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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,

My understanding from the news is that Brookfield defaulted on some buildings recently. Given the significant tightening of interest rates, the collapse of a 6th bank, and the increased reluctance for institutions to lend and drop in liquidity, how do you feel about the safety of levered companies involved in realestate and commercial realestate?

Have you looked at what obligations Brookfield has that might face mark-to-market losses? Are people confident that the assets and therefore the equity are properly valued?

The building defaults seem like a "canary in the coal mine," don't they? Developers walk away from the building because it costs more to finish it than the building is worth, right?

Thanks!

Read Answer Asked by Marc on April 30, 2023
Q: You have taken some heat on WELL and some other small caps, so I thought we would throw in a comment for some balance. In mid March I was thinking of taking a flyer on FRC and you were very cautious about such an idea. You said, and I paraphrase, 'we don't like stocks than can potentially go to zero'. That was enough to keep me on the sidelines. Now, FRC is down about 65% since then, and might not make it through the weekend. I wanted to thank you for your advice, and sometimes the 'don't buys' are good as or better than the buy ideas. Thank you for your service and keep up the good work.
Read Answer Asked by Aaron on April 28, 2023
Q: I note that CITI Group looks cheap with a P/E of 5.7X. It also has a nice yield of 4.16% and a Book Value twice that of it's share price. I would appreciate you opinion of this company as a long term hold. Also, I would appreciate your opinion regarding the significance of P/E and Book Value.
Read Answer Asked by Dennis on April 26, 2023
Q: Hi 5i,

Pretty sure I know your answer based on past questions, but I have so many questions to use from being a long time satified member.

Would you swap MG for DOO? Please provide some comparison metrics for the next 3 to 5 years to justify switch.

Again, using same question above, compare a BNS to TD switch.

Thanks again for your valuable insights over the past several years!
Read Answer Asked by Christopher on April 21, 2023
Q: Can you clarify the business models of the above for me. I am worried about the prospect of commercial real estate defaults affecting the share prices of the above. I own both.
As I understand it, BN actually owns commercial real estate that could potentially default, whereas BAM doesn’t. Can you confirm this? In the case of BAM, they simply take institutional investor money and invest it for them, in many different asset classes, of which commercial real estate is perhaps 5-15% roughly? And by investing institutional money in this class, they earn fees. So defaults in commercial real estate would probably only somewhat indirectly affect BAM because they might still get institutional investors wanting to allocate money to the class even if prices were low, and they therefore would still earn fees on this? Perhaps BAM would (eventually) earn less ‘carry’ on the commercial real estate investments, down the road in the case of some kind of commercial real estate decline? Thanks.
Read Answer Asked by Michael on April 21, 2023
Q: With the recent mini-banking crisis and banks restricting their lending; could this not be seen as a growth opportunity for loan generation for GSY? Even if they can't lend at the same higher rates as before they can still obtain higher loan volume growth - or at least that is my thesis.

Conversely, as consumer spending on discretionary items (eg. furniture, electronics) may be decreasing - could this be a head wind for loans related to their EasyHome segment?

If both of these trends are at play - which do you think will play a larger role on the stock if any? Even with the large drop in the share price, it can't be far off from a PEG close to 1 so it seems attractive as well.

Thanks.
Read Answer Asked by Cathy on April 20, 2023
Q: Hi, I have a 2.5% position in SCHW (down 25%) and am looking to sell while keeping exposure to the financial sector.

MKTX and CME score highly on my evaluations and others listed are pretty decent too. Curious on your thoughts on a suitable, safe replacement.

This is in my LIRA and I'm looking to hold for 10+ years (was also the case for SCHW, but I'm concerned wrt their exposure from their long term bonds).
Read Answer Asked by Cameron on April 19, 2023
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