Investment Q&A

Q: Good Morning 5i team,

Being an inexperienced (aren't we all) investor, one of the hard lessons I have had to learn (and am still learning especially on BNN) is not to believe everything you hear and/or read. Apparently, it is my own human nature that lends me towards wanting to believe a pundits excitement regarding the future of a company and the story he or she tells about a bright future and why a stock will go up 30% in 6 months. No question it is this behavior that is what truly makes 5i so invaluable to me... a sound and unencumbered opinion absent of ulterior motives purely for the purpose of keeping my eyes open and my gullible side in check.

As an example, I have just read an article about MDR. And from what I read, this company'is incredibly undervalued and should triple an investment within 6 months if not sooner. According to the article, they have tremendous backlog, ($4BB) tons of cash on hand, price to earnings ratio of about 5X, and it is at a tremendous discount being down over 70% since mid June. Further, it looks like an excellent take over candidate.

I was lucky enough to sell about 70% of my energy sector holdings (did especially well on Rock) back in Sept and am sitting on a bunch of cash.

Can you please tell me - especially considering your last opinion of MDR Aug 2013 - why I shouldn't put 5% of my portfolio into this company then sit back and watch my money triple in 3 - 6 months?

Thanks for all you do

Yours Truly, Gullible Gord

Q: I am interested in changing a portion of my wife’s RRSP holdings to US Oil Producers. I am looking at Chevron CVX, Kinder Morgan KMI, Devon DVN as candidates due to the recent oil price meltdown. Would you recommend any of these or do you have a favorite US Oil Producer. With the weaker Canadian peso we would have been better to do this when the dollar was at par, ah hindsight!
She is 62 and plans to roll the RRSP into a RIF when required, say 10 years. The portfolio currently has 40% fixed income and 60% Canadian equities. What level of US equities would you recommend? We are comfortable with medium risk exposure.
Many thanks for your service!
John

Q: Would you continue holding WPT : NYSE?

Q: hello 5i:
this is a follow up to my last question regarding the use of Cash Flow for evaluating companies. Thank you for a quick and precise reply. the follow-up question may be more art than science (hopefully not): When looking at cash flow for a company, are the numbers projected based on the latest data ie. if, for an oil company, prices had been projected at, lets say $80/bbl, how soon are figures updated to take into account higher or lower numbers? Hopefully, my question here is clear.

Q: hello 5i:
When evaluating pipelines or utilities, is Price/CF a better metric than P/E? Is it the best metric to use? What other sectors, if any, would utilize P/CF as the primary driver?
thanks
Paul L

Q: Hello Peter & Co,
Markets are in turmoil, for 2014 year to date TSX is up 3.4% (incl dividends). Even though my portfolio is up 11.4% over the same period (I hold most of your equity portfolio + other equities), I worry about the world economic outlook.
The strong US$ causes balance sheet problems in the emerging markets, the US yield curve is flattening (short term up, long term down), China is OK with a caveat, Europe is shaky, Russia is in trouble; but the US is fine (is it really), Canada and Australia are shaky.
In the context that I have described, 1) do you re-structure your portfolio?, 2) how? or 3) do you sail on?
Thanks,
Tony

Q: How likely will it be that IPL, PKI & PHX would reduce their dividends at this time?

Q: about 3 weeks ago you gave me intertain as a great buy for next 6 months saying it was somewhat risky, so since it is not raided not being investigated would it be a great or even better buy now. dave

Q: My portfolio is lacking in life insurers (heavily weighted in energy, tech, mining). How does Manulife compare to Sunlife and Great West Life as an initial exposure to life insurance companies in Canada? It was beaten down so severely over comparatively speaking during the last financial crisis. I wonder if there's more upside with Manulife than the other 2.

Q: I had 1/2 positions in these energy names before the downturn in oil. Which 2 would you add to first and why. Thank you for your help.

Q: What is your outlook and opinion on BTE.T and can it be bought now?

Q: We have Crescent Point and Surge Energy in our RRSP's. We're not wanting to sell and are prepared to hold on for long term. My thought is to move what I can into our TFSA's while the price is down. Thoughts?

Q: The prospect of rising interest rates has come up a several times recently in both questions and/or some of your answers; and I would appreciate your help in connecting the dots (as in cause and effect). With O&G prices having fallen so much; and comments being made that the entire economy might actually slow down because of the size of the industry in Canada, why would rising interest rates appear to be likely? .... unless there is a serious and legitimate concern about "Stagflation" raising its ugly head again, which scares the daylights out of me.

Thanks for your insights and guidance.

Q: Can you offer any insight as to how long the Amaya situation may go on for before the truth comes out?
Days, weeks months or years?

Thank you

Q: Can you recommend some US ETFs that are not hedged to the Canadian dollar for the S&P 500, US financials and technology? What are your thoughts on XLK and SLF? Any advice on when to enter these trades? Thanks so much for your service.

Q: I note that in your Sept 11 review of easyhome you state that easyhome sold off 15 US corporate stores due to profitability and unfavourable economic conditions. Give the recovery to date in the U.S. economy and the weak Canadian dollar, have economic conditions changed sufficiently to cause EH to refocus at all on the U.S. market. Is Eh a buy at $19

Q: HI- YOUR COMMENTS ON THE LATEST ACQUISITION. IS IT A BUY HERE?

Q: Can you recommend any Alberta specific companies to short beyond the oil patch? I am looking at companies that derive a significant portion of their revenues from Alberta's previously buoyant economy and may be due for a rude awakening. Would you say ACQ and MIC fit those criteria? Thanks

Q: I have 10k in my RIF A/C in $US. I am thinking of buying Telus/ and or AYA in this US A/C. As these companies are listed in the US stock exchanges, does it make any difference if you buy in the US or Canadian a/c. Thanks for your most valuable advices.

Q: Hi Peter & 5i: I heard mention recently of the prospect of Canadian O&G producers running into debt problems as a result of current debt covenants that require them to maintain threshold ratios on metrics like debt/cash flow. Lower oil prices would mean significantly lower cash flow and potential difficulty maintaining the required ratios. Also, with the prospect of the lower oil prices extending at least well into 2015, IFIRS requirements may also have them writing down their oilfield values by the February-March timeframe, which could be detrimental with any similar provisions using metrics that involve asset values. What are your thoughts regarding these concerns for the O&G stocks generally and, more particularly, for Baytex? Thanks.