Investment Q&A

Q: Hi 5i team,
Re ECN, which is in the ‘growth portfolio’, is the special dividend of $7.50 per share only payable to shareholders which are on the book as of Aug 10, 2021? Shares purchased after Aug 10 would not be entitled to this special dividend? Thanks.

Q: What is the reasonable counter-argument to using my 10% cash holding to buy ECN for the special dividend? It's a good company so I'm fine holding after to ride out any market volatility, and it doesn't seem to have any especially severe company risk compared to peers...

Q: i do not ask many questions, i am a seasoned investor but ecn has me stumped.
hudson did an amazing deal-will close within 4.5 months from now and payout 7.50 a share to shareholders-the stock should be at 15-16, i saw the interview with hudson on bnn -he is a shrewd as they come-he said they will only do tuck in acquisitions for now because prices are to high.the market is valuing ecn like after deal closes the stock is worth 2.50 -is this the greatest opportunity to buy this stock or am i just wrong. dave

Q: Hi 5i,

I own the Preferred shares of ECN. They have just sold a major part of the business and are going to pay a special $7.50 dividend to the common shareholders. The way I see it, are they not taking away a lot of the security of the preferred shareholders by paying such a large common share dividend? Do the preferred shareholders have a voice in this matter? Can the company just dividend out everything leaving the preferred shareholders holding a worthless piece of paper?

Your thoughts on this are appreciated.

Q: A follow up question to your earlier response. If the company is paying such a high special dividend does that mean that Mr Hudson and the board did see better uses for the proceeds? After the sale the company will be much smaller, slower growing (from what I can tell but I may be wrong) and without the cash available to grow meaningfully by acquisition. Do you think this is the start of the end game for ECN where the rest of the company eventually gets sold?

Q: I am sure you are tired of ECN questions by now, but I have to ask;)

Do you have a good way to evaluate what the leftover divisions of ECN will be worth on a per share basis?

I assume one can't simply equate the amount of revenue left over.

I am not skilled enough to figure that out, but I am sure someone is.

Is there a bit of a disconnect here or are the left over segments only worth ~$3.5 a share.

As always, thanks for the great service.

Q: I'm thinking that I want to remain invested in ECN because I like how they think and their results. I'm thinking of buying more shares in the coming days which ended the day barely up from the day before and I expect it will not fall the full $7.50 when it goes ex-dividend which would give me the post-dividend shares at a cheaper price than buying later. I would do this in my RIF and TFSA so there is no resulting tax. What do you think of this idea?

Q: Could you enlighten me about just why ECN is selling off a big chunk of their business and then paying a special dividend to shareholders? From what I can see and what you've said so far it will go from a $2.5 billion dollar company to a half billion dollar company. It will pay us $7.50 a share in a special dividend, but then the value of the shares we hold will likely drop by the same amount, if not more, since larger investors will probably abandon the newly shrunk company. So where is the benefit for shareholders in this action?

Q: Can you please comment on a special dividend that would be paid $7.50. Stock is only up .22 cents right now. The stock should go up by at least $7.50. Do you think the stock would move up by at least $7 to 7.50 once the date is announced? Do you consider buying the stock to collect the special dividends?

Am I missing something here? Do you expect the deal would not be completed?

Thanks for the great service

Q: Regarding Mike's question,that $7.50 dividend can't be right,looks more like $0.75 the way the stock is reacting!!

Q: With something like 2/3rds of ECN valuation coming back to me as a dividend (!) I will be losing a fair bit of my financial exposure within my portfolio. I do like the smallcap Fintech space. Do you have any suggestion on where to start looking to gain more exposure? I have GSY on a full tank and so not an option. Should I buy more ECN now or wait?

Q: Will the ex dividend date for the special dividend be at a future date??? Trying to assess whether to buy the stock to take advantage of this payment. Thanks

Q: Can you comment on ECN earnings and the deal announced today. How does a $7.50 special dividend make sense for a $10.65 stock? Will the stock price spike and then drop after it goes ex-dividend?

Q: My TFSA is pretty much the way I want it. But now I'm organizing my non-registered account. First, Is there too much overlap between BAMR and SLF. (if so which one would you prefer). Second, Is there too much overlap between FTS and H (if so which one would you prefer. Could you put all of these in rank order, best fundamentals first. Finally, should I just take equal sized positions in all, even position sizes end up being quite small, like somewhere between 1.5% and 2%. If you think those size positions are too small I will eliminate the last 2 or 3 from your rank ordering. I mainly want the dividends in a set and forget style setup, and I will add to positions as funds come available. Thank you again for excellent insight and advice. I learn an enormous amount from the Q/As daily.

Q: I am looking at acquiring 5 stocks based on potential long term return (5 year minimum). From your growth portfolio looking at AT, DOL, DOO, ECN, GDI, MRS and OTEX. Three others I am looking at are EQB, SDE and VMD. In what order would you purchase them and would you purchase them now?

Q: Has ECN reached its potential or does it have some room to run yet? As the Covid crisis improves and people do less renos, shopping ect. will this effect share price? Finally are they in a position to aquire another company to grow? Thanks

Q: ECN is expected to show strong earnings over the next 12 months and even now after a nice move in the share price shares are still selling at a very reasonable multiple. Based on the earnings projections and the nature and size of the company where would you see the shares trading over the next 12 months?

Q: I’ve owned Ecn since inception, it ran up over 10.00 today. Do you think it can run further, is it a hold or buy at this level? What do you think about long term risks like interest rates etc.

Thanks

Q: Hi 5i team,
I'm trying to decide between Go Easy (GSY) and ECN Capital, both of which have been on terrific runs. How do you view their current valuations, their prospects for further growth and risks involved with each and how will rising interest rates affect their businesses? Finally, which would prefer currently if you had to make a choice?
Thanks for your great service.
Bob

Q: ECN through its subsidiary in the Us has a deal with Sam's Club to help with financing of home repairs & renovations. Is this deal material to ECN or just a small add on? Thanks for your great guidance.
Dave