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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 Peter and Team,

Could you please comment below The Motley Fool's analysis about CRH.
"CRH made three acquisitions in 2016 for controlling interests of anesthesia companies with two of the acquisitions for 51% of the targets, and the third acquisition for approximately two-thirds of the business.
Because CRH now owns more than 50% of these companies, it is able to include 100% of the revenues and earnings from these firms on its balance sheet, boosting total earnings substantially while distributing only approximately half of the acquired value to shareholders.
On the bottom of the financial statements, we can see that net income “attributable to shareholders” was $10.6 million in 2016 and net income “attributable to non-controlling interests” was $5.5 million, meaning more than a third of the net income produced by CRH in 2016 is not attributable to shareholders of the company.
It is important to differentiate the two; looking at the financial statements from a high-level perspective, the numbers may seem impressive, and the growth rates often stated on press releases or in the media may make investors wonder why they didn’t pick this “growth gem;” however, the numbers used are clearly artificially inflated by more than one-third, and the overall indebtedness attributable to shareholders is more than one-third higher.
Shareholders who are not careful to take note of the adjustments may be disappointed when they understand that their overall equity as a percentage of the total company is actually shrinking.
The percentage of net income attributable to shareholders has been decreasing at an alarming rate due to the manner in which CRH is completing its acquisitions. As of Q4 2016, over 45% of the company’s quarterly net income was not attributable to shareholders, meaning in 2017 investors can expect to cut most of the numbers shown on the financial statements in half for the sake of accuracy."

Thanks
Read Answer Asked by Victor on April 24, 2017
Q: How to catch a falling knife and when do you know it's hit the floor?

In your opinion, considering all the media, short attack pirates, and the massive volatility that have come to life so quickly. How would you play picking up CRH medical? I see technical levels at 7.99 for different measures as a resistance level. Or perhaps it would be prudent to spend time on the sidelines and watch this one. Or would it be best to watch the moves of institution buying as a sign of confidence for those who have done their homework vs. stop losses begetting further selling? I see this company as having a lot cleaner financials, so I don't feel too worried taking a small position at $8.00.
Read Answer Asked by Liam on April 24, 2017
Q: I realize you guys have to be diplomatic, but the rationale that the shorts (different people in each case, by the way) were right on other stocks so they are probably right again is laughable. And it should be pointed out that just a month ago Motley Fool (not exactly the cream of the investment crop anyway) issued a very positive report on CRH.
http://www.fool.ca/2017/03/22/investors-forget-valeant-pharmaceuticals-intl-inc-check-out-crh-medical-corp-instead/

Thanks,

Alex
Read Answer Asked by Alex on April 24, 2017
Q: Team,
Just like your thoughts on the listed stocks and which you would add ( in some order of preference) to an existing portfolio skewed to secure dividends and modest growth with a target 7-8% combined dividend and growth. Conversely is any one a definite NO.
Thx
Read Answer Asked by Peter on April 24, 2017
Q: Peter, in the past you've indicated that you want to like this stock more. It's finally moved over this past half year, or so, as it's finally getting noticed again.

Can you get past the fees, etc., which you've objected to previously? To me, the fees are relatively modest, considering the discount to NAV, private holdings, astute management, overall long term decisions made by the company, etc.

They have a good sized stake in Real Matters, which will have its IPO in early May.

And, would you consider it ever for a spot in one of your coveted portfolios?

Thanks,
David
Read Answer Asked by David on April 24, 2017
Q: Hello,

In the real estate sector, I have a position of 7% in D.UN, and 2.5% in CUF.UN. Both positions are respectively held in my TFSA and RRSP. I would book a 15% profit over the past year if I were to sell. How important is it to be exposed directly to real estate?

What's your thought on selling to buy more growth oriented stocks since I am a young investor and don't really need the income. What would be your company suggestions? I am currently underweight in consumer defensive (3% ATD.B), industrials (3% SNC, 3% WJA) or/and could also add another position in technology (2%BB, 2%PHO, 5% OTEX, 6% KXS).

Thank you,
Read Answer Asked by Julien on April 24, 2017
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