Investment Q&A

Q: Dear 5i, I've read some good questions lately on REITs and return of capital, dividends, business income, and the adjusted cost base for these securities.
I just wanted to follow up and ask if my understanding of the different tax treatments is correct.
1. RRSP: all monies paid to the RRSP is basically exempt and no need to keep track of ROC, dividends, etc.
2. TFSA same as RRSP
3. Cash Account, monies paid to the account must be kept track of and the ACB will be reduced each time ROC is paid back to the investor.
Please confirm this means over a very long period of time the ACB could be reduced to zero or even negative? Is the ROC, Box 42 on a T3, the only amount I have to keep track of?
and another question, on BYD.UN, Why is BYD.UN allowed to operate under .UN status and in your opinion will they eventually be required to convert to a Corp.?

Q: Can you comment on Winpak's (WPK-ca) earnings, their cash position and speculate on how large they can grow their cash position before management begins to consider a special dividend?

Q: April 29/17 ? asked by david:

Jerome Haas of Lightwater Partners has been shorting HCG successfully for several years
using public info. He points out below that the loan originations were robust concurrently with the loan book decreasing, amongst others.

http://www.bnn.ca/investing/video/home-capital-short-seller-warns-on-the-whole-sector%7E1109205

Q: The authorities knew if they dd anything home capital would have issues. I thought it would skate through with a fine and a few firings. Why bring down the whole company? Check the mortgages determine the default rate and then decide what to do.Announce action everyone deserts Home Capital gics and the company swirls into the bowl. Hoop insider probably knows the default rate ponies up the money.Please explain.

Q: In March and February your comments about this company were generally positive. Yet just recently you said that this company was the most likely candidate to be booted out of the balanced equity portfolio. Sounds like you views have changed in the past four weeks. Can you explain the apparent shift in your position please. Thx.

Q: Hello,

I have read a suggestion that perhaps OSFI or the government might "encourage" a big bank to purchase home capital. Any insight as to what a potential price could be? What metrics do you think someone could base a bid on?

Regards,

Robert

Q: Can you comment on Constellations Software's debt profile and cash position? From what I recall, it is a definite strength of the company. Is there any plausible short to medium term scenario where the company can destroy their strong financial position?

Q: Comments please on Constellation's latest quarter.
Thank you

Q: Do you know if the secondary offering of PKI shares has closed? There is no confirmation on SEDAR and my broker (RBC Direct) hasn't participated in this (yet).

If it has closed, with the price holding above $29, would you consider this a good time to add?

Q: Is the drop in BNS due to negative sentiment around Home Capital? I'm trying to determine if this is another buying opportunity.

Q: With the recent drop in price,would this be a good time to take a position for growth?

Q: Isn't it a a bit too coincidental that we learn that both Royal Bank and BMO are selling uninsured mortgage backed securities, a few days before the Home Capital death spiral? You have an optimistic bias, and typically trusting towards management, so I speculate that you will answer that there is nothing much to think of it, but could you take a distrusting view on this (without being paranoid) and guess what could have motivated them to do that?

Q: In regard to HCG I am on the wrong end of the stick with this one.
In your defence, I did notice a change in 5i's opinion of HCG around the end of March, here is an excerpt from one of your replies "Unfortunately, there is such a cloud hanging over the company right now, the fear and uncertainty surrounding it make it hard to be excited about in the shorter-term. It could still do quite well if they can get past all of the concerns but actions such as letting go of the CEO are not overly helpful in terms of boosting confidence. We would note that it has been profitable every year since 1999"
Fear and greed rule the markets, investor sentiment affects market value in the short term way more than fundamentals.
At this point, I want to learn what I can from this situation. What would you say are the take-away's from this debacle?
Thanks in advance for your continued excellent work.
Randy D.

Q: Should Gsy be linked to home capital?

Q: HCG has hired BMO and RY as strategic advisors and have now secured a 2 billion LOC. Thoughts please??

Q: With the demise of HCG there is plenty of blame to share. I am disappointed with 5I continuing to maintain its rating of B+ right to the end. You extensive experience in the field did nothing for your subscribers. As with most other advisory services your tune only changed when it was far too late to make a difference. I can add DH to the comments. It was only my own common sense and intuition that protected me in both cases. I hope 5I does some soul searching and simply does not write this one off as another miss.

Q: I purchased some of this stock for an RESP about a year ago. It has climbed nicely. The company seemingly achieved a good measure of success before going public. What are your views of this company and the stock going forward?

Q: Can you please give me your comments on Firstservice. it seemed like it was expensive, but it looks like earnings were good. Would you add to a position at this time, if it is not a full position/

Q: Which one of these 4 companies would you buy today
for growth and long term hold? (disregarding sector)
In which order would you rank them?
Thank you.

Q: Can the tariff rate for Acadian be determined at this point?

Thanks
bob Rose