Investment Q&A

Q: Dear 5i,

I just did my 2 year renewal with you. I've been a member since the very first day and wanted to thank you for your care of exisiting members!

To celebrate, I was hoping I could ask a question about TRP and TRP.PR.D. I own both the common and preferred stock of TransCanada (about 5% in each) and wanted to sell one of the positions for balancing reasons. The rest of my portfolio is all cash and stocks (no other fixed income). I was planning on holding the preferred "forever" and selling the common but the thought crossed my mind that the preferred my react particularily negatively to rising interest rates (worse than the common). Any thoughts on what should stay and what should go?

Q: PLUG has met their 4th quarer targets and the stock is spiking in early hours.
According to the CEO the first quarter 2014 should also be a good one. Once again they seem to be on a good growth curve with top notch customers. BLD is one of their suppliers.
Could be a very good year for both companies.
Do you agree.
Good Luck for The New Year
Hersh

Q: I will retire in 2014 and am looking to structure my RRSP and non registered investment account to generate monthly income. I'm looking to achieve approximately 6 percent return. Would you provide some suggestions as to dividend stocks and also a 25 to 30 percent of the portfolio in growth stocks with a moderate amount of risk

Thank you for this great service and I wish the team a very successful 2014

Q: In our portfolio all of our US allocation is 25% in in one etf - XSP, also 23% allocation is international, again one ETF - XIN Would you suggest an alternate or is XSP and XIN ok in you opinion?

FYI our portfolio is 27% bonds - CBO, 25% US, 23% international,
15% Canadian using 5i portfolio, 5% emg mkts - VWO, 5% cash.
Please give us your opinion and suggest any tweeks or recommendations.

Since becoming a member I have had great benefit and enjoyed this web site, hence the above questions on whether my allocation which I am comfortable with is using the correct product.

Wishing you all a happy and successful new year.

Q: Convertible Bond question of Jan 02/14(asked by Lance):

Also check the "Change of Control" sections in the CD prospectus (sedar.com). In such circumstance, often the company must make an offer at par in cash, and somtimes extra shares are available to compensate for the loss of interest to maturity.
Publish at your discretion.

Q: Happy New Year to all!

This is just a general question on "behind the scenes" action at 5i. Over the course of the year, I've come to enjoy, and trust, Peter's recommendations on BNN -- and that was the catalyst for becoming a member here. (Very happy I did -- I just renewed for another 2 years.)

I'm interested in knowing how questions are answered. Given the volume of questions pouring in daily, I can pretty well assume that Peter is not answering all of them, so, what is the team's approach to evaluating companies and providing answers and advice to members? Is there a specific formula, for instance, that applies to everything? I see that the answers come in fast and furious, ... and so there must be some sort of proscribed method that all team members apply to the questions, as they come in, to be able to answer them so quickly.

I'm also noting that you've mentioned, a few times, that new employees will be coming on board in 2014, and was just curious to know the methodology behind choosing those who work from Peter's way of thinking. It is certainly different from "the street consensus" , which is a very good thing, but am wondering what new employees will do to the team dynamic, and if the analysis will continue in the same vein.

I;m only curious, and hopefully you don't feel it's an impertinent question, for it certainly isn't meant to be.

Feel free to respond privately, or publicly, at your discretion. (For better or worse, I'm always the one pulling the curtain, to see what Oz looks like behind the scenes.)

Thanks so much for your great service!

Q: Hello Peter and Team,

Happy New Year. This is not urgent. I've been following your comments on EEM (emerging markets stock ETF) and VXUS (all markets stocks except US) for foreign stock ETF holdings. I was wondering if you could compare/contrast them with EFA-N (developed markets stocks in Europe, Australia, Asia & the Far East). If you had to choose only one, which would it be and why?

Many thanks. Michael

Q: Good morning, After reading your article on small caps, I'm wondering if you have any thoughts on the canadian graphite or graphene mining companies. Are there any that are already profitable or have a distinct competitive advantage? Thanks, Rod

Q: Happy New Year 5I Team. Would you give some insight into how the US ecomony may fair this coming year? Do you see the Canadian Dollar losing strength against the US Dollar?

Q: I've heard that a lot of bank preference shares are being bought back in the coming year or so. Would you kindly tell me if that applies to any of the following, and when that might be and at what price. Thanks.
BNS.PR.T
BNS.PR.X
CM.PR.M

Q: Best wishes for 2014. And thank you, once again, for freeing us all from brokers.
Could you please compare and contrast Redknee RKN and Sphere 3-D ANY. I own RKN and am wondering if I should swap it for Sphere. But I can't assess how serious RKN's last earnings miss was. You have said that the story is not over, but you have also said RKN is now more risky. I don't know Sphere 3-D very well, but I have seen you suggest it to other members.

In your recent blog post "Five Small Cap Rules to Live By," your 5th recommendation is the following: Don't stick around too long if serious problems develop. Specifically, you add that a serious problem may be revealed in "declining sales trends or declining profit margins. A small, growing company, in our view, should never show declining sales." Does RKN fit into this category? Is Sphere a good switch with better risk-reward or should I wait one more quarter on RKN. Thank you again for fabulous service: I have made money--and more importantly learned a lot!

Q: As part of proper portfolio balance, my philosophy is to generally have income securities inside RRSP, blue chips in cash accounts, and the most speculative of the bunch in TFSA. In a recent question on TFSA where dividends were a criterion you suggested BDI where I might consider MCR instead.

Current TFSA is: CVL largest holding at 25%, equal weights: AYA, SYZ, WCP, WIN, WPK and at 5% MUX.

What 2 names could you suggest adding for the 2014 contribution, bearing in mind that dividends are less important than potential home run power, or should I beef up one of the existing weight stocks, and is my thinking fundamentally solid? Thanks, J.

Q: Best wishes for a most successful year, 2014, may it bring to all the team at Si continued good health, sound investment insights,and successful investments for all your subscribers. Would appreciate learning your thoughts on Cardinal Energy Ltd, CJ-T, which came to the market in mid December, as to whether or not is a potentially good O/G E/P investment for the next 2-3 years in my portfolio. Many thanks, Jim

Q: I have a portfolio of USD & CDN blue chip stocks and was thinking of buying 3 or 4 small to mid-cap names as a very tiny % of my overall portfolio: ENT, E, GPS & perhaps HNL or maybe LOY? Is there too much overlap between ENT & E ? Thoughts please.
Thank you James

Q: BNP Bonavista. I have held this for 3 years. Average of $17.00.
They kept saying no cut on the dividend then cut it and the CEO stepped down immediately. It seems the big investors are sore about the way the cut was announced. Should I exit this stock as momentum will be hard to recapture.

Q: Hi,
what's a good amount of $$$ to invest in a stock split like TD?

Do you have an opinion on
1) AXX
2) PPY

Q: I would like your opinion on Poet Technologies V.PTK or V.OPL. Thank you

Q: i would like your opinion of LAS VEGAS SANDS(LVS)

which appeals to me as it operates in south east asia

and the asians are BIG GAMBLERS

Q: Hi Peter and 5i: a couple questions about convertible debentures (“CDs”) and also could you please let me know if anything that I am saying suggests I may be misunderstanding these instruments. First off, it seems there are two typical situations that result in CDs trading above their face value. One is if the common share price appreciates to the point where the CD’s are primarily of interest for their potential conversion value. I’d like to leave this aspect aside, as right now I am more interested in their characteristics when they are behaving more like bonds. The second situation seems to occur mostly when they get relatively closer to their maturity dates. I would guess this is an effect of their relatively high original yields in combination with the fact that the perceived default risk can decline more steeply and from relatively higher levels for these corporate debt instruments than for “safer” fixed income alternatives. If they are issued with 6 or 8 years to maturity, that is a long time in the world of corporate business and who really knows how some of these companies will do over that kind of timeframe. On the other hand, in a CD’s last year before maturity, the visibility of the solvency and continued existence of the corporate issuer may be extremely good. With a short enough time to maturity, one might even think that the default risk is not materially worse than with government backed securities, that is, probably still somewhat worse but the overall risk is small enough that the difference is not that significant. So my first question is: Is it common for professional money managers to purchase CDs with short remaining maturities in order to boost short term yields in their fixed income funds? Would that be a significant component of what causes CDs to trade above par as their maturity dates get nearer?
Second question: Are there any standard “catches” or pitfalls in the construction of individual CDs that retail investors really need to be watchful for? I know it is important to go right to the filed prospectus document when evaluating a CD for potential purchase but it would be helpful if I had a better idea of what kinds of features to be on guard against when I am doing that research. (Feel free to refer me on to another info source on this one, if that would make the most sense.)
Thanks for any help, as always!

Q: Junior oils took a pretty good hit yesterday,WCP,SGY,CPG-any particular reasons ?