Investment Q&A

Q: Hi 5i,

I would like your assessment of a New Issue/IPO just made available on TD's Direct Investing web-site. It is for approx $250 million of common shares in Aurigen Capital Limited. It seems this company has been in existance since 2007 and offers Life reinsurance to primary insurers. The CEO (Alan Ryder) has
previously led the launch, growth and operation of two other successful reinsurance start-ups and previously (2007) raised
$505 million of equity capital from respected private equity &
industry investors. Is the CEO and other members of the mgmt team known to 5iResearch? Who are their competitors in the CDN market? Do you recommend purchasing this on the IPO, later after it settles, or not at all for sector reasons? (price has yet to be determined...)

Thanks for your great service!

Scot

Q: Hello,

Do you have an opinion on RFP? Thank you.

Q: What is your opinion of:

SPM...good time to get in?
ENT...has some insider buying, and price seems cheap?
HME...down 10% today, is this a buying opportunity?

Lastly, how much consideration do you give to a stock that has a lot of inser buying?

Q: Hello Peter and Team. I have owned WCP since July, 2013 (with help from your advice). There has been 2 dividend increases and I am up over 30% since then. My weighting is about 6.5% now. With the recent gains, should I take a little off the table, or wait until it is a higher portion of my overall portfolio? Lots of good news and an exciting stock for sure. Thanks for your insights!

Q: Hi folks,
Would you know of any fundamental reason for BOYD,S BYD.UN latest run up ( better than 39 dollars?

Thanks again ,
Larry

Q: RBC has raised its estimate on CF to $12 from 7.50.Is the investment business this strong and will the rising tide lift all the boats such as GMP?
Thanks for your opinion.

Q: Could you please provide an update on CFN?
Bought at 9.15 and 9.00, now at 8.90.

Q: Hello Peter,

What are your thoughts on Savanna Energy (SVY)? Good time to sell? It is hovering around $8.75 right now and I don't see much growth potential in the future.

Thanks,

Q: Hi Peter, As for Paul's holding of ALC.DB, I see a few more considerations for the analysis of this investment. Yield to maturity in 4 years at 2.5% assumes the debenture will be redeemed at par then, which is unlikely if the normal growth assumptions for the shares are applied and the debenture, now at a 12% premium to conversion, will be in the money, and the current $113 price will be a bargain then if the shares were to lift to, say, $24. If that is to be the route the shares will take, then conversion at a later date will be more advantageous or sale at a higher price for the converts, and a current yield of 5.3% is a fairer comparison to the share dividend of 1.8% than YTM of 2.5%. Only a flatlining or downtrend of the common would cause redemption at par in 2018.

A current 12% premium to conversion isn't large compared to lots of others including converts of FCR and MRT that I hold in RRSP where I tax shelter the interest, which is more advantageous than a taxable account. In fact I might switch for the lower conversion premium. If I'm making any false assumptions here, please correct me. Thanks, J.

Q: ALC.DB question of Apr 26/14 asked by Paul:

"Converting ...you would need to sell the debentures at the quoted price, buy the stock at the current price, pay taxes if you sold the debentures, and pay two commissions"

I don't follow the above answer. There are no commissions to convert as the broker informs the transfer agent and the shares are credited to the account. I have never seen a conversion fee at full service brokers such as McLeod.
The current yield is 5.30% (6/113) versus 1.77% for the common.
The yield to maturity losses will be gradual since the bond has 4 years to redemption. The bonds will hold up better than the common on the downside because because of embedded 4 year warrant in the bond. Conversion destroys the embedded warrant. Publish at your discretion.

Q: Does DHX own the rights to Johnny Test? This show is all my grandkids favourite. For example if they decided to start making figurines of Johnny Test and other characters would that not be a call to Disney to buy DHX for their huge potential? Or ignore if this is a ridiculous question.

Q: Hello Peter,
Can I have your view on the recent thumping ( down 10+% in a day) of PRE on the heels of its Q1 report? I feel the fundamental metrics seem positive, despite the company`s involvement in a geopolitically risky environment. I was initially planning to hold my position in PRE for a 2-3 years.
Thank you Peter!

Q: Hello Peter :
I have had very little experience with Convertible Debentures and need some advice.
I own $50,000 of Algoma Central Convertible debentures ALC.DB which I bought at $108.00 a while ago. My Book Value is $54,000.00 and the current Market Value is $56,550.00 for an unrealized gain of $$2,550.00, and an annual dividend income of $3,000.00 for the next 4 years.

The National Post give this information about ALC.DB :
Coupon 6.00%
Maturity 31Mar18
Last Price $113.10
Parity $100.71
Yield to Maturity 2.50%
Premium 11.91%
Conversion Ratio 6.49
Conversion Price $15.40
Current share price [ALC] $15.79

I would be quite pleased to own the common shares for a very long term hold unless there is an advantage to holding the debentures.
At a Conversion Ratio of 6.49 am I correct that I would receive 3245 common shares?
Does this mean I could now advantageously convert my debentures into shares. If I am in effect just earning 2.50% yield now and the yield on the shares is 1.77% there isn't much difference and the share dividend has the dividend tax credit advantage.

The debentures are held with Scotia McLeod so I suppose there is a fee for doing the conversion, and would I be subject to tax on the unrealized gain if I do the conversion?

Would you go ahead with the conversion or just wait and hold the debentures? Any other information or advice you could provide on this issue would be appreciated.
Thank you............ Paul

Q: TOS This company is trading like it is going out of business at 52 week low. Would you recommend sell or hold. Thank-you
Best Regards
Harold

Q: I took a flyer on PRY and have lost most of my capital at this point. Though I am modestly cheered by some insider purchases in the last few weeks, I think I am ready to seek greener pastures. Do you have any reasons I might want to reconsider sale at this point? Thanks for a great service!

Q: I have an opportunity to purchase shares in the pending IPO spinoff of PrairieSky from Encana. Should I take advantage of this opportunity? The rumour is that there will be will an overwhelming demand for this IPO.Thanks for your opinion.

Q: Espial Group (T.ESP) Q1 results on Wednesday indicate a company now hitting the sweet spot. At what market cap would you consider doing a detailed report on it?

Q: Hi team:
DND is slowly making a recovery, would you rate this as hold, buy or sell ?

thanks!
Michael

Q: Do you have a comment or any insight into the repercussions of the court finding against MDA's subsidiary today in California (patent infringement). Is this likely to be a continuing drag on the stock until finally resolved?

Q: I noticed today that MDA lost a case against Via Stat for breach of contract and patent infringement. The stock is getting hit hard today. Will this effect the stock long term?