Investment Q&A

Q: Please write about GCM's earnings, risk and future prospects.

Q: Thoughts on REAX? Are they doing anything that differentiates them from any other real estate company? They seem to be growing at a fast rate.
Thanks

Q: Can you comment on their recent acquisition? What’s your Updated view since your last comments and does this follow along with the theme that with housing becoming more unaffordable for some does this “trailer park/mobile home” space make sense for investment. It seems to according to Financial Post article

https://www.google.ca/amp/s/financialpost.com/real-estate/trailer-parks-could-hold-the-answer-to-canadas-national-housing-crisis/wcm/757f8662-6526-490c-bca4-d962c6e6c8b1/amp/

Your thoughts?

Q: Hi Peter & 5i,

Just a comment. I always find your answers to ROC (Return of Capital) perplexing to me. 5i seems to view ROC as almost a completely negative situation and that you are almost always receiving your own money back. That is just not the case. Today's response to a question from Albert regarding the ROC with regards to CAR.UN and REIT'S highlighted this situation even more. I like a stock (CAR.UN) that has went from $30 in 2016 and is $60 in 2021 and that 63.8% of the distribution during those 5 years has been ROC. Multiple great things to like in a non-registered account from a total return basis and a tax scenario.

The technical details for ROC and REIT's can be highlighted in this response from John Heinzl of the Globe and Mail. It is one of the best answers that I've seen.

Please post as Public if you think it can help with the ROC understanding.

This is the question posed to John Heinzl - I have a question about calculating the yields of real estate investment trusts. Many REITs distribute significant amounts of return of capital. It has never made sense to me to include getting my own money back when calculating my yield. Do posted yields need to be adjusted by deducting the ROC to get a more realistic idea of what one is receiving?

Answer - Return of capital doesn’t necessarily mean you are “getting your own money back.” In general, ROC is defined as the portion of a distribution that does not consist of dividends, interest, realized capital gains or other income. In some cases – for example, a high-yielding mutual fund that distributes so much ROC that its net asset value erodes over time – you are indeed getting paid with a portion of your original capital.

But with REITs, it’s not that simple. ROC typically arises when a REIT’s distributions exceed its taxable income. This isn’t necessarily a problem, however, because income is affected by accounting items, such as depreciation, that don’t reduce cash available for distributions. In other words, when you receive ROC, you are getting cash generated by the business, not some sleight-of-hand trick by the REIT.

For investors, ROC has one big advantage: It is not taxed immediately. Rather, ROC is subtracted from the investor’s adjusted cost base, which gives rise to a larger capital gain – or smaller capital loss – when the units are eventually sold. For REITs that distribute large amounts of ROC, it can significantly reduce the tax burden in non-registered accounts.

Interested in a particular REIT? Most REIT websites provide a detailed annual breakdown of the tax characteristics of their distributions. In addition to distributing ROC, REITs typically pay out capital gains (50 per cent of which is taxable), other income (which is fully taxable) and in some cases, dividends (which benefit from the dividend tax credit).

One final note: When assessing their operating performance, many REITs focus on real estate cash-flow measures, such as funds from operations (FFO) and the more stringent adjusted funds from operations (AFFO). These measures are also useful for determining a REIT’s payout ratio and assessing the sustainability of its distributions.

Q: After receiving your reply to my initial question on this company, I purchased a half position which has worked out well- thank you for your input. Looking to move to a full position now, after their earnings release today. Do you see anything in the release that would lead you not too buy?

Q: Do you have any recommendations for 3D printing manufacturers. It looks like there could be some consolidation.

Q: American Tower pick-up COR but premium doesn't look that great .

Dan

Q: Accidentally I fell on an Aritzia store on Sunday in a shopping center. I was surprised at how few customers shopped in the store compare to others. The mall was packed. I found only few interesting choices and little inventory. I already have a half position in ATZ but I am now hesitant to take a full position. I would like to know the reasoning behind your strong recommendation. Thanks to your advice, my portfolio has never performed so well in 30 years.

Yves

Q: Hi, what do you think of the digital games portfolio of spinmasters ? Do you think that this part of the company will produce major growth in the future ? I read in their 2021 playbook that: The Company’s digital games business saw considerable growth and popularity in 2020, largely due to the growth of the Toca Life World franchise. As of March 2021, the Toca Boca ecosystem had over
50 million monthly active users, more than double the same period last year. The Toca Boca studio will continue to pioneer digital play with the introduction of its first multiplayer game, Toca Days, set to go live at the end of 2021.

The Toca life world and toca hair salon are presently ranked 4 and 5 in the apple education app store.

Thanks

Q: Hi,

Could I have your top two picks for Materials please?

Thanks,

Q: What are your thoughts on park lawn recent earnings and future direction

Thks
Marcel

Q: hello 5i:
We recently sold U: 50% gain and a bit too high valuation for us. To quote Peter: we would reduce very expensive growth stock exposure. Current tech holdings are CSU, PANW, AVGO, OTEX, TOI and DND; the latter 2 being about 1% positions. We would like to replace U with something "less" exciting and are considering TCS, APPS and QCOM as you seem to favour these stocks (like others, I read the questions/answers daily). TCS is very appealing as it looks to have a moat within the health care sector, but we also own VEEV and WELL. Is there too much overlap here? APPS is a volatile trader and not really in our wheelhouse, but is of interest. Can you make a suggestion as to how you'd replace U?
thanks
Paul L

Q: This Nationwide Risk-Managed Income ETF (NUSI) is kind of like a QQQ with downside protection and income from options. Do you think I can use it to protect my investment while the market is in volatility? Or at least I can use it to park some cash while waiting for marketing pullback? Thanks for your excellent service!

Q: Can you comment on their recent earnings and conference call? Looks like the right space to be in and trading below “fair value”. What would you consider fair value? How does the recent news affect your last comments concerning at least on the “Cons” side of the coin where you said “ On the negative side: the stock is one-fifth the level it was in 2011. Revenue is about 20% of 2013's levels. But, it has kept the share count very low, and the stock is on fire. ” If this had a higher market cap would it be one that would be on your screens as something to own. I’ve made good profits so far so wondering if I should hold or sell on the recent good news.

Q: Can you please provide your opinion of Galaxy Digital?

Q: Could you compare SOFI to the business model, target market and customers of GSY. Are they in the same space, compeditours? Differences vs similarities?

Q: How is the estimate for the upcoming quarter? Also what do you still think about this company?

Q: So, it looks like the US has expanded their money supply (M2) by 40% over the last 18 months. That's 40% of all money "printed" since 19681 Firstly, that seems like a terrifyingly huge expansion and I'm hoping I've got it all wrong, but if that is the case, it would seem the amount of money floating around the system needs to eventually find a home which would likely lead to a significant bull market for quite some time.

How would you interpret the mid and long term effects on the stock market as a result of the most significant monetary expansion in the history of the US? Have we seen the bulk of the effect already baked into the market?

Q: Hello Peter,

It’s that time of the year where I contemplate moving a stock from my cash account to my TFSA. Which of the three above would you move into a TFSA? Or would you move cash into the TFSA?

Q: I am looking at my losers. Please list in order of preference which ones you would average down on. I know that's a bad word but we could call it greatest contrarian opportunity. Obviously risk is not a great concern but not to be completely ignored. Thanks as always