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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: I have heard you use the EOITDA frequently.What does t mean and how useful is it for evaluating any stock?Thank yu and have a good day
Read Answer Asked by ebrahim on March 06, 2014
Q: What is your opinion on the Knight Therapeutics (GUD) financing at $3.50? The market seemed to act favourably today as it reached $4.50. Mr Goodman retains a significant ownership but do you see this stock trending lower when the financing closes on March 19th and these new shares can be sold for a quick profit?

Thank you
Read Answer Asked by Marty on March 06, 2014
Q: My Question in short:
Can you quantify the change in size of the alternate mortgage lending market due to the recent mortgage regulations changes in Canada? Can you also comment on the quality of said mortgages given that the regulations have essentially raised the bar on the mortgages that the big 5 will write up?

My Question in long form:
I’d appreciate you input on the change in the alternate lending market and any corrections you wish to add to the information I’ve provided.

From my research, there have been three sets of regulations changes to the financial industry in response to the 2008 financial crisis, the Volker rules, Dodd-Frank and Basel I, II, III. From my understanding, the Volker rules limit proprietary trading/derivatives and are thus irrelevant to this subject. The “Dodd-Frank reform” is a sort of blanket US legislation that is being written SEC and rolled out in pieces, some already in effect, until 2018. I believe it will have a direct effect on mortgage quality regulations in the US, but Canadian banks will be able to place there US operations in subsidiaries and thus Canadian operations will be unaffected.

On the other hand, Basel I, II, III and other OSFI policies will have a direct effect on the Canadian mortgage market in a two-fold fashion;
-Bank capital reserves requirements are more stringent from both a quantitative and qualitative measure.
-Rules regarding who qualifies for mortgage insurance have been elevated.

Benjamin Tal recently commented that these new regulations will raises the bar on who qualifies for a big 5 bank mortgage and thus create a new high quality tranche of mortgage business for alternative lenders such as HCG. Would you agree with that hypothesis? I believe the mortgage market is around 1.2 trillion in Canada; do you have an estimate on the size of this tranche of the market? Are there any other alternative lenders similar to HCG that stand to benefit from the change in the market place?


Thanks in advance for answering my question and also for the great research reports you regularly deliver.
Read Answer Asked by Emile on March 06, 2014
Q: In response to Chris (and Greg) per Frac Sand companies, there is a private one called Canadian Silica and a small cap public junior named Stinkine Energy (SKY.v).
Read Answer Asked by Evan on March 06, 2014
Q: Hi - Gear Energy GXE just released an update and indicated a NAV of $4.23 I noted they are trading right at this price - my question is what is a typical price to NAV ratio in this sector and in this case would GXE be considered under valued? Thanks -terrific service you provide.
Read Answer Asked by Robert on March 05, 2014
Q: What are some some examples of light oil and heavy oil companies-there seems to be a feeling of increased light oil on market ?
Read Answer Asked by terrance on March 05, 2014
Q: Good Morning Peter and Team,
I have been taking a look at Macro Enterprises (MCR- TSXV). Upon reading the most recent Ink Insider report I noticed that one of the two founders (Mark Dodge) has recently been selling down his stake in the company. However the other founder (Frank Miles) still owns about 30% of the outstanding shares. Being a value oriented investor (However I am slowly coming around to your philosophy) I believe that MCR looks cheap with compelling long term prospects to boot. The recent insider selling may explain some of the recent weakness in the share price. What is your opinion of this company ??? Thank you for your help. DL
Read Answer Asked by Dennis on March 05, 2014
Q: Hi Peter
Could you provide an opinion on Brompton Lifeco split LCS
Thanks
GUY
Read Answer Asked by Guy R. on March 05, 2014
Q: Hi Peter,

Hoping you and team can provide some advice on when to sell a stock. I consistently struggle with when to hold and when to sell so have always erred on the side of holding. This has generally worked out for me with the exception of cyclical stocks. I have held Magna for a very long time and it is creeping over 8% of my portfolio and wondering if this is the time to trim a bit. However, the momentum in the stock is quite strong and so I continue to dither and sit on the sidelines. Your advice would be helpful.
Read Answer Asked by kelly on March 05, 2014
Q: I've been reading quite a few articles recently about the high level of margin debt in the US. What is your opinion on the correlation between margin debt levels and major stock market corrections. Apparently margin debt levels are very close to where they were just before both the 2000 and 2007 corrections.
Thanks for the great service.
Read Answer Asked by Andrew on March 05, 2014