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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: Hi 5i team,
I have XBC in my TFSA with a 50% loss. As you mentioned before, it probably will take about a year for the company to prove itself. There won’t be much upside for this stock in the near future. In order to put the money to better use, I’m going to sell XBC now and use the proceeds to purchase another company hopefully at the cusp of positive move. I’m thinking of ATA / EGLX / MCR from the Growth Portfolio. I’m looking for high revenue growth and strong cash flow. Which of these do you think have the most upside potential in the next 12 months and why or would you suggest another name? Thanks.
Read Answer Asked by Willie on April 13, 2021
Q: These are the 4 losing stocks in my long term hold portfolio. I am considering to sell them because I start to doubt my original thesis of owning them. Please rank in selling order if a better buying opportunity becoming available. Thank you. Bill.
Read Answer Asked by Bill on April 12, 2021
Q: Lot of investors with astronomical results pick up good companies way earlier than others. I am following some people on Twitter with results of like 1000% in one year. How do you identify these companies early when they have minimal revenues but something in demand. What would be the top 5 go to stocks in this category in Canada and US which no one really knows much about and with not much analyst following?
Read Answer Asked by Imtiaz on April 07, 2021
Q: I have these stocks in varying amounts in my TFSA . I have decided to sell one, two or three names to fund a purchase. Which three would you sell first? Thanks as always
Read Answer Asked by Frank on April 05, 2021
Q: Hello, I need to liquidate some of the stocks listed. Disregarding sector diversification, in what order should I do this? Thanks for your help.
Read Answer Asked by Keith on April 02, 2021
Q: Good morning Peter, Ryan, and Team,
There's a class action lawsuit involving XBC.
https://www.lexgroup.ca/classaction/xebec-adsorption-inc-securities-class-action/
Do you think that such an action will put further pressure on this "in the doghouse" stock? (Although it closed slightly up yesterday, a welcome event)
Also, if you were an investor, would you join this class action, or is that an unwise move? (IMHO, It's sort of like "hedging your bets", especially since it costs nothing to do so.) Your guidance and advice is always greatly valued
Read Answer Asked by Jerry on March 31, 2021
Q: Seems like XBC is still in the doghouse and may be for a while, so I'm trying to decide whether to ride it out given the potential, or cut losses and move to something else. Do you have any new information or views following formal release of their earnings on March 25 or the management conference call? Right now, do you consider XBC a buy, hold or sell, and if a buy or hold what would be reasonable to expect going forward in terms of share price recovery and length of time to do so based on the earnings release or what may have been communicated by management during the conference call?
Read Answer Asked by Brad on March 29, 2021
Q: Are you in general agreement with today's conclusion from TD Equity Research on Q4 results? For those willing to "hang in", it appears there is descent upside from here:
2021 midpoint revenue guidance implies more than25% revenue per-share growth and continues to imply a constructive outlook forXebec across its various end-markets (hydrogen, RNG, and other gasses). However,we believe that Xebec is firmly in "show-me" territory with investors and, based on thefactors described above, we are increasing our risk rating to SPECULATIVE (fromHigh previously), consistent with other companies in the Cleantech sector that are notexpected to generate meaningfully positive cash flow in the near term. This changein risk profile requires a rating change to SPECULATIVE BUY (from Buy previously).Based on our revised estimates, and an increase in the discount rate we employ, ourtarget price decreases to $7.50 (from $10.00 previously).
The report also mentioned XBC is abandoning it custom made RNG equipment products and will sell only standard equipment going forward.
Read Answer Asked by Albert on March 29, 2021
Q: What do you know of XBC's management? How would you rate them, both excluding what is happening now and including current affairs?

In your report on the company in December 2020, you state:
Management is well-seasoned and has public company experience, including former top executives (CEO, CFO, COO) of various energy and industrial companies like CAE Inc (CAE) and McPhy Energy North America. Have they ever experienced anything like what they are going through with XBC now? How important is the involvement of CDPQ who invested $50M?

5i advanced XBC as a top growth company, as recently as March 10. Your report outlines your reasoning back in 2020. Obviously it's a different picture today. Any lessons learned?
Read Answer Asked on March 18, 2021
Q: I did not buy XBC because of the revenue or profit it was generating today. I bought it for future potential which leads me to ask you if the news - though bad - changes the fundamental story here or if it is still a company with huge potential that has to correct a situation and learn from it? To put it another way, is the technology and value proposition that XBC offers its clients worse today because of the adjusted numbers?

My take is that we are not at the end of the clean energy but at the beginning. Their growth rates are not what investors thought and that isn't good but if their technology and TAM are huge (and in the early innings) how is it not materially higher in 5 years? If 5i looks past the next 12 months on this and ignores the stock price is the story intact?

Your comment to another question was that you have a finger on the sell trigger which sounds to me that you fear more than just an accounting error(s). Is the fear that this is a VRX situation with imaginary sales in a systemic way?
Read Answer Asked by Tim on March 17, 2021
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