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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
I know you are NOT momentum investors!
But I know from your answers you watch for the trends and repeatedly point to the lack of traction in the Energy sector.

What are the momentum factors/ trend changing indicators that you do consider when you answer your subscribers' questions?
Are there any newsletters/blogs/that you respect/follow?

Thanks!
Mano
Read Answer Asked by Savalai on October 17, 2019
Q: Looking through their report today, their share count is up by about 800,000 units (5% or so) this year, compared to last year. am I missing something? I thought the recent offering they did was of shares already owned by the parent? bit of a goofy question but the DCPU would've been positive for the quarter if the share count was closer, no?
Read Answer Asked by George on October 17, 2019
Q: i often see you use the following phrase :
“it is not a must own in our view”
so in your view give me 7-10 stocks for growth that are a must own in your view,i am assuming the above 5 make the list. dave
Read Answer Asked by david on October 17, 2019
Q: Hello 5i Group,
Could I have your opinion on RQB.
Thanks,
Ken
Read Answer Asked by kenneth on October 17, 2019
Q: I continue to struggle to find the right level of diversification, especially fixed income in my portfolio. One of the strong reasons for my struggle is the recent very strong bond performance and concerns that I am too late.

The standard rule of thumb 60/40 blend is challenged here. I am wondering if you saw this article on the Globe’s website. Could you take a look at the article and share your thoughts on Merrill Lynch’s thesis ? As well as the suggestion of using dividend paying stocks as, at least, a particle substitute.

Thanks.

.... from the Globe and Mail Investor website ( a partial excerpt...)

The 60-per-cent fixed income, 40-per-cent equity portfolio has been an important benchmark for balanced funds and overall asset allocation for decades.

Merrill Lynch analyst Jared Woodard, however, believes the 60/40 portfolio is now far less relevant because of the rising risks in bond markets.

In The End of 60/40, Mr. Woodard cites three reasons that bonds may no longer provide the portfolio stability and consistency they once did.

The first reason is that bond portfolios have not been providing diversification. He writes, “The core premise of every 60/40 portfolio is that bonds can hedge against risks to growth and equities can hedge against inflation; their returns are negatively correlated."

The problem in recent years is that periods of major market weakness have seen both bonds and equities fall.

In the U.S., longer duration government bonds have generated terrible risk-adjusted returns over the past three years - lower than junk bonds and emerging market equities. This means that investors who bought Treasury bonds for steady returns and lower portfolio volatility have seen volatility actually increase.

The data is U.S. based, but the performance of U.S. and Canadian long-term bonds has been virtually identical, as this chart posted to social media underscores.

Mr. Woodard’s final warning about bonds concerns overcrowding. He notes that globally, the fund manager allocation to U.S. Treasury debt is close to a 20 year high. So far in 2019, investors worldwide have sold US$208-billion from equity funds and bought $339-billion worth of bond funds.

With government bonds so popular, the analyst is concerned that “Crowded positioning means that natural swings in bond prices may be exacerbated as active investors rebalance their holdings.”

To the extent that Canadian investors have made the same switch to fixed income – and the 38 per cent increase in the market capitalization of the iShares Core Canadian Universe Bond Index ETF suggests fixed income has been popular domestically - these risks are also present here.
Read Answer Asked by Donald on October 17, 2019
Q: I’m considering starting a 2% position in this company for a 10 year hold in my rrsp.

I like the space they’re in but it seems like they have a lot of debt and the dividend payout is >100% (according to yahoo). Is this accurate / concerning at this point?

I’d appreciate your thoughts.

Cheers

Also it shows they only have 50 employees. Do you see that as a risk in itself? If a competing company poached 3 or 4 employees that is a big hit to their workforce.
Read Answer Asked by Dennis on October 17, 2019
Q: Hi there, ATZ quarterly results looked strong (however as did the past Q's), but the stock does not really seem to gain much attention and attraction since IPO. What are your thoughts on this company and do you foresee it eventually gaining traction like such Canadian brands like Lululemon or Canada Goose? Does it need a US listing to gain attention and investors? Would you step in today? If so, at a full or half position? Thanks!
Read Answer Asked by Michael on October 17, 2019
Q: Can you comment on the prospects of AMX?

They also just announced a bought deal prviate placement flow through units at a price of $1.80. Can you explain how flow through units work? Why was it priced at $1.80 when share price is around $1.14 yesterday. Whats the advantage and disadvantage of AMX issuing flow through shares from the perspective of current shareholders, the company and buyers of the flow through shares. Thanks
Read Answer Asked by Roy on October 17, 2019
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