Investment Q&A

Q: I am down 32% on these preferred shares. The yield is now over 8%. Does it make sense to buy more so that my yield is better? Is this preferred stock going to go up if interest rates rise?

Q: Hi Peter and the 5i Team,

I presently hold 1000 shares of CVD in my RRIF and it's down about 5% (excluding the dividends, so it's down only marginally). I saw an ad in today's Globe describing Fiera's "Canadian Preferred Share Trust", where you can exchange shares in CVD for this new fund. Do you see any advantage in doing this? The Fiera offering is actively managed, but since it's essentially a closed-end mutual fund (am I correct?) wouldn't the fees be higher than CVD's? I know you like Fiera as an investment, but would this translate to liking this product? (Don't buy mutual funds; buy shares in mutual fund companies?) As always, I appreciate your advice and recommendations.

Q: Please explain "rate reset preferreds" (not necessarily just ENB/ENF) and how to invest in them.

Thanks much.

Q: I bought this preferred just recently for a price of $25 and it has gone down steadily since then -- it now has a bid of $24.35. It has a yield of 6.5% and I bought it for income but if I lose in capital what I am gaining in income it doesn't make me happy (grin). What do you think the future holds for this preferred?

Q: Some investors assess a company's share prospects by looking at the company's debt. Since Argex announced its offering (on June 1), it has lost more than half its market cap, yet its debentures are getting a $66 bid. I agree that $66 on $100 face isn't exactly a vote of confidence, but given the 'failed' offering, wouldn't we expect the debenture to follow the share price down? Or does the relative stability of the debenture serve to recommend the shares?

Q: Would you classify bonds, preferred shares, preferred share ETF's and cash all as income?

Thanks
Dolores

Q: Hello,

I owned ENB.pr.b and I'm down 24%. It took a dive last dec. Should I sell?

Q: I am looking to invest in fixed income for my RRSP. What do you think of Dorel Convertible Debenture? I can get a yield in excess of 5.5% for a bond maturing in less than 5 years.

Q: Can you please give me your thoughts on this, at $25:

Loblaw Companies Ltd Perpetual Preferred Shares Series B

Issue:
Cumulative Perpetual Second Preferred Shares, Series B - 5.30%

Thanks!

Q: My portfolio of rate reset preferred shares (ENB, FTS, MFC, TD) is underwater by 5%. It's average dividend rate is 4% & all rate reset dates occur in 2019. I have two questions. 1) Why are rate reset preferred shares doing so poorly? 2) Is there any hope that their share price will improve in the future? Thanks ... Cal

Q: Hi There
What are your thoughts on this for a small part of an income portfolio.
Resets seem trickier to evaluate that was first apparent.

Thanks
David

Q: You seem to like BTO as a gold pick, yet I notice that as of the end of April, BTO has one of the largest short positions on the TSX. Why do you think this is the case?

Q: Just noticed GXI.DB and it yields over 10% to maturity. Would you recommend this convertible debenture for the bond side of one's portfolio?

Thanks

Q: could you give me the paticulars on the Black Berry convertible debentures. Whats it's ticker how much and when is yield payed out, how many shares of stock will one be able to get from one convertible debenture, etc. Any information that would be useful. Also will there be dilution issues if Fairfax converts all there convertible debentures

Q: Hi there

I am up 17% on BAM.PR.M (Brookfield Preferred) over the years and have been very happy to collect the dividend but the preferred looks like it may reach the end of its life at the end of December 2015. Just wondering if I should sell now with the gain or wait until December 2015. It trades now for 22.68 and it looks like that Brookfield would have to pay me $25 to redeem. An I missing anything e.g. could they roll it into a new preferred at a lower interest rate?

Much thanks

Stuart

Q: I'm trying to get a better understanding of preferred shares and possibly start a position. When the BOC reduced rates why did the value of CPD decline? I expected the perpetual prefs to increase in value offset by a decline in the rate reset prefs.

Considering CPD is paying a 5% dividend it seems now is a good time to start a position. The BOC seems to have backed away from another rate decline and we are paid 5% to wait. Also a rate increase should benefit the fund if a rate decrease hurt the fund. Let me know if my logic is sound. I dont have any pref share exposure and all of my income portfolio is with CBO. Most of my money is in registered accounts.

Thank-you.



I dont have any exposure to pref shares.

Q: Hi Peter,

In recent questions re my convertible Deb holdings, I sold a majority of my energy based CV's. My IT 8.5% was also just called very recently well before maturity.

I currently want to maintain that % in my portfolio of Convertibles.

Can you please recommend 5 or 6 convertible bonds that you recommend I replace my sold and redeemed CV holdings with.

Keeping in mind return, ability to be redeemed in full at maturity and finally perhaps some upside potential due to equity growth.

Thanks very much.

Q: Hi Peter,

Had you written the article on PFD shares and I read it about 5 years ago I would have probably been much better off.

At any rate over the years (since the financial crisis I invested in many Pfd share resets, all at ipo price.

Amongst them are :AX.PR.E, DRM.PR.A, DC.PR.B, FFH.PR.F, NPI.PR.C,AIM.PR.A,INE.PR.A and C, PPL.PR.G AND TA.PR.F.

Obviously I am not concerned about the solvency of these companies, however I am underwater substantially on all of them. Can things get worse and can they fall further?

Or should I hold my nose and just keep them?

Small portion of my overall portfolio and income from them is marginal. I am retired.

What say you?

Thanks

Q: Thank you for the article on Preferred Shares. My former advisor at RBC-DS did not explain 90% of what was in your article. I lost a significant amount on the preferred shares he sold me. My question is this: Generally, at large brokerage firms, what kind of behind-the-scene commissions or "incentives" do advisors earn for flogging preferreds?

Q: Your recent article on preferrers only alluded to resets, which are now over 60% of all preferrers issued. So, I don't know how much I can take from the article. For example, I would like your opinion on efn.pr.e. You have recommended fen several times recently, and this preferred yields north of 6.5%. I believe I get my 25$ back in another four years, as long as the company is solvent, right? And the reset spread is around 4.5%, so I either get my money back or i get a very good yield when this five year term expires, right? I realize I am not participating in the cap gains, but I traded that for a 6.5% yield that seems quite safe and getting my money back in the end (i.e. 5 years). Am I missing anything?