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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: Hello 5i

I'm thinking of selling both MDA and EFN (down 30% on each), and consolidating them into MAL. Do you think this would be a good switch? I understand that EFN is unrelated to the two others, but it's a small holding and I would like to consolidate it into a more attractive name.

Thanks,
Jordan
Read Answer Asked by Jordan on June 20, 2017
Q: Hi there, as a follow up to your response today on NYX Gaming, can you please provide further details to your comment " Insiders have been buying"? This may help shed more light on how confident insiders feel about their stock/company.

Which insiders have been buying?

When have they been buying, recently after their last quarter or before?

How much have they each bought recently this year?

Buying small amounts may just be a token gesture, but large amounts may indicate true confidence of things to come, yes/no?

Thanks!
Read Answer Asked by Hussein on June 20, 2017
Q: First, a quick comment on Patient Home Monitoring regarding your response to Robbie's inquiry this morning. I agree the board members need to go but it's the present management that has turned around the debt, margins, revenues and general focus of this company and should they not be credited with doing a very difficult job in the face of such negativity as this stock has seen over the past two years.
I am building an income portion of my RRSP and currently hold KWH.UN, FC, HOT.UN and ECN.PR.C and would like an opinion on adding BCE and HR.UN. Canada is "possibly" ready to raise rates so are my present holdings and additions facing headwinds for that reason. I want to hold them for years and would be happy with just the dividends.
Thank you.
Read Answer Asked by Steven on June 20, 2017
Q: Hello to 5i team,
I've been reading up on a potential investment opportunity: blockchain technology. More specifically, I'm curious to know your thoughts on applications of the technology outside of Bitcoin and Ethereum which are too volatile for my tastes.
I would prefer to buy shares in public companies that offer the technology to businesses in other sectors and that have the potential to grow steadily long into the future.
These companies need not be geographically limited to Canada. Finally, do you know of any solid sources of information on the technology, in particular the negative aspects such as hackability of the system?
Thanks in advance, Robert
Read Answer Asked by Robert on June 20, 2017
Q: Hi guys.
Feeling a bit deflated. I joined pretty recently and decided to take a chunk of cash and put into your highest rated stocks above. In a short couple of months I am down almost 10%. Every one has lost money. Are they still all in favour. Do I just plug my nose and wait? Also, I have some short term cash I need to park. Was going to put half in Apple with the recent pull back....thoughts? Any other ideas for a two month hold?
thank you
Read Answer Asked by Brigid on June 20, 2017
Q: I hold the following ETF’s in a Non-Registered account. It is sort of a general purpose portfolio with a bit of emphasis on the health care sector (just because I think it is coming due). My question is with additional cash to add should I look for another ETF or add to the existing ones? I guess I am saying do I need more diversification or is there another particular sector I could emphasize?

Canada
iShares S&P/TSX 60 Index Fund

US
Vanguard US Total Mkt Ind ETF
AdvisorShares Focused Equity

Europe
Vangrd FTSE Dev Europe All Cap

Health Care
BMO EqWt US HthCare Hedged CAD
iShares Global Healthcare ETF

Emerging Markets
BMO India Equity Index ETF
Fairfax India Holdings
Fairfax Africa Holdings


Read Answer Asked by David on June 20, 2017
Q: Is there a way to determine whether the dividends paid out by a company will be taxed as income or will receive the dividend tax credit, in an unregistered account? for example: enb.to, enf.to, bep/un.to, bip/un.to, bns.to, ala.to, bce.to, eci.to, etc. I am looking for solid companies with growing dividends where these dividends will be taxed more favourably as dividends and not income. Would you have a list of suitable companies? Thank you.
Read Answer Asked by A on June 20, 2017
Q: Peter and His Wonder Team
I am down a ton on bother of these. I do not need to liquidate but not sure what to do...hold or sell. Since they have both been hammered lately would it be better to wait for a rebound before selling? On the other hand do they have any longer term potential? Your thoughts please!
Thanks...your insights are always valuable as we retail investors navigate through tricky waters!
Dr.Ernest Rivait
Read Answer Asked by Ernest on June 20, 2017
Q: Thank you for answering my question on the names of the companies that have been deleted from the portfolios for underperformance. You told me in advance that it would take some time to respond, but you did. And that's why I subscribe. It's great to align with people who keep their word and are up-front. While some of the choices we make could turn out well or not, integrity can always be upheld. I hope you charged me about ten or twenty questions for the response. -Jerry
Read Answer Asked by Jerry on June 20, 2017
Q: Would you put money into biotech seasonally ? In the past I have done well on Celgene ... However , I have taken quite a hit on Gillead, so I am cautious.
Or should I look at the ETFs for a broader/safer play ?
Read Answer Asked by Thomas on June 20, 2017
Q: I bought RBA at 30, rode it to 52 and now it is 39 and change as of Friday. I thought it would be a steady stock for a good or poor economy. Last quarter was bad, but was compared to a record quarter from the previous year. What is your opinion of this stock: hold or sell? Thanks
Read Answer Asked by Richard on June 19, 2017
Q: My question concerns a robust method to estimate free cash flow.I have been running some calculations as part of my investment process and I make use of Free Cash Flow extensively in my models.

Usually I just use Operating Cash Flow - average of last five years CapEx. However in many cases such as GIL there are large variations in working capital from one year to the next. Management can boost operating and free cash flow by reducing working capital in the short run. This is a one-off rather than permanent boost to cash flow and can give a misleading measure of sustainable cash flows. The opposite is also true and management can make short term investments.

Some authors recommend removing changes in working capital from the calculation and defining free cash flow as Post-tax profit + Depreciation and amortization - stay in business CapEx. The stay in business CapEx is then estimated as the greater of the average of last five years CapEx or 120% of depreciation. Sometimes this adjusted definition of Free Cash Flow is also called owner earnings or Cash Profits.

With respect to GIL this approach certainly seems to give a much better free cash flow figure, but I wonder if this is wishful thinking? Is a company that over five years or more has to constantly deplete its working capital really showing us that it actually has a higher CapEx requirement? I would appreciate your comments.
Read Answer Asked by Andrew on June 19, 2017
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