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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: Please enlighten me on how bought deals work, using the most recent EIF bought deal as an example.

EIF floated new common shares at $42.45 per share recently and it was a bought deal so the underwriters bought the entire issue (plus the over subscription shares) for $42.45 per share. Thereby EIF received $42.45 per share (less the underwriter fees), while the underwriters assumed the risk in case if they cannot sell those shares at $42.45 or more. Am I correct so far?

In that case, with the EIF SP lingering under $42 a share, can I assume the underwriters will suffer a loss? After all why would you buy the new shares from the underwriter at $42.45 if I can get them cheaper in the open market?

Also if I were the underwriter, would I not be trying to drive up the EIF SP to over $42.25 to protect my deal?

Kindly shed some light on this type of transactions. Much appreciated.
Read Answer Asked by Victor on January 05, 2017
Q: I am interested in purchasing the above securities, but currently only have the capital for one. Without regards to sector exposure, can you please rank the three in terms of potential from current price levels ?

Thanks

KR
Read Answer Asked by Karim on January 05, 2017
Q: Hello

I am going to re-balance my family portfolio (by sector/industry mix and bond / stock mix) once the Dec 2016 statements come in.


In my family we have 2 RRSPs, 2 TFSA, and 2 RESP accounts.


In the past I would add up all the portfolios together and make a pie chart in Excel to find out our bond & stock mix and our sector/industry mix.


Before I start this exercise this year I wanted to have your opinion.

How do you recommend balancing? Each account separately or other???

Should I even consider BONDS inside my kids RESP since they are just 2 and 4 years of age?

Thank you for your help.
Regards
Stephane



Read Answer Asked by Stephane on January 05, 2017
Q: Income investments - preferred shares
On Jan 4, you posted an answer for an income investor, expressing approval of ZPR (BMO Laddered Preferred Share Index ETF). I am somewhat cynical about preferred shares, their being subject to the interest rate sensitivity of bonds, lacking the upside of common stock and generally lacking a fixed redemption date or any other assurance of capital preservation. I wonder whether, even on a reset date, they would necessarily trade at their face value. If I am right, I can't understand in what circumstances they would be suitable (without fixed redemption or as an interest-rate play with a high coupon). What am I missing?
Read Answer Asked by Carl on January 05, 2017
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