Investment Q&A

Q: WEF has had a very good run of late, up some 35% this year. I'm guessing the fires in BC interior might have something to do with it and when the rain falls so will WEF. What do you think of the current valuation?

Q: Hi Peter and Group. I have just taken some profits on WEF - I needed to lessen my exposure anyway. What is your top 3 stocks I should reinvest in? (regardless of sector) - I am a moderate risk investor. Thanks for the service

Q: My original small % positions have become a problem - HWD is up 130% down to OSB (finally) +25%. Would you sell some of each or do you have a preferred listing of keepers?
Thanks for the service.

Q: I noticed that WEF (Western Forest Products) hit a new 52 week high on fairly significant volume. This even comes after news of increased US tariffs on Canadian lumber. I haven't been a shareholder in WEF in years as I grew frustrated with it being stuck in a trading range for a long time. Is this the opportunity to jump back in?

Q: I have substantial capital gains in both of these companies. How exposed are they to the anticipated US actions in the softwood lumber warfare? Would it be prudent to lock in some of these gains?
Thank you for your advice.

Q: Do you like either of these companies? Great yield on DIV.

New member. First question.

Thanks

Chris

Q: On Friday Helen suggested an innovative solution re avoiding potential duty but even if it was feasible the solution would not restrict supply which is the goal for the US players.

The softwood lumber trade dispute is not so much about finished lumber crossing the border as it is about land management. In recent years, the largest CDN domiciled companies have purchased 30-40 mills in the US because buying US mills is more profitable than investing in CDN mills. That is evidence against the US claim that gov't subsides make it cheaper to produce in Canada. Also, US owners have been bailing out of operating Canadian mills.

Large US companies want the value of their timber land to increase which is mainly why they attempt to restrict supply. For example, the largest US timber holder is WY, (NY). WY owns about 13,000,000 acres of timber currently valued about $1,000 acre. If they can restrict supply, the average value could appreciate to $2,000 - $2500 acre. The "trade" dispute is more about wanting to increase US based inventory values than unfair subsidies for CDN manufacturers.

Phil

Q: Why not? A US lumber company buys western forest to get around the lumber trade disputes? It then becomes a US owned company even though it is in Canada. Does that make sense? Could that work?

Q: Why is WEF so cheap compared to its other canadian peers (WFT,CFP,etc)? I realize size could be a factor but it's actually not all that much smaller.

WEF has a much higher yield, a cleaner balance sheet, and trades sub 10x p/e vs peers at 15x. What am I missing?

Thanks

Q: What did you think of Western's q4 and the company in general? It seems they made paying down debt and holding off on further capex a priority in ahead of the soft wood lumber dispute outcome.

Q: I have owned WEF since late 2014 and am, effective today, back to even par (if you include dividends). Their recent report showed good metrics, but I am wondering about the impact of the SLA negotiations vs the soon-to-be-imposed CVD and AD duties. Some would say we might be better off just paying the duties. At least that gives us some certainty. WEF is in a bit of a different boat than its peer group, since only a very small portion of their exports are SPF softwood-related. I believe < 15% of their exports are duty-related, due to either their species (eg: cedar) or higher value products.

What are your thoughts - keep or move on? Is this likely to be dead money until the SLA is resolved or is the CVD-AD duties going to provide some short term certainty? I am paid to wait via the nice dividend.

Thanks...Steve

Q: Can you recommend one or two lumber names that are a good pick right now? thanks

Q: Hi Peter + group recently I transferred some WEF stock to both my wife / my own TSFA (out of a cash non- registered account). If I understand the TSFA concept any $ increase in the price of the shares is noon taxable just like any other TSFA deposit. Ort should I have sold the shares outright and then used the $ to but something else ? Thanks for all your ongoing help /advise

Q: Any update on softwood lumber agreements? What are your thoughts on ADN and WEF? I hold a smidge of each and have been waiting to add to positions.

Q: Your response to Brian on Dec 15 included the following comment: "if you own 85% of your portfolio in high dividend stocks, then this is more of a concern".

I am a retired, conservative, dividend-income investor, with a pension, CPP, annuities, the above listed stocks and 3 income producing MFs (RBC Cdn Equity Income, Sentry Cdn Income, Sentry Global REIT).

I fit the 85% easily. I believe my portfolio is diversified by sector and by security. I also believe the securities have, for the most part, sustainable and growing dividends. I am a "buy-and-hold investor with reasonable tolerance for volatility.

Your comments and concerns please, along with any recommended improvements. Thanks...Steve

Q: If trade agreements are an issue with for the entire forestry sector, why is WEF down so much versus its peers? Other stocks like WFT and CFP are actually up since the election. Is there something specific to WEF that people should be concerned about or is it mis-priced by the market?

Q: This company seems to have sold off somewhat after the US elections. Would you consider this a buying opportunity?

Q: I have small positions (less than 0.5% each) in WEF and CCO, both at losses (20% down on WEF, 62% down on CCO). I am debating whether I cut my losses on each and consolidate this freed capital into increasing my position in CAE (currently at 0.5%: making this move would increase my position to about 1.2%).

In defence of WEF, I know that this is a cyclical company, and with the prospect of more construction in the US (I believe there have been some rumblings about increasing house construction in the US), I am aware that WEF could improve over the next 6-12 months. Also, it pays a 4% dividend to wait, so that would be another case to keep it. As for CCO, I am not aware of any tail winds for uranium in general, but I don't think CCO will head much lower than it already has.

On the other side of the argument, I am aware that hanging onto losing positions in the hopes that they improve is not a successful strategy. I believe that CAE is a company worth investing in, and I do plan to increase my position in it, either by adding capital to my investing account (which I will have to wait on until extra capital becomes available to me for investing), or redeploying my existing investment capital.

My question is whether I act now by selling these companies, or whether I hang onto them and wait until I accrue additional free cash to increase my CAE position. I am unwilling to sell my other positions in my account at this time. Thanks so much for your time, and I await your reply.

Q: Is it worth holding western forest. I have held it for two years and only get dividends no capital gains. Do you view it as a possible takeover?

Q: I noticed that WFT reported good results today. Would this be a good time to invest in a Canadian lumber company? Which companies do you like and why?