Investment Q&A

Q: IPL and Enbridge have showed a steady decline in share price since mid-october ?

Q: Pardon me! The symbol was CHW - Chesswood Group -not CHN.
Thank you.I own shares in CHW. So far, it's been a pleasant ride. My concern, of course, is both their relative small size as well as the inherent risks that must be accepted when almost all their individual entities operate in a very leveraged & high risk market. As a retired US Attorney, I am familiar with legal & case funding as well as Plaintiff financial support. These areas along with their start-up financing loan business is my primary concern. Would much appreciate your opinion.

Q: re ATP...At these new prices is there any value in taking the contrary view and picking up a little. What would be a steal price? I might like to try to go bottom hunting. Also, if a company like ATP does cut or eliminate divvies could this be actually to best thing for shareholders?

Q: I took a flyer on XSR this spring at $6.50 and have been rewarded with a 32% rise plus the div. But the valuation looks crazy stretched and the payout ratio is high. I know it's priced for growth but my gut says to take the money and run. Would you dissuade me?

Thanks!

Q: Hey Folks,
I have sold all but one of my American LP stock in my portfolio which is ETP, the 35% off the div. is just too much... I am considering WMB, could you give me another choice.
Thanks

Q: Hi Team,
Could I have your opinion on CSE ( Capstone Infrastructure)?
Many thanks
vera

Q: Hi Peter & 5i: Been meaning to ask you about this for a while. Can you please let me know if you disagree with me on this and, if so, exactly why? I don’t like bond ETFs and bond mutual funds. I have a strong preference for my own ladder of individual bonds. I recognize that the funds offer convenience for retail investment and the advantage of superior instant credit risk diversification. But at this stage they don’t offer particularly inspiring yields and they don’t offer any certainty (not any!) that I will get all of my principal back. The two things I want from my fixed income investments are visibility of investment return and the relative certainty that when a bond matures I get my principal back – all of it. In my view the main point of the fixed income side is to have a portion of one’s assets not be exposed to equity risk. While both bonds and funds’ unit prices may fluctuate with daily trading, the only way out of an ETF is to sell the units at a market price. You simply don’t have the option of waiting for instrument maturity to make you whole. Of course that doesn’t necessarily mean you will lose money relative to your ETF unit purchase price, but you might. A bond maturing inside an ETF puts the bond’s principal back into the fund for the manager to reinvest. But, subsequent to that reinvestment, if rates rise the fund’s unit value will almost certainly decline. Having recently come through a period of about 30 years of declining rates, it ought to occur to people that rates could rise slowly and steadily for a very long time. That scenario could mean that the very investments people most count on to be protected and reliable could end up significantly under water with no certain prospect of recovery. A bond ETF or mutual fund introduces an equity risk component into the fixed income side of one’s investments. I wonder about the extent to which retail investors really understand the implications of that risk. Despite the relatively limited diversification of credits in one’s own ladder of between say 10 to 20 bonds, I prefer managing that credit risk through instrument selection, versus a fund’s market risk, which is entirely out of my control and based on rate movements that are beyond my ability to predict. Thanks for any critique!

Q: I normally do not consider investing in debentures mainly because I really do not understand them however, I have come across one that looks interesting: Premium Brands Convertible Unsecured Subordinated Debentures (PBH.DB.C-TSX).
Your insight in this security would be greatly appreciated.

Q: Hey 5I Team,
I am having a hard time buying a consumer staple stock such as: ul,tatyy,syy,pg,nsrgy,krft,kmb,hnz,gis,cag,clx,cpb as they have not met my minimum threshold of 4% dividend. Should I wait for this to happen as that sector seems overvalued? I do not want to buy in and get hit like the RIET sector. Currently what would be your best pick out of these, or do you have another?
You guys are the best!

Q: Hi Peter and Crew,

I love your service and it has been very good to me. I try to restrict myself to a question every few weeks (or less), as I wish you to not be not overwhelmed at your end.

It is getting close to the end of the year and I am beginning to research my TSFA purchases for 2014.

I have structured my TSFA around selections from your reports and model portfolio. I love the moderate dividend/increasing dividend theme. My goal is to have all of my holdings in DRIP programs (through my TD Waterhouse account.)

The issue is finding equities that produce enough of a dividend to purchase at least a share with each dividend cycle. Many of the equities are in the +$10 range, and I don't have enough of that equity for the dividend to be sufficient. The only possible exception is SYZ-T (Sylogist) at $7.22 per share.

Are you aware and would you recommend any other sub-$10 equities at this time that would be appropriate for a TSFA ?

Thanks again for the great service !

Q: Hello 5i Team,
I currently hold BEP.UN within my RRSP at a 5% weighting. Would adding a 5% weighting in BIP.UN be too much of the same? Looking at my income component in the RRSP, it is high but I have been unable to determine where I should invest given it is a registered account.
I'm retired so one of these years I shall have to move my RRSP into a RIF but in the interim want a steady stream of income.
Appreciate your comments.
Ronald

Q: When professional money mangers talk asset allocation, do preferred shares go into the "fixed income" portion or the "equity" portion? Thank You

Q: In regard to your notes on Just Energy on Nov. 27 I have been tied in to them for five years for gas at 36.9 cents a cubic meter. On renewal they highly promoted the savings that you would get at their new rate of about 25 cent a cubic meter

However they did not tell you that the rate from the gas company was 12.49 cents a cubic meter now and not far off for a lot of the time I was hooked into them.

Now I should be paying about 1/3 of what I was paying

Obviously I did not renew with them. If other people did their homework, there would be a lot more non renewals. This may affect their earnings

Q: Hello, Would you consider ALA a decent buy at current price? Better names in the sector? Thanks for the great service! Lavern

Q: Hi Peter,
Will the announcement today from MCAN Mortgage (MKP) be overall neutral (or better) from a revenue point of view, and if so does the drop in price provide a chance to add to current holdings at a good price. Present holdings are 3.4% of overall portfolio, held in a RIF and TFSA.

Q: I am interested in the question from Gary and your answer re: ENB and ENF. According to the Globe website, ENB has a beta of -0.037 and ENF 0.513. This would suggest ENB has far less volatility than ENB. But first, what does the negative number on ENB mean and, are we comparing apples to apples?

Q: Hi, the share prices of Enbridge (ENB) and Enbridge Income Fund Hldgs(ENF) have performed about equally over the past 5 yrs, but ENF has a much higher yield. Would you hold both of these in a portfolio or just one. Which one do you prefer for the next 5 yrs. Thanks.

Q: Hello, in regards to JE, Just Energy, Billionaire Ron Joyce now owns over 10% of the company, this makes another big owner along with Pattison. Is there value in this company others are missing?

Q: An article on this morning's (27 Nov) Globe & Mail website suggested investors be wary of restaurant stocks in general and A&W in particular (due to the latter's PO ratio >100%). Would you comment, pse. Thx.

Q: gsz is a european gas company based in France could I have your opinion please