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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: Could you please provide insight into the offer to go private. Based on ownership composition, it would seem unlikely a competing bid can be expected. Given the offer price and recent performance of the company it sounds like a good offer? Last check, it was trading at #12.15 so, sell or wait for the buyout date to get the $12,30 and pay no commission?
Read Answer Asked by Michael on April 27, 2017
Q: In regards to the comments of another subscriber's about HCG.

The investment thesis made perfect sense: management navigated well through 2008, the greatest financial crisis of the modern era. The company had good capitalization ratios, valuation, and track record. David Baskin, Barry Schwartz, Jason Donville, Martin Ferguson/Jeff Mo thought so, and they have great track records and returns.

Judging the outcome of one company outside of the context of the whole portfolio is not constructive. This company was also dropped from the portfolio before the crash even happened. At the end of the day, 5i has provided market beating returns EVERY year since inception with the BE portfolio. These sort of events happen in the market every now and then and we shouldn't be ignoring the gains on our big winners.

Also, should we criticize Buffet for investing in United Airlines? How was he supposed to predict the self inflicted PR nightmare that the company suddenly got themselves into. Educated estimates based on disclosed information is the best we have.

By the way, I'd rather swing for doubles and triples and average market beating returns than swing for singles with vanilla names to get the market return. No need for soul searching here.

Keep doing your thing.

Elliott

Read Answer Asked by Elliott on April 27, 2017
Q: Isn't it a a bit too coincidental that we learn that both Royal Bank and BMO are selling uninsured mortgage backed securities, a few days before the Home Capital death spiral? You have an optimistic bias, and typically trusting towards management, so I speculate that you will answer that there is nothing much to think of it, but could you take a distrusting view on this (without being paranoid) and guess what could have motivated them to do that?
Read Answer Asked by Matt on April 27, 2017
Q: In regard to HCG I am on the wrong end of the stick with this one.
In your defence, I did notice a change in 5i's opinion of HCG around the end of March, here is an excerpt from one of your replies "Unfortunately, there is such a cloud hanging over the company right now, the fear and uncertainty surrounding it make it hard to be excited about in the shorter-term. It could still do quite well if they can get past all of the concerns but actions such as letting go of the CEO are not overly helpful in terms of boosting confidence. We would note that it has been profitable every year since 1999"
Fear and greed rule the markets, investor sentiment affects market value in the short term way more than fundamentals.
At this point, I want to learn what I can from this situation. What would you say are the take-away's from this debacle?
Thanks in advance for your continued excellent work.
Randy D.
Read Answer Asked by Randy on April 27, 2017