Investment Q&A

Q: A recent negative article in Seeking Alpha by Timberwolf Equity Research raised a few points that I hope you can comment on. The company was not calling for a short on the stock so the article does not appear to be self serving, although that in itself is not much proof. So while the article appears to be based "on facts", it does not agree with your recent review of the company.

The article as best as I can understand it raises 4 points.

1. That Starbucks accounts for 35% of the company's sales (23% of revenue). They acknowledge the company does not state this but that they have figured it out.

2. Inside ownership. and therefore an alignment of management interests with that of other shareholders, is a mirage because the company has provided these particular shareholders with low interest loans that require the value of the stock as collateral and for the dividends to cover the principle repayment costs. Therefore, the company's management has an incentive to raise the dividend whether warranted or not.

3. Cash flow is miss-stated because the company excludes working capital changes as it only includes replacement capital expenditures and leaves out expansion capital expenditures (I won't pretend that I understand this). The upshot is that the company's cash flow is closer to $28 million rather than the $81 million stated by the company.

4. Share count is ever increasing because the company finances its takeovers with low interest convertible debentures which almost assuredly means that the debenture holders convert their holdings into stock. The authors estimate that this resulted in a 22% dilution in 2015.

Appreciate your insight into these matters.

Paul F.

Q: Thank you 5i for your excellent service!!!

I have divided up my portfolio into thirds.
One third is a diverse group of ETFs.
One third is cash and a group fluid group of stocks made up primarily from stocks you recommend. SJ, CCL, SIS, KXS... etc.
One third is made up of the seven stocks listed above. Do you have any concerns about any of these being a long term hold. I know Magna is cyclical but is that a concern?
Cheers,
Bryan

Q: Sorry for resubmitting the same question again. It seems that I am doing something wrong. Just realized that the name of the Company didn't appear on my last submission, so I am putting the company name and the symbol in the text, (Capstone Mining CSE.PR.A). My original question was sent two days ago, and probably did the same mistake.

I am in dilemma in choosing between the offer to convert series A to a fixed reset for five years at 3.271%, to convert to the floating rate preferred, initial quarterly rate 3.204% or to just take my losses and sell. What would you suggest, how safe is the dividends on this prefered now it is in the hands of the new company that bought Capstone and considering that the rate of return of over 6% based on current price? What would be a good replacement if income requirement isn't important and would rather have some growth and less dividend?

Thanks.

Q: Hi, PBH announced their plans to build new sandwich facility in Phoenix USA at an appx cost of USD 29 mln. It is expected to be operational in 2017. What are the implications of this development with respect to company's revenue and earnings ? Stock seems to have reacted favorably to news. Thnaks

Q: Hi, considering buying Loblaw. Is now a good time with the rather steep p/e of 42? Are their any better Canadian consumer staples other than couche tard? Thanks in advance

Q: I own loblaw but need another food stock. Which is cheaper premium brands or maple leaf or some other company. Thanks to awesome 5i.

Q: Saw BNN market Call with Ryan on Friday and another good, informative performance. I noticed when they listed 'holdings' for PBH, it showed a positive tick mark for guest position, household member and guest firm/affiliates. Only investment banking showed no involvement. I was surprised to see this as 5I sells itself as conflict free and I have never seen any possible conflict before. Comments please.

thanks

Q: I am resubmitting this question as apparently the symbols did not show up with my first question. Can you please comment on these stocks as to suitability for a GROWTH portfolio and if you have any concerns over any of these. Are there any substitutions you would make to this list? Thank you.

Q: I am looking at these 4 stocks for a combination of growth and income. Do you see any problem with these or do you have a better suggestion? Also, do you feel now is a good time to buy or would it be better to wait until summer is over?

Q: Hi, Friday was the monthly expiry of June listed monthly options. I am trying make some inferences out of the trading activity for these two companies on Friday June 17. CSU had very large individual orders (22,000 shares or more) on bid and ask about $510, just before market open. Stock opened and closed with large volume on open and close, without much activity and price change during the day. As for PBH, there was not much activity for most day and stock dropped like a rock in last hour of trade with almost 225,000 shares changing hands and closing at its low. Was it as a result of traders covering their positions on long or short side and does it signify future direction of these co.'s ? Thanks for your valued insight.

Q: Hi, a large block of 204,400 shares at $54 was crossed by Cormark Securities, yesterday. What could be the possible scenarios of the trade? Thanks

Q: I am a retired, conservative dividend-income investor with a pension, CPP, annuities, and hold the following: AD, AQN, ALA, BNS, BCE, CGX, CJ, ECI, FTS, PBH, RY, TRP, WCP, WEF, WSP, Sentry Cdn Inc, RBC Cdn Eq Inc, Sentry REIT, ZLB, XIT and Fisgard Capital.

I am looking to top up my consumer stocks, already having full positions in CGX, ECI and PBH.

I am also looking to top up my industrial stocks, already having a full position in WSP and those contained within Sentry Cdn Income.

Suggestions for new holdings with a dividend > 3% please.

Thanks for your help...Steve

Q: My parents purchased RBC Monthly Income and Dividend funds for me with the family allowance cheques. In recent years I have sold funds and purchased AW.un, AGT, BDT, DH and BPY.un. I have about $20,000. Would you suggest three funds, other than financials, that pay dividends and have reasonable growth prospects. Thank you

Q: Hi
If you could only buy five out of the six above listed stocks at today's prices (for the long term), which stock would you NOT purchase?

Q: Hi, PBH stock has been under constant selling pressure, after hitting an all time high of $59.81, one day after the quarterly release. I know, co. missed earning estimates, but outlook and growth expected from additional sandwich capacity coupled with C&C acquisition should be quite positive. Technically stock seems to be quite weak and may even go lower. Is there a reason to worry ? I have a full 5% position and would appreciate your comments. Thanks

Q: Lots of momentum behind Maple Leaf Foods. Owned them forever and sold out at $25.00. Now they are approaching $30.00. One analyst thinks they can go as high as $40 now that their restructuring is in place. How does MFI compare to Premium Brands a stock I don't own but have been watching.

Q: Hi, could you please comment on the recent volatility in PBH stock. A BNN guest attributed large market moves in stocks like WPK, PBH etc to portfolio managers' repositioning after a big run up in past 12 months. Thanks

Q: Would u buy premium brands at these levels for a conservative investor or wait for a further pullback?? Thks

Q: I guess I wasn't clear in my last question. Would you please rate these companies as to which would be your first choice, second choice , etc. for a 5 year investment and purchasing today. I have no US exposure but otherwise have a relatively balanced Cdn portfolio and need to deploy US$100,000. Please explain why you rated them as you did. thank you. This was the prior question: What do you think of Int'l FLavours and Fragrances and their latest quarterly results? How would you rate it relative to HD.us, PBH.us and STZ.us for a 5 year investment? Thank you.

Q: The president stated in its press release that the first quarter results were "right on plan". Although I realize this is only one quarter and record results at that, my concern lies in EPS being almost 20% below street consensus and a lower number than any I could find. This seems like very poor communication between the company and the street especially after the recent money raise and only adds to unnecessary volatility. Do you agree?