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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: Adjusted earnings is a scam! (in my opinion). It blows my mind how much attention people pay to adjusted earnings vs GAAP earnings. Management of any company is probably in the most biased position and has the most incentive to paint a rosy picture. This is why GAAP and IFRS exist...to stop management from being able to go into this fantasy land where they can pretend any expenses/cash outflows they don't like never happened.

One of the adjustments I understand the least is the elimination of stock based compensation from expenses when calculating adjusted earnings. Lets pretend there are 2 identical companies. The only difference is company A pays its CEO in stock, and company B pays its CEO in salary for an equivalent amount. Company A will finish the year with higher earnings, however there will be more shares outstanding. As a result, earnings per share (which is what actually matters to an investor) between both companies will be the same (excluded tax impact). This is why it makes no sense in my view for company A to adjust its earnings higher and show higher adjusted earnings vs the identical company B.

The other point I find comical is that companies claim to adjust earnings for 1 time items...yet there are 1 time items every single quarter.... perhaps these 1 time items are part of running the business then?

The worst example might be excluding the write down of Goodwill. News flash manager...that means you made a mistake and over paid for a business...and now you want to pretend it never happened by excluding the write down from earnings?...

My question is surrounding the history of adjusted earnings. How long has this been around for, and is it possible that these (always higher) adjusted earnings are giving the illusion that companies are less over values then they actually might be?

Thanks,
A concerned CPA....

Read Answer Asked by Joel on August 05, 2020
Q: What are your favourite Canadian industrials stocks for growth and for stability (or maybe both) right now?

Thanks!
Read Answer Asked by Dennis on August 05, 2020
Q: Dear 5i,
Do you think the CRA will have any concerns with Horizons change from a Total Return Swap structure to a Total Return Corporate Class structure implemented in Nov. 2019?
I understand that Horizons changed all their Total Return Swap ETF's to this new structure late last year. I would like to avoid any future CRA tax issues if I purchase one of these Total Return Corporate Class ETF's. Your thoughts would be appreciated. Thanks
Read Answer Asked by Ian on August 04, 2020
Q: Hello, I received a tendered cash offer of USD $12 (so, about CAN $16) for the units of this security from the corporation for cancellation). The tender deadline is August 26 and there is no date noted for the purchase..

Is there a reason why this offer is not immediately supported by a price hike to CAN $16 (or thereabouts) as $CAN 16 is the floor price in the near term?

Thank you.
.
Read Answer Asked by ANDY on August 04, 2020
Q: Hello 5i, I have a large position in LSPD, and I am finally breaking even. Today its up over 7% . I have not been able to find any news. Do you have any info? is it the fact that it may report good numbers on Thursday? or takeover chatter? or up on market trend?
Thanks for your great service,
Carlo
Read Answer Asked by Carlo on August 04, 2020
Q: Hi 5i team. Is it unusual for trading to be halted for over 6 hours today (so far), with no communication from anyone why?.. and no indication when trading will resume?

I see nothing in my TD Webroker news feed except for the news of the trading halt itself, and nothing published today on the Nuvo website.
Based on your info sources, are you able to discern and share what the reason for the trading halt may be? Typically where else would such information be available?
sgr


Read Answer Asked by SG on August 04, 2020
Q: I am still holding Spin Master and hoping to recoup my substantial loss ($42 per share cost). I was my own fault being hesitation to sell when 5i removed it from the portfolio. It`s share price has recovered nicely from the low.
Please evaluate the current status of the company and recommend buy, sell or hold. Thank you for your great service.
Bill
Read Answer Asked by Bill on August 04, 2020
Q: If my first objective is capital appreciation, how would you rank these three? Second question, my perception is that FTS isn't as "renewable" compared to BEP and AQN. How would you compare FTS to the other two in this regard?
Thanks.
Read Answer Asked by Albert on August 04, 2020
Q: I am holding this name, but at under 2% of RRSP. I also have a position in XGD, which obviously has not risen as smartly this year. I'm bullish on gold over the next year, but also don't want to be greedy, so I'm asking if I let PRYM run or churn out to XGD or elsewhere in this space? Thanks
Read Answer Asked by Darren on August 04, 2020
Q: Hi 5i Research,
I have read the news on July 28, regarding for the QNX operating system (OS), seem like the new trend will have auto pilot in furture and it said: "The global autonomous vehicle market is expected to reach nearly $600 billion by 2026." Do you think BB can successfully turn around to start making big profits, also now the price around $6 is near the bottom? Would you please kindly advise.

Many thanks
Read Answer Asked by kwokwai on August 04, 2020
Q: Why is Maverix dropping while the others continue to rise with the price of gold?
Read Answer Asked by Allen on August 04, 2020
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