Investment Q&A

Q: Hi 5iResearch Team,
I have finally decided to give up my full position on ZCL and was wondering if you can recommend something regardless of sector/industry, to take its place. Preferably I would like something with a dividend but it is not a must. As always, good works guys.
Cheers,

Q: I have owned Open Text for a couple of years and have had a little growth. I would like to obtain some cash to buy Avigilon. Does selling Open Text to buy Avigilon for better growth make sense.

Thank you,

Bob

Q: Peter and Associates,
The question of rising rates and their impact on bond proxy alternatives.

There was a time one could somewhat believe a certain reasonably consistent relationships existed between investment alternatives? There also used to be a principle that government and corporate bonds tended to move in opposite directions depending on the economy, especially downturns? Financial engineering has created paradigm shifts, anomalies/distortions, if not bubbles?

In a low inflation environment as rates went low, one could still find 5 year government bonds ( i.e. Provincials) producing 5% +/- returns. In today's artificially low realities? How many TV guests suggest the last BOC increase was a mistake or at least not wise? Is what we are hearing suggesting the Canadian economy and likely even less, highly indebted consumers are capable of handling significant rate hikes? Are there not suggestions technology and globalization are causing , deflation as part of our new economic paradigm?

Given yields on bond proxy alternatives, how real is the likelihood of fixed income rates becoming a strong competitive alternative in the immediate future? Other than giving central banks dry powder wiggle room, more than a few professionals are of the opinion we are in for years of low rates? Somehow a 2.09% 10yr rate (BOC stats) has not only a long way to go, but multiple hurdles to be a disruptor? Is stagflation a concern?

Using the Buffett principle, if corporations cannot find good uses for excess cash, they should return it shareholders? Are corporations acting like we are entering a period of strong economic expansion ? What message does consolidation and right sizing with closures/ job cuts give? My reading of the tea leaves , a tepid bull market cycle? Low grow and rates for the foreseeable future? Reasons to increase and/or declare special dividends for shareholders?

I n a world where the half empty/full glass is used to divide optimists from pessimists, direction and content are often overlooked, if not lost? The fact is, a lot of money can be made regardless to the direction of any market! Low rates, optimistic pessimism?! My conclusion, rates will remain borrower favorable and if so, what will the likely "new" normalized rate structure look like?

For all, capital appreciation is always desired but for retirees ,economic repression and its consequences on needed reliable income of far greater "interest"? Any feed back or counter opinions would be much appreciated. As usual, thank you for sharing your expertise, it is always trustworthy and extremely useful.

Season's greetings and best wishes for a prosperous 2018!

Mike

Q: Regarding the decision to add AVO to the BE portfolio, what is AVO's strategy shift that you referred to, what metrics did you use to conclude its valuation is cheap (PE is around 36) and any concerns about the declining sales growth?

Q: Hi 5i: I want to buy SHOP, but am somewhat overweight in tech. I am considering selling either CGI Group or Decarte Systems (in which I have a double), or a bit of both, to make room. What would you advise? Many thanks. Roland

Q: question - if I sell a TSX listed stock through an on line broker on Dec 28, is it considered a capital gain/loss in 2017 or 2018? The settlement date is, in theory, not for 2 trading days later, Jan 2, so does that make it a 2018 capital gain/loss?

Q: Humble comments as I see them.CEO Steve Hudson is described by a respected guest on BNN as"a wonderful guy in promoting things",who was supported by the investment community.However his light has dimmed somewhat since the very big acquisition of the GE leasing assets(now spinned out to EFN) as he overpromised & underdelivered/performance below expectations.Hudson is more suited to ECN than ENF as shown by appreciation in ECN & depreciation in ENF since split.Reportedly Hudson& his management team draw very big salaries(maybe too high compared to performance) but they always buy back shares for many years.While he did not acquire co after promotion,he indicated that he will buy in 2018.Stay tuned.

Q: I currently own full positions in both these stocks in an unregistered account. In January I will be able to move about $35K of one or the other into my TFSA. I see both as having very good chances of a substantial gain in the next year or two. Which would you move, in considering the impact of a large capital gain for the one I keep in the unregistered account? I do not see either as a long-term keeper at this point, so I foresee the sale of both in 1 to 3 years, moving into something perhaps more conservative .
Thanks!
Paul

Q: My mother has recently been invited by a friend she trusts to buy into a local privately traded Marijuana Grow Op Company, which comes with a 30-40% tax credit through CEDF. I have concerns about whether she'd be able to sell whenever she likes, not to mention the (apparently) high-ish risk. But I wanted to check with you: Are there any circumstances under which such a move would be advisable? And if not, would you advise buying into a publicly traded marijuana company at this moment, and if so which one? WEED? I might add that it is also quite hilarious, from the perspective of my former teenage self, to find myself in a position of advising my mother on investing in WEED.

Q: I normally can find answers to my questions by reviewing past questions but when I ask for questions on DS I get nothing. Not even the notice that there are no questions.
Anyway, I am retired and interested mainly in yearly income. I own DS and happily collect the dividend. But, can you explain how they can pay a 10% return when they hold stocks yielding less than 5%. Is the remainder return on capital or are they selling covered calls?
Thanks
Don

Q: Very saddened to hear about the recent mysterious death of Honey and Barry Sherman of Apotex, however, will this void create an opportunity for Jonathan Goodman to enter into talks with Jeremy Desai?

Q: ECN Capital was among the top pick's on BNN by Peter Hodson on Dec 15/17. I couldn't find a report on the company in the "Reports" section. Did I miss it or is there a report coming out in the near future?

Q: I bought this stock recently at an average price of 2.7 $. It has gone down considerably. What is your advice on this stock?

Q: You stated in your Q&A on Enbridge that "that cash flow PER SHARE has doubled since 2010." However if I go to the Morningstar web site under Key Stats it shows that cash flow has been mostly negative for the last ten years.
The following are numbers from there site......
Free Cash Flow Per Share * CAD
2007-12 -1.28

2008-12 -3.10

2009-12 -1.78

2010-12 -0.74

2011-12 0.33

2012-12 -3.51

2013-12 -5.50

2014-12 -9.47

2015-12 -4.87

2016-12 -1.20
What am I missing? Are their numbers incorrect?

Q: In June you wrote an article in the NP where you provided some insight on 5 smaller U.S. stocks that investors should consider. Any plans to publish a similar updated article in the New Year?

Q: Hello 5i team,
On the one hand, you suggest to have some exposure in all sectors; yet, after the recent changes, the Balanced Equity has 0% in RE, Telcos and Utilities.
Please explain,
Antoine

Q: Great show on BNN. As always Peter was to the point,sharp and candid. (CPG for example).
I was surprised that GUD didn't make it to the top picks . Any reason why? It figured prominently in the year end tax loss selling based buys. Always gets a good recommendation in Q&A. Yet didn't make it to the top 3.

Q: TFSAs and RRSPs. Are you able to sell a stock one day, and rebuy the next, or is there a waiting period as in non-registered accounts.

Q: Not sure why so many subscribers seem concerned over ECN at $3.80, I am looking for $3.60 so I can load up but even at today's level it's a no brainer buy.

Q: By letting my winners run to overweight positions, while recognizing the importance of overall sector allocations, I am in a constant debate with myself feeling the need to rebalance. My question is regarding 3 sectors with the backdrop of assuming we are in a rising interest rate environment. Currently having a 10% Utility weight, with 0% Real Estate and Telco's, would you suggest trimming Utilities to acquire one or both sectors, if so what names would you suggest? If rates rise faster than expected, will all 3 sectors perform similar ? I watch my portfolio very close, am quite comfortable with higher risk for higher return.