Investment Q&A

Q: Hello 5iresearch,

Wondering if you could comment on the recent events unfolding at Rubicon. It has received 50 million from the CPPIB, and has posted its advancements on Vimeo and its website. Do you think it is fairly valued here? Will it get a different type of evaluation when it actually starts production in Q2 2015 if it goes as per plan? Also, what companies would you compare RMX to once in production? Possible take out candidate? Lots of questions. Thanks for taking the time to investigate the potential or lack of potential of this company.

It is much appreciated.

Arturo

Q: Power Corporation just raised their dividend by 7%. It's the first time since 2009 they raise their dividend. I've held the stock for over a year and I enjoy how safe it feels. It doesn't seem to get much interest because of its low growth. What do you think of the earnings? Do you expect the stock to move up or should I expect the same capital return of the last 12 months?

Q: I have a well diversified portfolio aligned with your three portfolios. I got an additional $16k to invest for 18 months.
I am looking for a stable investment with a good dividend.
I understand that 18 months is a relatively short period but I hate to leave the money in a saving account.
I am inclined to buy BCE an ENB and I am opened to other suggestions.
I will appreciate your expert opinion.
Thank for your excellent service
Raouf

Q: I am in a big hole on BXE,YRI,SGY,FRC and WIN. Apart from these I hold AYA and AVO. What do you suggest??

Q: Would appreciate an update to your assessment of GE: whether the potential special dividends, share buybacks and financial spin-off make GE a compelling buy?

Q: In his review of the markets this week Jeff Miller suggests that the rate rise is a spike and not the beginning of an inexorable upward move. I would appreciate your thoughts on the recent interest rate rise.( I copied his comments below)



My own investing is firmly linked to economic fundamentals. The market disparities cited this week mostly reflect trader or pundit lore. Here are the key points:
•The interest rate spike has nothing to do with the Fed and little to do with liquidity. (See Ben Carlson).
•Interest rate levels have only minor implications for stocks – at least until they move much higher. Stocks do very well in the first portion of interest rate increases, especially when stronger economic growth is reflected.

So why the bond mystery. I have offered this hypothesis in the past. It still deserves a more complete explanation, but I will share the outline.

Many players have a “carry trade” where US Treasuries are the investment, not the “funding currency” as has often been the case in the past. Some funds have put it on explicitly with leverage, maybe 15-1. Some have it without leverage. Some merely choose an “unusual” asset allocation. Some have a currency hedge, but others are “going commando.” This explains a lot.

Whenever the dollar drops, some of these players are stopped out or get a margin call. Here is some evidence from 361 Capital:

06_macro_small

Whenever US rates rise more than the funding currency, we see a similar effect. Traders are stopped out or get a margin call.

None of it really has anything to do with the strength of the US economy or the prospects for stocks, but it provides plenty of grist for the media mill

Q: I would like to suggest to Warren that he might consider Keystone, or as they are some times called Keystocks.com.They are a bit on the pricey side, but with one pick you can more than make your money back. I,ve been a happy happy member for 6 years and use them as my primary source for stock picks with 5i and BNN as my confirmation info. Profitable investing!

Q: suggestion regarding some members repeating recently asked questions - I wonder if placing the "Ask a Question -Search by Symbol, etc." at the top right side instead of at the bottom right would be a way to encourage questioners to avoid repeating recently asked enquiries - just a suggestion as I also see this point.

Q: With regard to Warren's question about other investing newsletters, I have found Eddie Elfenbein's Crossing Wall Street to be a useful source. He maintains a "buy list" of 20 US stocks that he revises once a year (and only 4 or 5 changes annually). A weekly email provides updates on the stocks and useful macroeconomic perspective and helps cut through the hysteria and noise of the market (and much of the TV commentary). There are more frequent blog updates too if you are interested. Most years, his 20 stock list beats the S&P. Over the last 9 years, it has returned a compounded 151% versus 99% for the S&P. Note that this includes the market collapse in 2008. Finally, he is not selling anything and it is free.

Q: As a member for approximately 1 year now I want to compliment your group for having what I think must be a strong stomach towards answering the same questions over and over. Often the same or very similar questions are asked by different people and often within a day or few days of each other.

Your response are consistent which is great and should provide conviction to the members.

This reinforces to me that most people do not read and/or understand what they read. Or they are so myopically focused on themselves to not see the trees or the forest presented in front of their very own eyes.

Some members appear to rarely read the earlier posts and thereby repeat a previous question.

It appears many, if not most, retail investors, which I am one, listen to the news way too much and trade too much (which I try to not do).

Have a great day.

Stan
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I agree with Stan’s previous comments. Since questions “build up” over a nightly (and weekend period) basis why wouldn’t 5i save their bullets in addressing the repetitive questions in one swoop on favorite companies via the question/answer format, or better yet, give updates in batches by way of email to subscribers? Isn’t long term investing the mantra that 5i preaches? Pretty sure the 5i team have better things to do to improve our membership than repetitive answering day in day out. Seems like a lot of repeat answering is displaced by 5i (even copy/paste in some cases) when it could be dealt with in a more efficient fashion. Good site here at 5i with Mr. Hodson at the helm but there are definitely ways to improvise....regards.

Q: How much are the rights worth to either sell or buy more?
Is their value diminishing with time
Thankyou

Q: Regarding 5i's May 8 assessment of Trimac's Q1 earnings, the company at its website http://www.trimac.com/page/InvestorRelations
has very different and much worse numbers which would explain the stock's 12% tumble since pre-release.
Would you like to restate your outlook for this stock based on the different numbers and would it still be a top pick as it was on BNN last October? Thanks, J.

Q: I use 5i as a double check on my thinking quite often. Am looking for another good investment type letter - focusing on North American equities, a targeted approach and longer term holds. If you could maybe give me three of four suggestions that come to mind I would do some leg work to see if they match up with me. And this letter like a good stock holding, is a keeper.

Q: As a member for approximately 1 year now I want to compliment your group for having what I think must be a strong stomach towards answering the same questions over and over. Often the same or very similar questions are asked by different people and often within a day or few days of each other.

Your response are consistent which is great and should provide conviction to the members.

This reinforces to me that most people do not read and/or understand what they read. Or they are so myopically focused on themselves to not see the trees or the forest presented in front of their very own eyes.

Some members appear to rarely read the earlier posts and thereby repeat a previous question.

It appears many, if not most, retail investors, which I am one, listen to the news way too much and trade too much (which I try to not do).

Have a great day.

Stan

Stan

Q: just a final point to the CSU debentures. One must be aware the link to inflation is NOT the inflation rate at year end BUT the percent change in inflation rate
It is reset each March 31 at a rate equal to the annual percent change in the All-items consumer price index during the 12 month period end Dec 31 in the prior year. WHICH may be negative or positive plus 6.5%
The rate will not be less then 0%
This is the link to inflation IE the % change plus 6.5% NOT the inflation rate plus 6.5%

Q: A slight correction to your response to Noel re the CSU RTS. The exercise price will be $115 per 100 of principal as indicated below. Perhaps you can expand your response to include something on the merits of the offering at the published price of $115.

"The Rights will be exercisable until 4:30 p.m. (Toronto time) (the "Expiry Time") on September 15, 2015 (the "Expiry Date") at a price of C$115 per C$100 principal amount of Debentures purchased."

Many thanks. Bob

Q: Hi there guys. I need you to elaborate further on your reply to Michael regarding CSU.RT.A. I have 150 CSU shares so I received 150 RT.A units. I have lots of stock experience but none when it comes to rights. Please explain what I have the opportunity to buy, how much I would be paying, the rate of return on what I am buying etc. Is it a bond I would be getting? Can I buy more than the 150 RT.A units permit? How would I exercise these things? Why has the value of RT.A dropped by half since they were issued? Can you tell I'm pretty clueless on this stuff? No need to respond to that last question.

Q: I first bought csu on your advice below $200. ( thank you) your report is now dated quoting a lower price and a much lower PE than is now the case. There is now only 1 buy and 6 hold/sells and a PE well over the comfort zone according to Thompson Reuters. Will you be updating your report soon? Should I consider selling some?
Also, should I excercise the rights, and/or should i consider buying more rights?

Q: Hello,

How low can WIN go? Is there any price support based on fundamentals?
Considering the yield would you advice on double down to park some money for at least 1 year? Is XSR better for this purpose?

Thanks
M

Q: Could you please comment on May 14 results, their payout ratio, EPS and your outlook? Thank-you.