Investment Q&A

Q: What's wrong with this story?

This is a Global Construction and Engineering company which appeared to have good momentum in the O&G sector, had a strong backlog earlier in the year, and is relatively cheap as per your May comment when it was trading at $74.

As of closing today it is at $67.65 and is down almost 30% on it's high for the year. Do you have any explanations for the poor performance? Is this a good opportunity right now?

Thanks for all you do

Gord

Q: Hi Peter,

AVO took a beating when the CFO suddenly left immediately before earnings were released in May for "health reasons". It is now four months later and the company has yet to announce the hiring of a permanent replacement. Smells a bit fishy to me. Is this long delay a further cause for concern for AVO shareholders? How long should it take to hire a qualified and suitable CFO???

Thanks for the reply.

Q: SES is one analysts top pick on BNN yesterday. What is your opinion on it.

Q: Do you think GIL is a good buy at today's price. Thanks

Q: This stock is not going down even on bad days. Do you think it is still a buy ?
thanks
LC

Q: Instead of loading up on one company I have diversified across the board by owning entrec, enterprise E and petrowest PRW. Is this a good strategy? I figure bet on all three same weighing and hope one is a home run. And are all three not going to move until LNG plants are up and running? Thanks.

Q: When are we gonna hear about the apple/win case?
And what are the chances for win to defeat apple in court?

Q: i would like your opinion on the company neulion and wonder if it has room to grow or possible takeout target in the mobile media space.i have made money on this stock but it has been trending lower for some reason.i dont think they have competition in this space .

Q: 5:48 PM 9/25/2014
Hello Peter
We own a large position in Sherritt 8.0% Unsecured Debentures 15/11/18. Sherritt are offering to buy them back at a $1.045 which is just about what we paid a couple of years ago. Should I accept their offer to buy, or wait for a better offer, or just sit tight and collect my 8% interest for the next 4 years. I really cannot see a replacement for these if we do sell them unless you have a good suggestion.
Many thanks...... Paul K.

Q: What do you think of Kelso at current price? Is it still very expensive? Still a top growth pick for you?
Thanks

Q: Hello gentlemen,

Just a quick question about Rubicon Minerals. I realize that gold is continuing to take a pounding and is hurting all gold stocks ( producers and explorers) but this gem continues to pump out fantastic drill intercepts with high grams/ounces. The mill is supposed to be finished in mid 2015, they no longer require financing because of a share issue and a streaming deal with Royal gold. Lawsuit with the WFN was ruled in their favour too in Ontario Court (although it is being appealed). Do you still think it would be appropriate to throw in the towel on this one as per one of your earlier responses or would you possibly reconsider based on all of these recent positives in the last several months? If you were to recommend a few junior stocks would this be on your list? Seems out of favour with many mutual funds and am wondering why?

Thanks for all of your analysis. It is very helpful and appreciated.

Arturo

Q: What are your thoughts on Activision at this point. I am thinking of adding to my holdings once it appears to have bottomed here. What are your thoughts (ignoring issues of balance and other holdings)?
thanks
Joe

Q: Hi 5i team. When Ms. Wilkins (No. two in the BOC) referred to 'neutral' interest rates in her speech, did she mean short term rates, 10 years or long government bonds? Thanks. Henry

Q: Peter and company,quick pick on Alibaba.
I always wondered why a Chinese company would relinquish some ownership ''just'' to have the dubious privilege of an American listing.
Well I got the answer via 'Wall street on Parade' yesterday: they simply don't give up anything and that makes much better sense for them. Does it for you?
If you are interested, read on:

The concerns about this Chinese company’s opaque structure as a Variable Interest Entity (VIE) in the Cayman Islands are so serious that a U.S. Senator, Bob Casey (D-Pa), issued two letters this year to Mary Jo White, SEC Chair, demanding answers.

In a July 11, 2014 letter, Senator Casey drilled down to the core of the stock ownership problem, writing:

“…American investors in Chinese companies often do not enjoy the same protections and legal guarantees that they are afforded when they invest in American firms. Most Chinese firms that list in the U.S. use a structure known as a variable interest entity (VIE). VIEs are shell companies that give investors contractual claims to a firm’s profits but do not legally grant them ownership of the company. For example, according to Alibaba’s securities filing, Americans who invest in the company will not be buying stakes in Alibaba’s profitable e-commerce business, but in a related Cayman Islands shell company. These structures allow companies to circumvent Chinese regulatory restrictions on foreign investment.

“More concerning, given the Chinese government’s interest in restricting foreign ownership in certain industries, it is far from clear that the contractual claims underlying VIEs are enforceable. In fact, in recent years Chinese courts and arbitration boards appear to have invalidated VIE contracts and similar arrangements. As a result, VIE structures pose significant risks to American investors accustomed to the idea that shares sold on stock exchanges amount to legally sound ownership stakes in revenue-generating companies.”

The VIE structure for Chinese companies trading in the U.S. sounds more like an international lawsuit waiting to happen than an ownership piece of the corporate pie. If you think VIE shareholders have any right to elect the Board of Directors of this company, think again. Here’s a revealing section from the Alibaba prospectus:

“Risks Related to Our Corporate Structure

“The Alibaba Partnership and related voting agreements will limit your ability to nominate and elect directors.

“Our articles of association, as we expect them to be amended and become effective upon completion of this offering, will have the effect of allowing the Alibaba Partnership to nominate a simple majority of our board of directors…

“The interests of the Alibaba Partnership may conflict with your interests.

“The nomination rights of the Alibaba Partnership will limit your ability to influence corporate matters, including any matters to be determined by our board of directors. The interests of the Alibaba Partnership may not coincide with your interests, and the Alibaba Partnership or its director nominees may make decisions with which you disagree, including decisions on important topics such as compensation, management succession, acquisition strategy and our business and financial strategy.”

The history of Chinese companies listing here in the U.S. hasn’t exactly been a rose garden for investors either. Senator Casey notes the following in his July 17 letter:

“In the past three years alone, the SEC has charged a number of China-based companies with fraud, including China Sky One Medical Inc., AutoChina, SinoTech Energy Limited and China MediaExpress. The sheer number of fraud cases involving China-based companies listed in the U.S. reveals systemic problems with many Chinese companies’ legal structures and accounting practices. Indeed, earlier this year, SEC Administrative Law Judge Cameron Elliot ruled that the Chinese units of several large accounting firms could not audit U.S.-listed companies due to their willful failure to disclose information to U.S. financial regulators.”

This seems to be more the realm of traders than the one of your subscribers, don't you think so?

Q: Please give your current opinion on MUX, notwithstanding the current decline in the gold price. Thanks

Q: CSU had a good run and has been consolidating at the current price level. Any developments that would warrant adding on a pullback here?

Q: Could you please update me on alexco (AXR). I don't understand your june 19 answer about if silver at 19.45 they get 18.00 per ounce but if silver goes up or down they get less. At silver $35 per ounce they only get $3.90 per ounce.
I read the news release on the change and didn't understand that either.
What value does their mine and environmental clean up division have?
Also a general comment on mining companies developing old mining areas?

Thanks Doug
I figure modern technologie will bring out things from the past?

Q: What do you think about RET? Their last earnings were pretty good. Do you think it is a good position to hold for takeover potential? Thanks

Q: GLV has sold its pulp and paper and now is strictly in water purification.Can you give me an upgrade on its merits.Thanks Don

Q: your comments re this co. with a 2 year projection.