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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: Upon reflection on your answer about my earlier question concerning thinly traded stocks (SYZ), I would like to suggest a change in how 5i prices portfolios. I don’t think it will be popular with you.

I don’t know how many subscribers 5i has but I’m sure it’s substantial. By what happened this morning on the markets after you made a number of portfolio changes late yesterday, your base is enough to move markets, particularly in thinly traded stocks. Members will never be able to match the stated returns of the portfolios simply for this reason. Members can mimic the trades and keep the exact portfolio composition but we are at the mercy of the markets the following day when we try to make the trades required to maintain the sameness. Two stocks you sold outright were SYZ and ITC. Both traded down at market open (SYZ substantially). Another you bought, RHT, was up on opening on strong buying demand.

5iResearch announces portfolio changes after markets close and uses the previous day closing prices in costing out portfolio changes. But members don’t have this luxury of selling or buying a stock at the closing price of the day before. They line up in queue and do their transaction at the start of the following market day. My suggestion is for 5i to be transparent and price all trades at the opening prices of the following day. That way there is a sense of alignment with what the stated portfolio returns are and what members can expect to get.

5iResearch is a good service. I’ve been a member for years and have benefitted. Are you conflict free? In the traditional definition, you are but you have a vested interested in achieving high portfolio returns. This is your marketing tool. I have no problem with this but feel you need to be open with members and attempt to provide a portfolio return that members have a chance of achieving.
Read Answer Asked on February 17, 2018
Q: Hi Group appreciate your input on the following . Why are we holding CXI + GUD both have been off (trading well off their highs) for a considerable amount of time . Why are you still recommending holding these poorly performing stocks why not sell them and get into something that is trading upwards??. What do you recommend and why Thank you
Read Answer Asked by Terence on February 17, 2018
Q: This is submitted as a customer who simply wants to improve relations and responses through communications. Do with as you will.
Your response to John and others regarding portfolio moves on ABT and SYZ seemed rather sharp. I speak for myself only, but I doubt if I am alone when I say that I value your services first and foremost for the educational aspects; from blogs to reviews and questions. That said, I personally feel that your communications could have been improved by perhaps reviewing recent past responses on impacted stocks prior to updates being released. In this manner explanatory notes (for example), could be included and head off confusion/ consternation.
Read Answer Asked by Stephen on February 17, 2018
Q: Good morning,
5i must be getting to be quite a market mover! Syl. is down significantly, VB and RHT are going gangbusters. I think I might wait on these.
Cheers
Chris Benson
Read Answer Asked by Christopher on February 17, 2018
Q: In your email of February 15 you provided a list of changes to portfolios and reason for these changes. (Model Portfolio Changes) where can I find a copy of these reports on your website?

Thanks
Read Answer Asked by Saad on February 17, 2018
Q: This is not a question, but rather a comment on your statement that ALA.r distributions are mostly income for tax purposes. That is incorrect. It is mostly ROC. ALA put out a link to the month-by-month income vs ROC for distributions in 2017 here:
https://www.altagas.ca/sites/default/files/2018-02/Subscription%20Receipts%20Taxation%20Information.pdf

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RE:
Asked by Rajiv on February 14, 2018
5I RESEARCH ANSWER:
Utility and income stocks are not having a good year at all, on fears of higher interest rates. ALA is down 9% YTD. But we have no particular worries on the company itself and do not see the dividend at risk. As 'part' of a portfolio designed to generate income, we would be comfortable with it. Note the receipts pay interest income (for tax purposes).
Read Answer Asked by arnold on February 17, 2018
Q: Vanguard has come out with some total portfolio ETFS and I'm wondering what you think of them. They include a basket of vanguard ETFS, a low MER and are rebalanced regularly. I have two questions:

1. I was thinking of using one for my 2 year old daughters RESP. What are your thoughts on this? And if you like the idea would you go with VGRO or VBAL?

2. I 'm also considering maybe using them for my RRSP in the future as it would be an easy solution. However, you've mentioned before never to have more than 10% in one ETF? So in this case how safe would it be for someone to have their whole RRSP in this? Does the fact that it is made up of underlying ETFS make a difference? If at some point vanguard decided to discontinue the product, what would happen to the money?
Read Answer Asked by Carla on February 16, 2018
Q: Hi 5i,

With recent Q4 earnings announcement beating analysts' estimates Q4 EPS by $0.03 and revenues by $2.6M, and with the sale of its division to Google why is the market reacting negatively to such news? Also there is an analyst upgrade. Appreciate your insights!

Read Answer Asked by Sean on February 16, 2018
Q: This is not really a question but an observation. In response to your reply to Gervais copy below you indicated you would give Abt “another quarter or two.” I was therefore quite surprised/disappointed when you announced next day the sale of your full position.
John

Asked by Gervais on February 14, 2018
5i Research Answer:
Results were not great, and we would like to see more than a 3% revenue increase. EBITDA margins and cash flow improved, which is positive. We are still OK with its prospects, but it did miss most estimates. We will give it another quarter or two.
Read Answer Asked by John on February 16, 2018
Q: With just about every car manufacturer bringing out electric cars in the near future, how is the increase in electricity going to be produced? In Alberta 45% of their energy is produced by coal; 10% of energy in Canada is produced by coal and it is around 40% for the US. Hydro and nuclear plants are very expensive and time consuming to build; and getting new ones built are extremely difficult. Are any of these existing plants under utilized? Wind or solar power - I don't think so. So, does that leave fossil fuels to take up the increased demand? If that is correct, which existing energy companies would you think are best positioned?
Read Answer Asked by stephen on February 16, 2018
Q: Hello,

We are seeing M&A activity in the REIT space. Any thoughts on why we have not seen much activity yet in the beaten down energy sector?

Regards,

Robert
Read Answer Asked by Robert on February 16, 2018
Q: ATE is set to release final Phase 2b results of their lead drug ATB-346, in 4weeks. I'm curious if you have any relevant information on the outlook of this drug and the company overall? I understand GUD has funds deployed here. And my main question is if the trial results show less GI tract bleeding (the issue with prolonged doses of Naproxen) and better efficacy results than Aleve then how could the drug or company's valuation be estimated? Sales numbers for Bayer's Aleve that could be extrapolated? thanks
Read Answer Asked by Gordon on February 16, 2018
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