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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: Can you please identify if any 5i stocks in your 3 portfolios are "zombies" as defined by the following quote from Cresat:

" Crescat calculates that about 80 percent of Canadian non-financial stocks have been cash-flow negative in the past 12 months, which he measures as cash flow from operations minus capital expenditures.

That may be inflated by the the large numbers of “zombie” companies on Canadian stock exchanges, which the Organisation for Economic Co-operation and Development defines as those 10 years and older and whose earnings aren’t high enough to cover interest payments on their debts. In a September study, Deloitte found 16 percent of public companies on the Toronto Stock Exchange and its sister Venture Exchange are considered zombies, compared with 10 percent globally.
Costa said even if he excludes energy and materials stocks, 70 percent of Canadian stocks have still lost money on a free cash-flow basis. If you consider only non-financial stocks with a market value of more than $100 million, the share is still more than 50 percent, he said."
Read Answer Asked by Steve on January 18, 2019
Q: I am currently down 82% on this stock. I am in a Growth Portfolio. I have diversified across all sectors and geographies. I am considering selling and then investing proceeds in one of the following: XWD, CEF, or VGG.

Do you see any future growth potential for ACQ? If not, which of the 3 options would you suggest I invest in for growth.

Thanks for your continued assistance.
Read Answer Asked by Mauro on January 18, 2019
Q: I’m thinking of setting up two RIFF accounts (for my wife and I) with approximately 10 excellent dividend-growing companies (in each account) that have a good track record of growing their dividends, that provide diversity across most of the sectors and that would be able to provide most of the dividend income needed to meet the required annual minimum withdrawal from the RIFF's. Along with these dividend companies, I was thinking of adding a couple of ETF’s to add some foreign exposure (say, 25%). In addition to the income which the RIFF’s would provide, I also receive income from a defined benefit plan, CPP & OAS. I would like your opinion on whether this idea makes sense? Also, what companies, along with some ETF’s for foreign exposure, would you recommend? Deduct as many points as you deem necessary. Thanks!
Jake
Read Answer Asked by Jake on January 18, 2019
Q: ..with Husky pulling the plug on MEG how would you rank these companies as possible targets, or are there any others you think are attractive. thanks.
Read Answer Asked by Curtis on January 18, 2019
Q: Good morning,

I am struggling with the recommendation to sell WCP at current levels in exchange for Suncor.

Consensus ratings for WCP: 18 buys/1 hold.
12M target price: $8.68, or ~ 86% return from current levels.

Consensus ratings for SU: 23 buys/6 holds.
12M target price: $53.65, or ~ 26% return from current levels.

Suncor is a great company – no doubt. And I get that the recommendation does tie in nicely with upgrading to a "higher grade" energy play. But just wondering that when energy does turn if makes sense to continue to have exposure to the lower cap, higher beta WCP. I just really hate to sell here.

Read Answer Asked by Trevor on January 18, 2019
Q: If I read the news correctly Husky took up from tendered shares 50% of those outstanding at their bid price some $3 above todays price, and subsequent turnover is over 60 million. Assuming Huskey was a competent offeror an that the tendered shares were paid for what is to stop them acquiring the majority of the balance at todays much reduced price in the open market and would that be a competent and allowed strategy?
Read Answer Asked by Mike on January 18, 2019
Q: Some market chatter from MT Newswires found on TD. It says: 'Crescat Capital sees the Canadian economy heading for recession as the housing market buckles. "That might be bad enough for the banks but they face an added strain: outside the financial sector, more than 80% of Canadian companies aren't generating enough cash to support their businesses, the highest in the world," according to Crescat.
"Canadian banks will be left holding the bag and the ones to suffer from what is likely to be a major economic recession," Tavi Costa, a global macro analyst at Denver-based Crescat, said by phone.'

I was wondering about these 2 issues they raised, especially about the lack of cash.

Thanks in advance for your views.
Read Answer Asked by TOM on January 18, 2019
Q: Hi 5i! I'm a middle-aged subscriber that has picked up some of the 5i researched companies - most recently Kinaxis and BNS. I'm slightly overweight Kinaxis and Shopify since I see them as potential growth engines. KXS, TOY, NVDA, SHOP, FB, and BNS are all in my non-reg account. If I need cash this year for personal projects, which companies might you recommend I start selling? Thanks!
Read Answer Asked by Marc on January 18, 2019
Q: Aurora Cannabis announced an offering of convertible senior unsecured notes due 2024 and valued at $300 million USD. Net proceeds from the offering of the notes are to support its Canadian and international expansion initiatives for future acquisitions. The share value dropped ~10% on the news. May I have your thoughts on the market reaction? Thank you.
Read Answer Asked by Martin on January 18, 2019
Q: I sold DOL for tax loss reasons at the end of 2018. And now I am allowed to buy back, given the elapsed CRA time period is over. You recently mentioned DOL is a wait and show me company. How would I know went this "wait and show me" period is behind? Is it too early to buy DOL now?.....Thanks Tom
Read Answer Asked by Tom on January 18, 2019
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