Investment Q&A

Q: The new additions to the growth portfolio appear very conservative. Especially after past picks such as xbc, qst, and mrs. Has the methodology of the growth portfolio changed? Big bounce potential? STN is near ath.

Q: Hi, I own a number of preferred shares from various Canadian issuers and came across a recent article from Seeking Alpha which is concerning, except below. What is the possibility delisting of preferred shares could occur in Canada as well for the reasons outlined? Thanks.

“Preferred stock can be a useful and important part of a diversified fixed-income portfolio, even with the decline in all segments of fixed income in 2022, however, recent events related to preferred stock delistings have put to the forefront a risk that needs to be taken into stronger consideration by investors. While the matter of delistings is certainly not new, these recent events have heightened our concerns on this risk, and we also call on the SEC to take up the issue to protect investors.

Earlier this month Höegh LNG Partners LP (HMLP) announced that it will delist its 8.75% Series A Cumulative Preferred Stock units (HMLP.PA), effective January 2, 2023, to save legal, audit, and other reporting costs associated with the preferred stock listing. While the company intends to continue to pay the distribution, the withdrawal and effective loss of liquidity for unitholders is a major negative event that led to a sharp 33% plunge in the price from the low $21 range to $14.25 as of this writing, as seen in the chart below.

HMLP-A Price Chart 2022

While some may find value in what is now a 15% current yield, the lack of liquidity creates massive uncertainty for unitholders going forward, and it's unclear what investors should do next. HMLP management has affirmed that it does not care about its preferred investors who handed over $176 million in cash to the company in good faith, expecting that the public listing of the preferred stock would remain stable and tradable as expected when initially issued. The proper action would have been to redeem the issue as the parent company Höegh LNG Holdings Ltd. did when it acquired HMLP and paid common shareholders in cash.

The action of delisting preferred issues and disrespecting preferred stock investors is not just a phenomenon of smaller and obscure issuers. The same thing is happening to the preferred issues of PS Business Parks (PSB) Series X, Y, and Z (PSB.PX) (PSB.PY) (PSB.PZ) totaling $755 million of combined face value. PSB has been reliably issuing, paying and redeeming preferred issues since 1999 when its Series A preferred was issued. Series X was issued in 2017 as a solid investment grade issue (rated Baa2) yielding 5.25% - presumably a perfect fit for a long-term, conservative income-focused investor. PSB-PY was also issued in 2017, and PSB-Z in 2019.”

Q: Hi:

Are you able to list a few factors that let Costco trade at P/E of ~37X while TD Bank trades at ~9.5x and pays a superior dividend to Costo? It "feels" like TD is a bargain but obviously day after day someone / some algorithm feels Costco stock provides equally good value.

Thank you!

Q: Could you provide your view on ZMMK as a safe vehicle for a liquid cash investment and indicate any concerns you see. Thanks for the help.

Q: What is your preferred vehicle to invest in India for the next 10 years?

Q: What can be learned from XBC fall from grace? It was a highly touted stock and went to zero in a flash. Were there any warning signs that in retrospect you should have seen and can you share those with us as a teaching moment for us, your subscribers.

Q: Your thoughts on ASTL ? Is it "safe" ? I note it is at a 52 week low.

Q: Hi, thinking about one of the two to start a new full position for 2 to 5 years minimum in unregistered account. What would be your thoughts? Secondly, without trying to time the purchase, would you go ahead anytime or wait awhile?
Thank you!

Q: why has swav (shock wave) declined so much in the past month. the last quarters numbers were very good and their projections for next year appear to be excellent.

Q: Other than half a dozen or so major banks (i.e. BNS), there are a number of smaller banks such as Home Equity bank, Fairstone bank, Canadian Western Bank, ... If I want to acquire GIC's with any of these smaller players, should I be concerned? I have visited the CDIC site to see if they are covered and all appears to be fine but there could be other issues I am not aware of. Thanks.

Q: CM is approaching a 52-week low following disappointing quarterly financial results. On the other hand, it is one of the big six banks with a ~6% dividend that it just increased. All things considered, is CM a bargain that should be picked up for a long term hold? Or, would it be better to buy a slightly better performer like BNS that is also value priced and offers a similar dividend.

Q: Is there a stock in the USA that is the same size as TCN and how has its performance been in the last year?
Thanks again

Q: These two have almost exactly the same yield going forward. Which do you see as having better dividend growth over the next ten years?

Q: Hello 5i team,
I was thinking of selling the rest of my NTR (a bit of CAE) shares to start a position in PBH. This is more to have a non-cyclical position since I currently have none.

In your last report on PBH you state that their dept is Medium/High. How well are they servicing their dept (paying it down or adding to it)?

PBH has also been growing their dividend over the past 5 years, what is the payout ratio for it's dividend? Has the payout ratio increased over the years?

Thank You,
Andrew

Q: Hi Guys
I have noticed that there has been heavy insider selling on Capstone over the last 12 months, looks like they have collectively sold more than 20 million shares. Shares they could have accumulated around .55cent a few years ago. Insiders now only own around 5%, have we not missed the boat here?
Thanks Gord

Q: What am I missing?The market seems to hate this new BAM/BN spin out.Talk about loss of market value!!!

Q: The new BAM stock price dropped 7% on Tuesday. Is there something that an investor should be aware of ? Is this an opportunity ? I wanted to purchase this one post-split.

My understanding was that the yield for this stock would be in the 3.25%-3.75% range. Would I be correct in assuming that it could quite likely now be above 4% based on the Tuesday $41.60 close?

Is it true that the company plans to raise the distribution by between 15-20% per year ? That seems high to me. Maybe I misunderstood.

Q: Hi Peter, Ryan, and 5i Team,

More comments, a question, and a link regarding Algonquin and some historical relevance!

AQN was held in my wife's RRIF and daughter-in-law's RRSP. My feeling is that AQN will be in the 'penalty box' for quite some time, and the share price will settle around $10.00 or less. Since they're both conservative investors, I switched them to Fortis FTS, which they already held in their respective accounts. It was an easy decision. Do you agree with the thinking here?

AQN was also held in our son's TFSA, but he needed the funds recently for a house purchase. I was fortunate to sell it at around $16.00.

I didn't act soon enough with the two other accounts holding AQN for several reasons. Living in Oakville, where AQN's headquarters is located, resulted in "home town bias" - a mistake in retrospect, because I never felt comfortable with its acquisition of Kentucky Power. It was too expensive, and too much debt was taken on by Algonquin.

Finally, here's a link from 'Seeking Alpha' which outlines the fate that AQN may face when compared to a similar ill-fated and debt-ridden mistake made by AltaGas when they bought WGN. It's taken them a long time to correct their mistake, and I suspect that AQN's mistake will have similar consequences.

https://seekingalpha.com/article/4563884-altagas-vs-algonquin-discounted-utilities-with-ominous-similarities?mailingid=29958270&messageid=must_reads&serial=29958270.150190&utm_campaign=Must%2BReads%2BDecember%2B12%2C%2B2022&utm_content=seeking_alpha&utm_medium=email&utm_source=seeking_alpha&utm_term=must_reads

Thanks for your continued guidance!

Q: Hi 5i,

Further to Dennis's question on the 21%, the comments may pertain to how much of AQN's debt is floating and not the rate they are paying.

Just a thought!

Q: What do you think of selling PBH for a loss and buying QSR as a replacement, for a long term position?


Thanks.