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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: In the globe today there was a somewhat negative article about GSY and cash flow.
No need to reprint the entire article, I am sure you have read it with your morning coffee.
What is your take on this should investors be concerned

A portion below


At the behest of the Ontario Securities Commission, which was looking over the company's filings as part of a "continuous disclosure review," goeasy moved a couple of line items out of one portion of the cash-flow statement and into another. As the company noted in a news release, the change had no impact on the company's net income, earnings per share, cash position or balance sheet.

The change in the company's operating cash flow - a measure of cash the company generates in the ordinary course of business - was massive, however.

The company had told shareholders that it had $153-million in operating cash flow (OCF) in 2016; the reclassification turned the number to negative $21-million. For 2017, $179-million in OCF became negative $89-million. Over two years, that's a swing of $445-million (OCF figures are rounded).

And yet, the markets shrugged. The stock has not moved. Analysts covering the company did not put out notes. This was not "material," the word for what a reasonable investor would find important, a couple of analysts told me via email.

I think there's something wrong here, though, when a primary measure of how a company generates cash from its business can swing that much, and no one seems to care. Are we looking at the wrong things - or do financial statements that are compliant with generally accepted accounting principles - GAAP - not matter?
Read Answer Asked by Leon on July 24, 2018
Q: What are your thoughts on MPC? I am trying to find a small cap real estate, non reit company that is growing their real estate rental units with reasonable dept. levels. I would prefer investment back into the company over a large dividend. Do you have any other names I can look into?
Thanks!
Read Answer Asked by Derek on July 24, 2018
Q: I have held AX.UN for quite some time. and I am up on it, solely through the DRIP. Would you recommend holding, and continuing to just build my gains from the dividend, or is there another real estate stock that would be better for the long term. My other real estate holdings are CHP.UN, FSV & CIGI.
Thanks
Read Answer Asked by Dave on July 24, 2018
Q: Hi,
What are your thoughts on Merck as an investment, the company’s potential growth and risk? My interest started in Merck because of their immunotherapy drug... Keytruda. Keytruda has eliminated some of my mom’s melanoma tumors and shrinking cancer in two other areas of her body. Other melanoma patients are seeing positive results. Melanoma cannot be treated with chemo. This drug is now being tried on some liver cancers and was initially developed for some types of lung cancer. I really don’t know a lot about this company and would like your opinion.
Thanks,
Kerri
Read Answer Asked by KERRI on July 24, 2018
Q: Hello. My parents are elderly, and we have taken over managing their financial affairs. Although difficult to predict, I expect my mother will still be alive for another 3-4 years, so that is the time horizon we are working with. They have total savings of about $2.5 million, which we are amalgamating from various mutual funds and from the sale of their house, etc. We are considering using the wealth management services of BMO. We have told them that we are primarily interested in capital preservation. My father has a pension, so their monthly income needs are met. The representative recommended the PIMCO Monthly Income Fund (Canada). I'm not sure if it the same one as has been discussed here before. The identifier on the sheet is "Series F fund code PMO205", described as a Global Fixed Income fund. In any event, they were recommending 65-70% in the above fund, and 30-35% in a "Dividend and Income Guided Portfolio" which consists of 25 blue chip Canadian and US stocks (I won't bother you with their stock selection; it looked okay to me). They said they would gradually move money from the income fund to the stock fund during market drawdowns.

My question is, what do you think of this PIMCO fund? One of my concerns is protecting their money in a market correction. Would this fund be okay? Also, are the bonds in general of high enough quality that they would not be downgraded into the high yield category if things really get ugly? Has it had any negative years?

Thanks for your help.
Read Answer Asked by Donald on July 24, 2018
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