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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: My self-service broker has in its inventory Sherritt bonds, having 7-1/2 years to maturity on 11 Oct 2025. The (annualized) yield to maturity is 9.8% .
To redeem the bonds at full value on the maturity date, Sherritt does not have to do well : it just needs to survive without defaulting on its debt.
I am fully aware that these bonds are not suitable for the safe fixed-income part of my portfolio, but rather would be lumped in with my equity investments in terms of risk.
What is your opinion as to the probability that Sherritt will, at a minimum, "at least barely survive" so that they would be able to redeem the face value of the bonds in 2025?
Thanks!
Read Answer Asked by Gregory on May 16, 2018
Q: I would like to have some exposure to the nickel market. Could you make a couple of suggestions as a way to play this commodity.
Thank you.
Read Answer Asked by Peter on March 12, 2018
Q: I have Sherritt bonds 8% coupon in my TFSA expiring Nov. 2018. I got a proposal from the company to buy them back. Here is the proposal:

Option 1: Auction tender - The company is offering to purchase their debentures of SHERRITT INTERNATIONAL CORPORATION at a purchase price not greater than CAD $950.00 nor less than CAD $752.00 in cash increments of CAD $1.00, for a maximum of CAD $75,000,000 in value of its shares. All shareholders tendering at or below the purchase price will receive the same amount. If more than CAD $75,000,000 were to be paid, shares will be paid on a pro rata basis. Subject to proration. Tax consequences: Disposition

Option 2: Purchase price tender - The company is offering to purchase its 8.00% Senior Unsecured Debentures due 2021 of SHERRITT INTERNATIONAL CORPORATION. The purchase price for its 8.00% Senior Unsecured Debentures due 2021 of SHERRITT INTERNATIONAL CORPORATION will be the lowest price which will enable the company to purchase common shares for a maximum of CAD $75,000,000 in value of its shares. If more than CAD $75,000,000 were to be paid, shares will be paid on a pro rata basis. Subject to proration. Tax consequences: Disposition.

Option 3: Do Not Participate. (Default Option)

What would you advise?
Read Answer Asked by Andrew on February 02, 2018
Q: Hello,

I have some cash in my TFSA, and I am interested in buying a stock with good growth in capital and dividend appreciation. I am a long term investor.

Currently in my TFSA, I have FAP, CHW, NEPT, PHO, SIS and S.

I am looking at TWM, Tidewater Midstream and Infrastructure.

What do you think of TWM? Or do you have a better recommendation?

Thank you very much.
Marc
Read Answer Asked by Marc on January 09, 2018
Q: Hello 5i,
Congratulations for your new website and thank you for your good work.

In my TFSA, I have the following stocks:

Aberdeen Asia-Pacific Inc.
Chesswood Group
Crescent Point Energy
Photon Control (You had recommended this one a few months ago, and I am up 16%. Thank you for the good recommendation.)
Sherritt Intl.

I am down 70% on Crescent Point and 55% for Sherritt.

I have a 10 year plus investing time horizon.

Should I hold onto CPG and S and just be patient?
If not, and you recommend to sell either one or both of them, what stock(s) would you recommend as a replacement?

I am looking for growth and income.
Currently, CPG is around $4,000 and so is S.
Thank you.
Read Answer Asked by Marc on November 03, 2017
Q: Good Afternoon
I am getting ready to take some capital losses as gains offsets. I will not need to realize all of the above; but in what order should I use them and if I sell would you buy any of them back? The $ losses are about equal in all cases.

Thanks and enjoy the heat
Read Answer Asked by Warren on September 25, 2017
Q: Scotia iTrade (and presumably other brokers as well) offers two different Sherritt bonds for purchase: Coupon 8%, maturity 15-Nov-2018, yield-to-maturity 43.94%; Coupon 7.5% maturity 24-Sep-2020, YTM 29.08%.
Two questions: (1) How can the earlier bond maturity have the higher YTM? It seems it should be the opposite.
(2) I assume that an annual yield of 44% essentially mean that the probability of bankruptcy by the first maturity date is very high. Is there a likelihood of any substantial "recovery" (i.e. less than 100%) in the event of default? What is your opinion of the risk / reward if I were purchase the 2018 bond?

Thanks!
Read Answer Asked by Gregory on July 27, 2016
Q: I own some of Sherritt bonds that matures in 2018. Would you agree that the probability of this proposal to succeed is very high? What does this mean to the chances of the company survival? Would you recommend taking the consent incentive in money or in warrants? Would it advisable to add to my holding of this bond? My holding is insignificant as a percentage of my total portfolio. Are bondholders entitled to receive the maturity value on maturity date, or would that force the company to file for protection because it might not be able to meet their obligation?

Thanks.
Read Answer Asked by Saad on June 28, 2016
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