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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: What is your opinion of selling out of the money put options for income on stocks you don't own, but would not mind owning?
Read Answer Asked by ROB on February 23, 2014
Q: Based on 2 days trading it seems the market first liked recent THI results then on sober second thought hated them. What's the 5i take? I guess guidance for 2014 was light but I think Tim's is doing many things right like addressing long lineups, simplifying menus, buying back stock and increasing dividends. Dropping the gingerbread man will no doubt alienate the 6 year old demographic, however. My discount brokers show ROE as 34 to 36% which seems very high; what's not to like for the long term, even if growth is slowing? Thanks, J
Read Answer Asked by Jeff on February 22, 2014
Q: Hi Peter and team, I have held PWT and LTS for several years and am down about 75% in both. I also own CPG which is about even. All three have good assets but seem to go nowhere. Your thoughts would be appreciated. Thanks for the great service.
Gary
Read Answer Asked by Gary on February 22, 2014
Q: What are your thoughts on SMT (Smart Tech)? I'm still underwater (bought the IPO) big time and was wondering if I should hold or sell? If sell, what stock would you buy in it's place. Thanks.
Read Answer Asked by Sandy on February 22, 2014
Q: Greetings Peter and team. Would you be so kind to take a look at the stock Axiall Corporation (AXLL). It has a forward P/E of 9.12 a PEG ratio of 1.35 price per sales of 0.70 and price per book of 1.23 Thanks.
Read Answer Asked by Fred on February 22, 2014
Q: Hello Peter

Thank you for the really excellent video on the Top 5 Investment Questions. First Class!

I have carefully reviewed your comments on Sherritt [S] especially your answers on January 20, 2014 (asked by Richard) and on November 22, 2013 (asked by Chris). Subsequently Sherritt did slash their dividend. I am unsure about Sherritt's level of secured and unsecured debt which may be quite large and pose a threat, and there may be "off balance sheet" issues too.

We hold a large position in Sherritt Senior Unsecured Notes due 11/15/2018 with an 8.00% coupon, making up 3% of our overall portfilio or 10% of our fixed income portfolio

You would think that the sale of the coal assets and the dividend cut would reduce risk on the Notes, and I realize that this may be a "cleanout quarter" for the company before the crucial May 6th meeting, but I would value your opinion on their stability. The current quote is $99.50 which would suggest they are not under undue stress.

If advisable I would gladly sell these notes and switch to something with more safety and a lower yield. I read your recent comment on CBO [iShares 1-5 Year Laddered Corporate Bond Index Fund Common Class] and the 4.25% dividend yield would be acceptable but I am unwilling to take on the capital risk in a security with no maturity date, in a possibly slowly rising interest rate environment. Gaining 4.24% income with a possible 3-5% capital loss in a year is pointless and I might as well just buy a cashable 1-year GIC at 1.6%.

We already own a large number of good dividend common shares [RY, CM, BNS, NA, LB, OLY, SLF, GWO, TRP, ENB, ENF, PPL, BTE, PKI, POT, T, EMA, FTS, BDT, S, LIQ, NWC, NWH.UN, CSW.A, RSI, CJR.B, G, FNV, SLW, CGL, SVR] so have some quite good dividend income.

The other 90% of our fixed income is in a mix of long provincial bonds maturing 2027-2032 yielding over 6% on their purchase prices, and an Algoma Central Corp Conv Unsec Subord Debs 03/31/18 6.00%, and a small position in FAP. We also have about 5% in cash equivalents, one modest employment pension and two OAPs and CPPs. On your advice (January 23, 2014 asked by george) and for which we thank you, we just sold our Perpetual Energy CV 7% 31DC15 [PMT] at $98.00 at a small profit because of extreme company debt and bought Telus [T] with the proceeds and are quite happy with that.

So we don't particularly "need" higher yields now but I am a little reluctant to go beyond our current 66% weighting in equities, however this may be the only realistic option. I would not be keen on preferreds, even rate reset preferreds at this time, as they have no maturity dates and I have sold all mine advantageously a year ago. I am also not a fan of REITs,and don't want ETFs much preferring to own individual securities, and there is not much point in buying 1-5 year government bonds at this time.

I am retired, investing for a 20 year horizon, and am mainly looking for secure income, modest growth [although more is better and must be balanced against risk], stability, steadily rising dividends, and the liklihood of relatively better performance in a major market correction which, like death and taxes, will come for sure some day and we must be prepared to ride out any downturn without undue worry.

If there is a major market correction in the next couple of years, Sherritt may fare quite badly and the notes would be very vulnerable. Maybe if we need to be concerned at all over the Sherritt Notes, and if we are going to worry over them, we should just buy some "dull" but stable equities with acceptably lower but rising dividends, lower payout ratios, and good growth, like CNR, ALC, KBL, BCE, THI, taking advantage of the dividend tax credit, and pushing our equities up to 70% of the overall portfolio? Is 70% getting too high? We don't seem to have any other choice.

My apologies for the long question. I would welcome your suggestions as to what to do with this security.

Many thanks........... Paul
Read Answer Asked by Paul on February 22, 2014
Q: Hello, could you tell me which stock you would own between Precision Drilling and Brookfield Infrastruture. We are not traders and prefer to buy a stock and own it for some time. We are looking for security in value and dividend income. We have a well balanced portfolio and are only looking to invest about $10,000 in this purchase.
Read Answer Asked by Vicki on February 22, 2014
Q: Hi, I have done well with CGI (GIB.A) and am up 120%. I have been thinking of selling half my postion to "play with the house's money" and use the proceeds to invest in CSU. I like to be well diversified. Or should I sell my entire position and invest it in CSU? I have no other tech exposure except a small position in ESL. Tech is only about 5% of my portfolio but it has one of the better performers for me.
Read Answer Asked by MANFRED on February 22, 2014
Q: I have just read a member`s note thanking you for the new report entitled "5 from 5i" but I haven`t been able to find it on the site.

Thank you for the clear concise (jargon free) helpful answers you routinely provide.
e.https://www.5iresearch.ca/questions#sthash.ZQlmd33K.dpuf
Read Answer Asked by John on February 22, 2014
Q: Hello,
In my portfolio's "catch all" services segment (12.6% weight), I hold ATD, BYD, CGX, DOL, KBL, and THI; I think that they are all good but if I were to shed one of them, which would you suggest?
Thanks,
Tony
Read Answer Asked by Antoine on February 22, 2014
Q: I bought i-shares Silver Trust SLV:NYSE at the end of 2012 on a "timing the market/cyclical pricing play" and subsequently watched the shares sink. They have recovered some ground recently, but is there a better option to play the expected increase in silver prices? Is there a stock that pays a dividend and still has as much chance of growth as SLV, or should I just stick with it?
Read Answer Asked by John on February 22, 2014
Q: TGZ reported a loss instead of last year's profit. Would you sell here?
Read Answer Asked by hal on February 22, 2014
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