Investment Q&A

Q: Peter & Ryan-- Mary and I have about 2 million dollars invested in the Mawer family of funds. These funds are fully managed by an investment counsellor and comes with a MER of 1 %. Our intention was for the funds to be used for estate planning because we have enough other income to live on over and above these funds..
Our question is to get your opinion on what to do with these funds now that they are put up for stratigic review and possible sale.
Other than putting the company for sale,we have been very happy with everything they have done for us. Thanks in advance
Pete and Mary

Q: Your thoughts on SIM and their Q3 financials?

Q: This is following on my previous question, Here is the information regarding this new fund from Spartan.
I do value your opinion on this one and how it rates regarding risk factor. Thanks

LSQ – which has been quite successful in pursuing other market-neutral arbitrage opportunities – anticipates that its SPAC arbitrage strategy will achieve double-digit returns on a portfolio basis using modest leverage (3x) with a very low-to-negative correlation to other markets, and with low drawdowns. We intend to pause fundraising once the strategy reaches $100M.

SPACs and the SPAC Market

- For those unfamiliar with SPACs, they are publicly-traded shell corporations that raise capital with a view to acquiring an operating business. Once a SPAC is IPO’d in the public markets (at say $10/share), it typically has 18-24 months to find an acquisition (capital raised is held in short-term money market instruments until deployed).

- When the sponsors of a SPAC find an acquisition, the underlying investors can either (#1) vote against the transaction and redeem their shares at the SPAC’s original IPO price (in this case $10), or (#2) vote for the transaction and participate. In an increasing number of instances, SPACs are permitting investors to vote for the transaction and redeem their shares (again, at their original $10 IPO price, per our example).
- In addition, SPACs are usually issued with warrants entitling the holder to participate in the SPAC’s potentially-successful acquisition. These warrants can also have a tradable market value.
- While SPACs can vary greatly in terms of size, quality, experience of the underlying sponsor, etc., for a SPAC investor, the worst-case scenario is a guaranteed return of capital at the SPAC’s IPO price (again $10 per our example), plus the residual value of any warrants, while the best case is participating in a very successful transaction.
Since SPACs are plentiful (33 have been issued in 2018 so far), trade on the open market (usually Nasdaq), frequently at a premium or discount to their original IPO price, and have a known ‘worst-case scenario’ and ‘timing’ attributes, they present considerable investment opportunities for a hedge fund manager with a detailed knowledge of the sector.

Please see the attached materials for additional details.


Seed investors – i.e., the first $10M – are entitled to the 1.5% & 10% fee structure with the right of seed investors to double their investments at that same pricing level during the term of the fund. We are looking to launch early in Q1 – likely end of January 2019.
We are in the process of compiling our order book so please let me know if you are interested in having an intro call and potentially allocating.

Q: Hi Peter can you comment on earning thx Kim

Q: I was wondering your opinion about Cypher Pharmaceuticals and Centric Health Care. Would you buy either of these and could you give an explanation, thanks
Mary

Q: I have owned VII just long enough to catch the slide. Looking at your July answer on this stock, would you recommend jumping ship or buy in. This is a small holding.

Q: Hello, I own an equal amount of CCL.B and ITP representing 4% of my total portfolio. Both of them have been down for a while. Do you think it is a smart move to sell ITP and concentrate on CCL.B? Thanks

Q: Would you be inclined to average down on any or all of these given their current price? Thanx Robbie

Q: Greetings,

1. In my RRSP account I hold XEC (TSE listed) and VWO (NYSE listed) and I only want to hold one ETF.
2. XEC has only one holding and that is IEMG (NYSE listed)
3. 5i Model ETF holds VEE.

I thought that RRSP, rule of thumb for tax efficiency is to keep all my U.S listed stock here so why does it XEC exist considering it only holds a U.S listed ETF?
Are you able to help me decide which of the three options could choose?
VWO seems to have the lowest MER and best 3 year performance history.

Many thanks!

Q: WR Jacques Q. Andrew McCreath today on BNN had what I assume to be credible reason for WCP budget delay. If you inputted what WCS oil is selling for presently ($15) no business plan in the Alberta field would look reasonable.

Q: Hi,

My portfolio is light on fixed income and it's not a sector that gets me excited to educate myself about it...What is the best way to get exposure to fixed income at a decent yield? Any ETFs or mutuals you can recommend? Or should I buck up and educate myself and buy some Bonds?

Cam.

Q: TD online broker does not allow me to buy some securities electronically. I can place the order over the phone and get the online price. I can however sell my existing positions electronically. Example of securities concerned are Versa Bank, GMP Capital, and about a dozen others. I called broker and was told this restriction was placed on the shares by the company. Never heard of such a thing, have you? I can trade these securities through my other on line broker ie. RBC
Any idea what is going on?

Q: Good morning 5i team
My question relates to concerns raised about DOL's relationship with Dollar City.
The following appeared on a well-known security trading web site: "On October 31, 2018, Spruce Point Capital Management published a report .... that highlighted ..... purportedly "questionable accounting and governance practices that cast doubt on management and the underlying health of the business". Specifically, <among other points mentioned> the report asserted that "management appears to use aggressive FX hedges and an off-balance-sheet relationship with a Central American retail affiliate to boost margins in a non-transparent way."

Separately, DOL's 2018 Annual Information Form says on Page 8 that as part of their South American biz development strategy, "Under the terms of the Dollar City Agreement .... products are sold to Dollar City at cost, except for a small handling fee charged on shipments that transit through Dollarama’s facilities."

How should one reconcile this apparent conflicting information? How might margins be "boosted in a non-transparent way?" as the short-seller alleges? Or should the words "purportedly" or "appears to" scream out "BEWARE" in this report?

Finally, what does 5i think of investing in DOL in today's economic environment?

Thank you for your comments.
Edward

Q: I,ve owned this company for a long time. I sold half of my position a few years ago at a much higher price. should I keep this stock or can you steer me to a better yielding stock. thanks bill

Q: They released results this morning which looks like a beat on all metrics except they expected earnings for 2019 to be $2.96 -$3.06 and expected is $3.08.
What is your take on the results and will the 2019 estimate hurt the stock
which has tumbled from $70's to the mid $40's.

Q: The US President ‘may’ have broken laws and the Mueller Report will or could shed light on how big my perceived concerns could be.

If the President did break laws what will be the effect on the stock market. Or what effect will occur on the stock market if the President did not break any laws.
Clayton

Q: Other than being a small company which reports in US dollars, what is you opinion about the business and financials of Destiny Media? They just reported fiscal 2018 results and on the investor call from the Management's comments, they expect a big uptick in revenue growth in the current fiscal year as a result of investments made to upgrade their technology.

Q: I am down 25% on this Robotics and Automation ETF. After learning more about ETF's I feel it is small, and wish I would not have purchased it. What are your thoughts for a 5 year hold?

Q: tax question - I want to move a stock with a capital loss from a non-registered account to TFSA. I know I need to wait 30 days after selling the stock to buy it back in the TFSA. What about FIRST buying the stock in the TFSA, then afterwards (say the next day) selling the stock in the non-registered account and utilizing the capital loss. Is that process OK?

Q: Mid seventies and only investing in RIFs.

I bought 100 shares of LVS at US$79.93 in June primarily because of the good dividend and it is now off 31%.

There was some good news a few days ago about money flowing back into the casinos in Macao again, but do you see any hope of regaining the lost 31% in the short term, or would I be better off to sell and put the money to work somewhere else?