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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: I have held a position in OTEX for some time, and have a moderate gain, but I was wondering if it would be prudent to swap out my OTEX for CSU. I have losses against which I can neutralize my gain, so tax implications are not a prominent factor. Both are good companies, with the reputation of CSU being quite extraordinary. I have decent exposure to technology, and I don't feel that simply adding to it by purchasing CSU through selling off an investment in another category would be as prudent as keeping within my current allocations. I would appreciate any thoughts you could share with me. Thanks so much!
Read Answer Asked by Domenic on September 16, 2020
Q: Two part question about CSU: some time ago there was an announcement of a transaction where a company acquired by CSU would be "spun out" to CSU shareholders. Can you provide details of what is to happen? when is it to happen? do you expect CSU's share price to decrease as a result? What tax consequence will there be to CSU shareholders?
Secondly, I recently read the following:
"Our Strong Sell is based on our conviction that it
is difficult to create shareholder value by
continuing to add shrinking legacy software
businesses to 100’s of other shrinking legacy
software businesses. With organic topline
contraction and fading operating leverage, we
see CSU’s “never-ending roll-up” finally hitting
hard limits. In our view, CSU is too reliant on the
assumption of customer stickiness for legacy
apps with expensive support contracts in
dozens of niche/vertical markets. We see these
apps increasingly dislodged by less expensive,
more inherently agile, cloud alternatives. A
Covid-19-driven economic downturn would
likely intensify this competition, as it is our
experience that, rather than preserving the
status quo, tough times drive customers to
overcome inertia and accelerate paradigm
shifts in enterprise IT."
What is your assessment of this?
Thank you for your excellent service.
Read Answer Asked by Leonard on September 15, 2020
Q: Good morning 5i,

Looking to add two names to my portfolio, with the only criteria being a combination of balance and growth, and with a long-term horizon. Currently thinking of GSY and REAL/LSPD, are you good with these at today’s levels? Listed some others I’m interested in too. Any other of your favourites you’d consider (already own KXS, WELL). Thanks.
Read Answer Asked by Jeff on September 10, 2020
Q: Good afternoon,

The technology portion of my portfolio has grown too large (about 37%) and I’m trying to figure out how to get it back to about 25%? My issue is that I’m interested in too many tech options (I.e., the ones that I own plus others I’d like to buy). I’m looking for suggestions on which I should sell, add to or replace by buying a better option. Some were initiated with half positions that went down and some full positions grew so the proportions all over the place. I have a long time horizon and many are held in a registered account (except SHOP and NVDA). I own: KXS (3.5%), CSU (3.8%), SHOP (2.7%), PHO (<1%), ZS (3.3%), TEAM (1%), NVDA (6.1%), AAPL (11%), MSFT (4.6%) and I’m interested in buying REAL, DOCU and GOOG. I’d like to own what are viewed as solid tech companies for future innovation and growth and I’m willing to add, remove or replace any of these companies.

I also need to add materials and REITs to my portfolio since I currently have no holdings in these. I’ll use my tech trimmings to add to these sectors. Suggestions of top companies for these two sectors would also be greatly appreciated.

Many thanks for all the great work and suggestions you provide,
Lisa
Read Answer Asked by Lisa on September 08, 2020
Q: In the past you have noted that CSU is one of the best managed companies in Canada and there can be no argument there. Are they getting tired? In round terms CSU is up 20% in the past 1 year while ENGH is up 100%. Is it time for me to get off the CSU horse which has served me well. What would be your recommended replacement if yes please? Dam Dan
Read Answer Asked by Danny-boy on September 03, 2020
Q: What's wrong with Canadian tech these days? ZQQ is up 12.61% this month, as tech stocks soar. But in Canada, you would have been much better off owning a plodding insurance company like Sun Life or a bank than Kinaxis, Constellation Software, Open Text, Enghouse, CGI, Shopify or Sylogist.
Read Answer Asked by John on September 02, 2020
Q: Tech has boosted my returns this year and now it is around 40% of my portfolio and that is after trimming half my SHOP and CSU and selling AYX, GIB.A and DSG. Trying to get down to 20% Can you please rank the above stocks to help me with my decision. And thanks for the great service.
Read Answer Asked by Neil on August 17, 2020
Q: Hi Guys,

I have these tech companies inside my portfolio adding up to 40%, please rank them for long term growth (3 to 5 years). I would like to drop this percentage down to 25%.
Are there any MUST sell in this group?

thanks
Jim
Read Answer Asked by jim on August 13, 2020
Q: Hi 5i,

I am thinking to start invest the above stocks. In term of risk, potential grow, please kindly provide the ranking. Please take out any if not suggest for the moment to invest. Many thanks.
Read Answer Asked by kwokwai on August 11, 2020
Q: I have these shares in a tfsa. Do you see any sells in this list and can you please suggest a couple of additions? Thank you.
Read Answer Asked by Lois on August 10, 2020
Q: I am a long term CSU shareholder. I have full confidence in management but less confidence in their growth prospects at this stage. The types of slow or no growth software businesses that they acquire are in secular decline and CSU has no organic growth.

Is 5i’s confidence in CSU’s business prospects misplaced at this point??? Should we stay put to see if the “inevitable” decline materializes or try to anticipate this and step out of the way?

Thanks for your awesome guidance.
Read Answer Asked by Joel on July 30, 2020
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