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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: Please enlighten me on how bought deals work, using the most recent EIF bought deal as an example.

EIF floated new common shares at $42.45 per share recently and it was a bought deal so the underwriters bought the entire issue (plus the over subscription shares) for $42.45 per share. Thereby EIF received $42.45 per share (less the underwriter fees), while the underwriters assumed the risk in case if they cannot sell those shares at $42.45 or more. Am I correct so far?

In that case, with the EIF SP lingering under $42 a share, can I assume the underwriters will suffer a loss? After all why would you buy the new shares from the underwriter at $42.45 if I can get them cheaper in the open market?

Also if I were the underwriter, would I not be trying to drive up the EIF SP to over $42.25 to protect my deal?

Kindly shed some light on this type of transactions. Much appreciated.
Read Answer Asked by Victor on January 05, 2017
Q: Hello

I am going to re-balance my family portfolio (by sector/industry mix and bond / stock mix) once the Dec 2016 statements come in.


In my family we have 2 RRSPs, 2 TFSA, and 2 RESP accounts.


In the past I would add up all the portfolios together and make a pie chart in Excel to find out our bond & stock mix and our sector/industry mix.


Before I start this exercise this year I wanted to have your opinion.

How do you recommend balancing? Each account separately or other???

Should I even consider BONDS inside my kids RESP since they are just 2 and 4 years of age?

Thank you for your help.
Regards
Stephane



Read Answer Asked by Stephane on January 05, 2017
Q: Income investments - preferred shares
On Jan 4, you posted an answer for an income investor, expressing approval of ZPR (BMO Laddered Preferred Share Index ETF). I am somewhat cynical about preferred shares, their being subject to the interest rate sensitivity of bonds, lacking the upside of common stock and generally lacking a fixed redemption date or any other assurance of capital preservation. I wonder whether, even on a reset date, they would necessarily trade at their face value. If I am right, I can't understand in what circumstances they would be suitable (without fixed redemption or as an interest-rate play with a high coupon). What am I missing?
Read Answer Asked by Carl on January 05, 2017
Q: Hi Peter, Can we request to please include top 5 buys in each portfolio along with monthly portfolio reports. This will help us in directing new money.
Also, do you think there is strong case of putting new money into stocks within coverage summary that have high ratings but has dropped over last 12 months . Like ABT, BOS, ENGH etc. Since they have a good rating ( B or over ) are these good candidates for rebound or would rating may be slashing once the review comes up.Thanks
Read Answer Asked by RUPINDER on January 04, 2017
Q: Earlier today part of your reply to a security question was: "On any account there is, at first, insurance protection through the Canadian Investor Protection Fund, up to $1 million". What is an account? At TD they breakout you account into tfsa, rrsp, us, and Canada. Are these each individual accounts? As well you can have another account number with a similar breakdown. Would that account be covered by a separate $1,000,000 insurance? Would it then be wise to open another account at another broker, if you liquid assets exceed $1,000,000. Thanks, Mark
Read Answer Asked by Mark on January 04, 2017
Q: How would you suggest incorporating non-equity investments into diversifying a portfolio? For example, if an investor owned an office building:

a) Would this satisfy the "REIT" sector component of the portfolio?
b) Should the investor diversify within the REIT sector, and aim to also own a residential REIT, such as CAR.un?
c) Should the income-producing real estate asset be considered a "bond-proxy", thus not affecting the equity sector allocation?
d) Other?

Thanks in advance!
Read Answer Asked by Jonathan on January 03, 2017
Q: I have just discovered a valuation metric NCAV -Current Assets minus Total Debt...which to me is a significant moat for a Company...if positive. Surprisingly when I look at the Companies I follow, most have a positive NCAV. I assume a high growth Company with positive NCAV would be a good investment...a negative NCAV bad. Can you comment on the pros & cons of this metric.

Thank you and all the best to to i5 team in 2007.
Brian
Read Answer Asked by BRIAN on January 03, 2017
Q: Hello! I have received a decent sized amount of gifted funds (decent sized relative to my existing portfolio). I plan to spread it across my holdings which are almost entirely made up of the BE Portfolio. I know that usually January can be volatile. Would you 1) hold onto the gifted amount in cash for now and deploy later when the markets calm (February for example), 2) deploy now, knowing January can be volatile? Or if there is a better method you would recommend? Thanks!!
Read Answer Asked by Michael on January 03, 2017
Q: I have the above investments in my TFSA, TOY and MX being new. This account has been flat all year, so I am trying to make some changes. FB and AQN the worst, so I am looking to exchange those.
Now, looking at FB it is a strong buy/ buy. Are you expecting any growth this year, or should I sell. I have been looking at something with high yield like STB and PWF. Are they safe enough. I am going to use some of this money in one year.
Thanks for your opinion
Margita
Read Answer Asked by Margita Elisabet on December 30, 2016
Q: Bad day on the market. Virtually every sector is down but one. Real estate. I'm baffled by this. Almost every single REIT is up today, and REITs are performing well in New York as well. All the 'pros' have been saying that this is exactly the wrong sector to be holding now, that REITs will suffer more than any other sector in a rising interest rate market. Yet on the last day of trading it seems like everyone is tossing tech and everything else overboard and gobbling up REITs. Does this say something about the market going forward in 2017, that perhaps people are hedging their bets a lot and don't believe the "Trump Rally" will lift all the cyclical stocks after all?
Read Answer Asked by John on December 30, 2016
Q: My sister and I have joint power of attorney for my mother. My father passed away in 2015, leaving a sizeable estate that includes bamk accounts and investments at TD Bank. I am used to managing all my banking and investments electronically. My sister is so concerned about cyber security breaches that she does not want any of my parent's banking or investment transactions to be done electronically. I would appreciate your comments.
Read Answer Asked by Linda on December 30, 2016
Q: I am going to be purchasing all stocks in the balanced equity portfolio in the next few days. Would you recommend equal weights to begin with or mirror the current weightings?
Are there any companies you would wait for a bit of a pullback before buying.
Do you still prefer WCP over RRX? I am guessing maybe for stability and dividend?
Are you planning on making changes to the portfolio anytime soon. Thanks very much.
Read Answer Asked by Andrew on December 30, 2016
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