Investment Q&A

Q: Hello 5i team,
In North America, a large number of companies release their quarterly earnings report after the close of the stock markets (TSX, S&P 500, Dow Jones, etc.). How is it that, immediately after the numbers are released, the shares of these companies start trading up or down depending on whether or not they beat expectations? Who is buying/selling these shares and on which stock markets? Is there any way that I, as a retail investor, can buy some at that time in order to get in before the opening of the North American markets the following morning?
Robert

Q: In 2010 Starbucks decided to sharply focus on return on invested capital (ROIC) as a metric of success as opposed to solely earnings + revenue growth. Lease portfolios were growing faster than revenue and profits - costs were going up and performance was sub-optimal even though revenues were going up. Deploying increasing levels of capital into high-growth, high-return areas has been a winning formula for them - as well as closing under performing stores. Where can one find a list of companies with high ROIC's?

Q: Likely this has been asked, but could you clarify what your A,B etc rating means. I currently invest in most A to B+ rated companies. You touched on this in yesterday's market call segment.

Q: Peter, can you explain why inflation is so important? What happens if the central bank cannot reach their inflation target? Sorry if this is such a basic question to ask. Thanks in advance.

Q: James asked on the 3rd about TD dividend not being paid as he expected. For my RBC Dominion account it came through on the morning of the 2nd. Please share with him (if you wish) as maybe there is another issue related to his account.

Q: I read in one of your answers that Enbridge should be classed as a Utility for sector classification and I am wondering if TRP would be considered a Utility as well.

Q: Thank you, Peter, for the excellent webinar today on Dividend Investing. If anyone missed it, make sure to sign up next time! It's either a great introduction or a good review!
Marilyn

Q: Not a question, but hopefully a helpful comment for the 5i community given the number of recent questions related to portfolio balancing:
Google Sheets is similar to Excel spreadsheets, but has an interesting function that can be used to track portfolio weightings easily. The function is called GOOGLEFINANCE, which can retrieve the latest price of a security online automatically.

The way to use this function for a typical stock on the TSX is:
=GOOGLEFINANCE("TSE:symbol")
(for stocks on the Venture, use CVE instead of TSE)

For instance, to find the price of Brookfield Renewable Energy, the function would be:
=GOOGLEFINANCE("TSE:BEP.UN")

If you have one column for the stock price and another for the number of shares, you can then multiply them together to calculate the total value. Categorize all your stocks by sector, and then have Google Sheets calculate portfolio weightings for each. Hopefully I described this clearly and that it is useful for others. I know this has saved me a significant amount of time!

Q: A further question on deflation. If we do enter deflation, can low to zero interest rates still be used as a positive indicator for the economy?

Q: To register for the webinar one must register to Questrade who have the authority to contact you. I already have an account set up, so I really don't want have to deal/talk with them. My question ... Is the webinar available for view immediately after the live show ends?
Thanks,
Rick

Q: Barclay's is predicting the USA will experience a negative CPI in 2015. What would be the best sectors to be invested in should we find ourselves in a deflationary climate? Thank you.

Q: If you don't have American dollars can you justify spending Canadian dollars to buy American stocks. In my cash ACCOUNT AT PRESENT I HAVE 34% American stocks and 66% Canadian stocks
Alan W.

Q: Hello, I am new to your membership and this may have previously been asked. As there are many companies out there I would like to know what your criteria is to pick a stock for performing a review on. Are these ones scrutinized from the general lot for having the most potential?

Q: For Kelly looking for a US$ Investment Savings Account, this one pays about 0.25%.

Q: In reply to Kelly, we receive US Social Security and have it sent to our BMO US dollar account. No problem. Then we simply transfer it to pay our US credit cards, or into Canadian funds for use here as required.

Q: Peter and team,
This is a question that i am hoping either you or one of the other members of the site might be able to help me with. I have US holdings in my RRSP but to sell and keep the dollars in US currency, my self directed brokerage requires me to put the proceeds in another us holding same day. In canada, there are many high interest savings accounts to do this with but i have been unable to identify the same type of account in US dollars. Any suggestions? I have used FLOT but would prefer a high interest savings account if possible.

Thanks

Q: Hi 5I
I've tried in vain to understand IRE delisting (ADR's)from NY. I am with a discount broker (BMO) and I hold 1200 shares. I don't know if I can continue to hold the shares in kind at BMO (ADR'S) or do they get converted (or liquidated) and after 1 year can I continue to hold the converted security in the discounted brokerage.Excellent Site.
Thanks Bob

Q: I ask your opinion on equity diversification. Does diversification improve returns or merely reduce volatility. If I invest in the same proportions as the TSX make-up (30% financials etc.), will I achieve similar (or better/worse) returns than a well diversified portfolio over time (5 years for example). The equity investments would still have to meet the requirement of being at least satisfactory equities as indicated by 5i.
A second question is - do I need the to invest in other than equities if I believe that I have at least twice the investments to fund a reasonably comfortable retirement and keep sufficient cash on hand for about 2 years expenses. As a sombre/humorous note what is at risk (I think) is our children’s modest inheritance, and they are all in middle aged and in reasonable shape financially.
I understand that there are no perfect answers, but experienced, informed opinion is of high value.
I greatly appreciate the rational unbiased advice on 5i. Thanks.

Cyril

Q: Hello Peter and team,

On Feb 2nd deletions from the S&P/TSX Canadian Dividend Aristocrats Index will include Evertz Technologies (ET) (in your income portfolio), and two of your covered companies (CSU and HLF).

As of Jan 23rd the iShares Canadian Dividend Aristocrats Index ETF (CDZ) had $21,797,887 worth of ET shares. My math equates this to 1,371,799 ET shares. This represents 5.2% of the floating shares.

Similarly CDZ had $12,124,809 of HLF shares, which equates to 598,756 HLF shares. That is 5% of the floating shares.

The number of CSU shares held by CDZ would be 0.2% of the floating shares, which is negligible.

How does the ETF go about disposing of such a large quantity of ET and HLF shares? Does the ETF have to sell all of them exactly on Jan 30th, or does the ETF have days or weeks before and after Feb 2nd to gradually dispose of their shares (so as not to flood the market)?

If the ETF has to dispose of all their shares on Jan 30th, do they wait until the last minute of trading? And being that it is 5% of the floating shares in the case of ET and HLF, won’t this have quite a negative impact on the share price (in the short term)?

I may be interested in acquiring some ET and HLF shares. Is it possible to take advantage of this situation? How would I do this? Should I place a low ball order on Jan 30th and see if I get filled?


Paul J.

Q: Where can I find the "Shorts" outstanding for any listed security? Thank you.