giving weighting advice so I'll explain my philosophy on it. With a company like ECN a mid cap about to become a small cap I would normally be around 1.5% .... However with the downside limited to $2.50 a share and a belief that the remaining company doesn't face that much of a downside I am willing to go 2.5% to 3% ..... So that is what I did .... But after purchase I thought " Wait a minute. After my return in cash I took less than a 1% position . " How does 5I recommend I approach the situation with my goals in mind ?

Q: Yet another Q on ECN. Sorry. Was listening again to Hudson's interview on BNN on Aug. 11. In it Steve mentioned that he expects cash flow to grow to 120mil. a year in (relatively) short order. I was just wondering how that would look on a company that will trade (let us say) for $3.00 a share? I am imagining that there are few PF managers who could own ECN as it grew but soon won't be able to because of size and when I can hope for them to return?

TIA

Q: ECN at under $10.00 baffles me. I am tempted to buy more, but I wonder what am I missing?

Q: I hold ECN in my TSFA will there be a tax with held on the special dividend from the U.S.

Q: I seem to be confused by the announcement of the ECN sale and expected dividend. If I buy ECN now, will I qualify for the dividend of $7.50? Or is that dividend only for those who held on Aug 10.

John