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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: 5i has commented positively regarding Lundin Mining in the past noting its strong balance sheet, valuation, and healthy dividend. On March 27, Lundin Mining announced that it has entered into a binding purchase agreement with JX Nippon Mining & Metals to acquire 51% of the issued and outstanding equity of SCM Minera Lumina Copper Chile. Mr. Market seems to love the deal if today's trading is any indication. Is 5i similarly enthusiastic about the deal?

Thank you as always for your expertise.
Read Answer Asked by Richard on March 28, 2023
Q: Question regarding the topical issue of bank defaults...
I have seen many discussions lately regarding Canadian deposit insurance / investor protection fund (including Peter's recent 5i article) but...
What happens to stocks owned in a brokerage account if the brokerage becomes insolvent?
Am I not the beneficial owner of these stocks?
So I am wondering why the $1M coverage under the CIPF would even be an issue.
Would my stocks not just be transferred to my next brokerage account or directly to me in the case of default?
Would one need to even worry about stock holdings >$1 million at one particular brokerage?
Thank you for answering a question I have never found an answer to.
Read Answer Asked by Joe on March 28, 2023
Q: Good Morning All,

With Spartan Delta reportedly selling $1.2 billion in assets to Crescent Point, SDE will be issuing a special dividend of $9.50 per share, as well as providing a share of Logan Energy and a warrant for an additional purchase of Logan Energy at 35 cents, plus a special 10 cent dividend, I believe for holders of Logan at the end of June.
Could we please get your view on this deal? Do you favour heading down that path, or would you prefer selling SDE on today's bump? Any other comments regarding this deal?

Thanks,
Don
Read Answer Asked by don on March 28, 2023
Q: My TD Waterhouse account shows ZWB { yielding 8.2% } and HMAX { yielding 15.1% } . Could you please confirm both yield numbers at today's ETF prices ? And why one might buy the lower yielding ETF considering that HMAX has nearly double the yield and a little more diversified { 75% banks } ? ...... { I'm not concerned about the short history of HMAX } ..... Hypothetically, if it were " you " and you wanted a covered call financial ETF which one would you pick and why ? { Of if there is another one you would prefer over both }
Read Answer Asked by Garth on March 28, 2023
Q: The chart for the above is interesting. Basically there has been a 10X return since the covid low several years ago. The oil price hit $115 in May 2022, but the share price for MEG was only 20% higher than it is today, with the oil price at a little over half of what it was in May 2022, at about $68.
Many expect oil to regain some footing here and rise, maybe to $100 or more over the next few years.
But from this price history, we should really only get about 20% higher on MEG shares even if the oil price climbs back to $115 right? Why would shareholders want to pay so much more for MEG shares with oil at $115 in the future than at a previous date where oil was at $115? It would seem that at the future date of $115 oil, we would be even closer to a renewable economy than we were in 2022 and therefore be even closer to the decline of an oil based economy, making the MEG shares less valuable? Thanks.
Read Answer Asked by Michael on March 28, 2023
Q: Hello,
I already have a large position in TD and a small position in BMO, and would like to add to one or two more banks that won't keep me awake at night. Its quite clear that banks have trillion of dollars in loans . Last report that I read $4.12 trillion. And $1.5T of loans come due in Canada by January 2024. So even if 2% default, we have $30B in losses. And that's just Canada. Therefore, of the Canadian banks, which ones have the least exposure to the US. ? Today which ones are your recommendations?
Finally, in terms of deposit insurance, is it $100K per bank account or per individual taxpayer.? Brokerage account like RBC - Direct investing, the $1M is it for the total portfolio or just the cash? Again, per account or per investor?

Thank you
CR
Read Answer Asked by Carlo on March 28, 2023
Q: Hi Team
What are your feelings about these 2 stocks Qtrh has taken a beating the last week, all I can see is that the ceo has resigned or has been fired. I don't see this as such a negative, since the stock has not fared well. They always babble about a spin-off, but nothing happens
Cfx is also down, I know that they closed some plants, how does the future look?
Thanks
Auftar
Read Answer Asked by auftar on March 28, 2023
Q: Hi Team

In general it seems like commodity stocks underperform the markets. Let’s look at SU, ABX and TECK which are large cap stocks in the oil, gold and copper categories. It seems commodity stocks had a good run from about 2003 - 2008. Since 2008, each of these three commodity stocks have traded in a range and are currently close to the top of said range. It seems like the commodity stocks have underperformed the overall market for the past 15 years by quite a bit because the commodity stocks are about the same price as they were in 2008. There have been times when buying commodity stocks as a “trade” was great like in 2020 when SU was $15 or in 2015 when TECK was $5 and in 2015 when ABX was $10. But today these stocks are all at the top of the range. They never break out of this range and I don’t see any evidence that they will break out of the range. If they don’t break out of the range the only direction from here is down. For example, gold is a whopping $2000, and ABX is still only $25. Oil was over $100 recently and SU still never broke out of the range. When the markets tank the commodity stocks usually tank as well…. they don’t act as a hedge. There are exceptions like in March 2020 when the market tanked, and ABX did quite well for 4 months. But today, ABX is back to $25 where it was in Feb 2020. I understand diversification is important but why add commodity stocks to a (long term) portfolio if they never perform well. The commodity stocks are finally paying good dividends but so do many other stocks in different sectors.

Question #1 – please let me know if you agree or disagree to the above. If you disagree, what is the compelling argument to buy large cap (safe) commodity stocks unless they are trading at the bottom of the range.

Question #2 – is there an etf that tracks the Canadian stock market that does not include commodity stocks?

Thanks for your great input to your members questions.
Greg
Read Answer Asked by Greg on March 28, 2023
Q: Everyone, as the press release this morning indicates Alibaba will be splitting into six companies. The news will have a short term bounce for the stock but does it have a long term benefit? If it has a long term benefit what is the increase in the returns due to the split. This same strategy could be used for any company so if there is a long term benefit why does all other companies not prefer to split to generate benefits for their shareholders. Clayton
Read Answer Asked by Clayton on March 28, 2023
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