Investment Q&A

Q: Please provide recommendations in Canada & US for the following sectors to properly diversify a long term income portfolio :

Consumer Staple
Material
Consumer discretionary
Industrial
Utilities

Thanks

Q: I have five Canadian small cap stocks: ALP; EL; LND; PHM; and SPN. I have a couple questions on small cap stocks in general. What index(es) can I use in Canada and the United States to compare my small cap stocks to. What is your outlook for a turn around in the small cap space.

Q: some very good information. Thought I would pass it on to other subscribers.

https://www.oaktreecapital.com/insights/howard-marks-memos

Q: I assume revenue, and most expenses, for DR are in US dollars. Will the falling Canadian dollar have any significant impact on their earnings?

Q: The stock is down 17% YTD incl. 6% drop today. Any explanations why? There seems to be no news... SJ is one of the few companies that benefits from low CAD dollar, so I am surprised it is dropping so much.

Q: Regarding certain analysts recent advice to sell everything I would like to refer to a chart in Stock Charts that was published today on the Juggling Dynamite blog. The chart follows the value of the TSX and the $Cdn. The $Cdn leads and the TSX eventually catches down. 2002 TSX bottom 6000 & $Cdn at 62.5. 2009 TSX bottom 7500 & $Cdn at 77.5. If the TSX follows the $Cdn down to the current 68 cents, the TSX level will be 7000.

You keep telling us that nothing has changed. Maybe all assets are reverting to the mean from their elevated levels caused by all the QE. Almost every 10 year stock chart that I look at shows super charged growth starting about 2012.

The chart that I referenced is quite shocking and suggests that this correction could test the 2009 levels. Would you please comment.

Q: Both SLF and IGM are down 20% in the last 2 months. This is much worse than the market declines over the same period of time. Any reason why?

Q: In response to Bill's request for a DRIP site where shares are exchanged I highly recommend the following. I have used it for well over a decade and it is moderated and we have never had an issue with anyone.


http://www.dripinvesting.org/boards/boards.asp

Q: Hi,

Given the mkt direction, do you think Canadian banks are a good place to hide out for two years and should I wait or buy now?

Q: )I have tracked 9 ofyour Fri. recommendations ,as of now (3pm) they have dropped around 3.3%, the tsx has dropped 1.2%.What message does this send to me?

Q: I sent this question on Friday afternoon but it seems to have been lost in the deluge.

I would like to increase my holding in the utility sector for balancing purposes. I am looking for a solid dividend and some growth to balance out the more risky areas of my portfolio. I have looked at your answers regarding ENB, TRP and IPL and can't discern which one you favour. I am thinking IPL because it is the most beaten up and offers a high dividend yield. I have learned not to just chase yield but they are an exerienced company who have just increased their dividend, cut their cap x and provided thoughtful guidance (I think). The one negative I see is that much of their volume comes from the oilsands and perhaps there is fear that this supply will decline in this low priced environment because it is expensive to produce.

With this background, are pipelines a good investment as utilities and if so, is my thesis on IPL sound? Secondly, would Telus be a better "utility" choice as some analysts/advisors do include the telcoms in this sector.

Thanks for your insight.

Paul F.

Q: I currently have a holding in LRE which has a buy-out offer of $0.52 on the table from an anonymous Chinese company. I think this is to be voted on in February. Would it pe prudent to sell now at .30 or wait for the outcome at .52. By the way, Peter's appearance on BNN Friday was the most realistic advice I have heard anywhere since this downturn. Thans, John

Q: I hold a small position in Gluskin Sheff, which is getting hammered today, down 10% after an update that noted some revenue outflows.

Is this a game-changer in terms of outlook, or simply a hiccup that warrants taking advantage of the dip?

Q: As a follow up to the question asked by Richard regarding RBC I can say that anecdotally my late father starting buying bank shares in 1982. There were a number of occasions when he was advised by others to sell and he refused every time. He bought the shares for the dividend and the view that Canadian Banks were the safest Canadian equity. My mother and my siblings are very grateful for my father's wisdom.

Q: SJ is being hit fairly hard today (5%) on above average volume. Anything to explain this or is it just a bad market and some profit taking?

thank you

Q: Supposing the BOC drops the overnight rate on Wednesday by 25 basis points. ZPR would go South. CBO and VSC go North. XBB goes North. Am I correct?

Thanks

Q: Isn't the main concern on this that although the payout is well covered right now, many of the Alberta properties are perhaps empty but rent revenue still coming in under contracts and as they expire or if perhaps these businesses go under, the coverage ratio and other financial metrics will significantly deteriorate. How big a risk would this be for them? Is it quantifiable from the numbers they release? To ascertain if a distribution cut could occur sometime in the future...

Q: At the moment, the TSX is down 1.06%, supposedly on cheaper oil fears. However, your Balanced portfolio is down almost 2.5%, despite having only one oil related stock - which is up, ironically. Why would this be the case?

Q: Hi 5I Research team, Trying to read PHM' annual report. Some question marks:
On page 6 : " Revenue for the 12 month period ended September 30, 2015 revenue totaled $71.7 million up $50.5 million from the same period in 2014. The increase in revenue for the year w as driven primarily by the acquisitions of Black Bear, Black Bear North, Black Bear NH, West Home Health, Sleep Management and Legacy Oxygen in 2015, and Care Medical in June of 2014. Combined these acquisitions generated approximately $47.2 million revenue in the year from their respective date of acquisition. In addition favorable exchange rates benefited revenue by approximately $4.1 million." : the numbers seem to indicate an organic growth negative? What am I missing?
Bad debt expense= 6 M$ (approx 8% of revenues): versus 5% of revenue the year before: can we expect this to be a recurring expense? Is this a sign of bad management or a necessary bad that comes with the business?
Impairment of goodwill and customer relationships = 10 M$ : Isn't worrying to decrease the valuation of very recent acquisitions (Legacy, West Home, 0891532BC-a related party transaction, RMG and RMC)? Does it mean they overpaid for these acquisitions, bad allocation of acquisition costs or the new management is cleaning-up the balance sheet when starting their reign?
Stock-based compensation = 9 M$: Is it a one-time expense for the work done during the last fiscal year or is it a recurring expense? Written differently: can we expect other expenses for the acquisitions made in that fiscal year or exclusively new ones for future acquisitions?
Can you explain why and to whom the options were issued over the last +2 fiscal years (nearly 47 M! > 10% of shares)? Is it a way to pay the management in place or is it to pay while making new acquisitions and keep new "acquired managers" motivated?
This company seems to have a good strategy. The current year will reveal if operations are in good hands. But, the price paid for some acquisitions, and its accounting generate question marks. Do you agree?
Thank you for your collaboration, Eric (sorry for the lenght)

Q: I noticed that BYD.UN is listed in the Financial sector. Is this correct? I would have thought this was more of an industrial or consumer sector.