Investment Q&A

Q: Hi 5i,

Thank you for the great work. My experience grocery shopping this weekend is that the stores are busier than ever.

Is it to simplistic to look at the current virus volatility as an opportunity to add to positions in the grocery companies?

Currently I have existing positions in Empire and Metro.

Thank you in advance.

Q: Wow, Boyd continuing to get crushed. Sure, people may be driving their cars less these days and therefore less car accidents, but once life returns to normal, I can't rally see Boyd's business taking that big of a longterm hit. Down nearly 50% from its ATHs. What are your thoughts why this one got hit so much?

Q: Hi Peter and Ryan.
This is an interesting time to invest. My current portfolio is down a lot but I decided not to sell it. I am in for a long term. I have been thinking about the changed world due to COVID-19. And I think about the world for a long term investment. In my personal opinion, the commercial real estate will be impacted because it is an opportunity for big companies to cut down office space and get employees work from home. The companies enabling people work from home will do well in short term and and long term.
I am going to contribute some money into TFSA. I hope to take advance of the market dislocation right now. I don't know how much more the market is going down. But I believe the good companies will come back. Can you please advise a few companies? Though my investment will be for a long term, it would be nice to see a rebound when the virus is in a control in the next few months.
Also, I have REAL (Matter). I am concerned if it is associated with commercial real estate. Please advise.
Thank you,
Yiwen

Q: My son has AC shares in an unregistered account which were purchased over time as AC shares rose but now the AC price is below all of his purchase prices. He has tfsa room.

I am thinking of suggesting that he transfer those shares now to a tfsa so that he will not be taxed on the capital gains if and when the shares rebound.

As I understand it, he won't be able to use the tax loss due to the 30-day rule but he will not have any unregistered gains to use the offset anyway so I'm thinking that's a moot point. (I don't think he should liquidate and re-buy the shares in the tfsa after 30 days in case he misses the rebound.)

Does the transfer to a tfsa make sense or I am I missing anything here?

Q: Both of these are down significantly today. NFI had a press release. This was viewed as negative by the market, but to me it seems the company is reducing risk. No idea why TCN is down again, it is selling for less than half book value. Any risk of these companies going bankrupt? They both seem to be incredible buys at these prices. Your views, please.

Q: Please comment on the uptick of the US investment grade corporate bond ETF XIG today. Do you still feel this is a suitable complement to a core fixed income holding of ZAG? Thank-you.

Q: SIA continues to get beaten up. What is the real concern on this company? Isn't there a waitlist for senior care? Long term living? Are people worried that all the seniors are going to die off? I just don't really see the risks to this. Doesn't it have a decent amount of government support as well? The risk / return seems compelling here.

Am I missing something?

Q: Greetings 5i: Other than last week's cancellation of their share buyback and negative market conditions, are there any reasons you're aware of that would cause AT&T to be significantly below its 5 year low this morning? Thanks. Rick.

Q: Should I continue to hold these 3 in both cash and RRSP accounts.
What would be a good replacement
I can use the loss for capital gains in my cash accounts make in January 2020.
Thank you
Sincerely
Mike

Q: Last year, I purchased a number of ETFs to reduce risk. With the recent stock turmoil, they are all in significant loss positions. If possible, I would like to crystallize my losses now for tax purposes. However, I am comfortable longer-term with my portfolio's geographic and sectoral allocations, and do not want to change my set-up.

Am I allowed by the CRA to claim a tax loss in a non-registered account if I sell an index ETF (e.g. VSP - Vanguard S&P 500 index hedged) and immediately purchase an ETF from another company which represents the same index (e.g. ZUE - BMO's equivalent S&P 500 hedged index ETF), or is this considered a superficial tax loss?

Thanks again for all of your excellent advice and insights.

Q: Looking for a 2nd opinion.
My wife has stayed out of the stock market for quite some time. I think now's a great time to get in.
We've got about $75K in her RRSP/LIRA My strategy for her is as follows:
XBB 20%
VCN 15%
XUS 40%
XAW 25%
The plan is to buy in in installments over the next 3 months.
Are there alternate ETFs that may be better than the allocation above?
Does this strike you as reasonable ?

Q: I was reading your answer to Dennis about fixed income bonds from banks. I know very little about CBO and Bank bonds but asssume they are near risk free. Do you think there is an arbitrage opportunity in borrowing on a secured line of credit to buy a bank bond? Any particular bond that you can suggest and can they be bought on online self directed brokerage accounts with Canadian banks?
Regards

Q: At what point do the banks become a screaming buy? If TD Waterhouse has correct numbers, several are now trading below book value. I have only seen this a couple of ties in my life and it has always worked out okay in the long run. Have I missed anything?

Q: Boy these companies' stock prices took a hit. I appreciate many mid-size PNG companies will likely go bankrupt with the drop in oil prices. But I always liked these companies as I understood they had lower costs of production than many of their competitors.
1. Is that assumption correct?
2. How would you assess the strength of their balance sheet?
3. Do you see these 2 companies as ones that are at high risk of going bankrupt in the near future?

Q: I'm looking at AD's listed dividend of over 20% with an exdiv date of March 30. Do you think they will pay out? I'm interested in buying even if they cut the dividend by 50%; do you think they would be an ok investment in that scenario?

Q: Do you have any information on this company? Thanks, Phil

Q: Could I have your assessment of Hasbro? How well will it survive this downturn. Is it a slow buy? Cashflow, debt, etc.

Thanks

Q: Hello 5i Team

Northveiw REIT issued a press release Monday stating the "go shop" period has expired with no potential buyers offering a better offer than Starlight / KingSett Capital offer of $36.25.

Does this mean that the deal now has a higher probability (>90%) of going ahead once all the customary approvals (special meeting, Court of Queens bench, CHMC/lender etc.) have been met.

I also noted that now Starlight / KingSett can increase their holdings of Northvew from 13% to 19.9 % of Northview by purchasing shares on the open market. Do Starlight / KingSett have to issue "Early Warning Reports" each time they purchase shares?

Q: Sometime in the last 6 years a question was asked about a short list of Canadian companies that survived the 2008 financial crisis. I believe HCG was one of them although it has had its troubles since. I cannot find it in the search of all questions. Can you give a current list?
Thank you.

Q: Retired dividend-income investor. I currently own ZLB (in RRSP, max'd out, love it) ZRE (Cash account, purchase for LT hold-distributions, plan to add to it over time) and ZWC (Cash account, purchased for LT hold-dividends).

I have a sizeable capital loss in ZWC....2 choices. #1 = Keep it, top it up over the next several months. #2 = Sell it, save the capital losses for future years (don't need them for 2020) and replace with either CDZ or XDV. I flushed XDV right away due to the very skewed asset allocation (to financials & utilities).

So that left the comparison between ZWC and CDZ. Their metrics are, for the most part, similar (beta, P/E, P/CF, ROE, MER).

ZWC is down 39% YTD, pays a current yield of 11%, has a reasonable asset allocation (the 22% energy allocation initially may seem high but might be good for the eventual rebound). However, I don't have the knowledge on how the Covered Call part of ZWC may impact the comparison with CDZ.

CDZ is down 43% YTD, pays a current yield of 6%, but has a slightly more diverse asset allocation and has performed better than ZWC over a 3 year period, but has a higher Beta.

I entered the comparison exercise believing I would conclude to sell ZWC. Now however I might just periodically top it up. Your thoughts please?

Thanks....Steve