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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: A two part question relating to reading financial statements.
1. I'm looking for annual Free Cash Flow. For some companies (US) this is stated explicitly as a line item on the Cash Flow statement. For others it's less obvious. BAM, for example provides Net Cash - Beginning Balance, Net Cash - End Balance but also Cash from Financing Activities. Is one of these meant to be Free cash flow? If so, which one?

2. My second question is more about financial statements differing depending on the source (RBC/SA/amigo - [https://amigobulls.com/stocks/BAM/income-statement/annual?t=ibc]), again BAM will be my example using equity differences from 2018.

I've found some differences in results of equity estimates between RBC and amigo and am not sure why, as I presume BAM files once and everyone uses the same data.

As an example using 2018 data:
RBC amigo
EQUITY 29,815 97,150

Why would the be so different, and which is correct?

Thanks,

Cam
Read Answer Asked by Cameron on March 11, 2019
Q: Hi Guys,

Of the picks in this folio, which ones do you consider the most likely to break out, all things being equal, and which do you like to be a candidate to be bought out?

I'm looking to deploy a little cash in a growthy pick, and would appreciate your opinion based on today's valuation and prospects. Or would you recommend holding until better signals become apparent?

KC
Read Answer Asked by Kelly on March 11, 2019
Q: I don't think the most important reasons to hold bonds in a portfolio have been touched on yet, so here's my take. Dave, of the March 5 question to 5i on bonds, is probably a guy of working age. I, as a retired person, have a different perspective on holding bonds other than enhancing a portfolio's returns, but this is occasionally possible in a low to negative market return year if fully invested in stocks.

I am quite content to receive a 50% bonus to the inflation rate on my fixed
income part as it means I am holding my own after tax when it comes to the
spending power with inflation on that part of the portfolio and it is indeed
about asset allocation as I try to cover all asset classes in my portfolio
strategy including stocks, prefs, gold, cash and fixed income. (No crypto yet). For me, stocks provide the main boost in the overall return, long term. The dividend tax credit's a big help.

What I like about buying individual bonds which I usually hold to maturity is
controlling the issuer's credit quality (for me always investment grade), the
maturity date, and the guaranteed capital gain if buying discount. I've tried
bond ETFs for trading and better liquidity but since I have no control on
maturity or quality, I always seem to end up claiming a loss on the sale, and
any return is fully taxed as interest. I'll buy GICs also for a better interest
rate. The 3 reasons 5i gave for not liking bonds are, for me, minor reasons for having bonds, at my stage of life, if properly balanced in the portfolio.

As far as investment gurus like Buffet being fully invested in equities, this isn't quite accurate.The core of his Berkshire portfolio is insurance stocks which in and of themselves can be considered pension or bond-like. When they receive premium income, what do they buy - bonds because they need to be certain of future obligations and be liquid at the same time. Let's not forget the bond market is 40 times the size of the stock market, which is why Buffet laments there's nothing of size for him to buy and he ends up with holdings like Kraft Heinz. I'll wager the bond holders at KHC are sitting pretty while the stockholders cry in their soup.

If you've read this far, you're probably wondering how deep I'm into bonds and bond equivalents:
It's 29% compared to 14% cash 11% prefs 42% stocks & 4% gold currently, but this does change.
Read Answer Asked by Jeff on March 11, 2019
Q: Hi,
I'm currently holding SHOP with a large gain and the position is close to 10% of my portfolio. What do you think about trimming that position and investing some of the profits into LSPD currently? Would you wait a quarter first before buying LSPD or average into the position over the next year? Also these two companies operate fairly similar, what are the main differences?

Thank you!
Read Answer Asked by Keith on March 11, 2019
Q: Hi 5i team,
You recently answered a question (from Angus, feb 6th) about a list of large Canadian (TRI, CSU, ATD.B, SHOP, ONEX and BYD.UN and usa) companies that could be long term holds based on their management (past and current accomplishments). My question is: what would be a generic maximum weighting for such companies (one weighting for every one of them) if portfolio is invested for a very long period (no need to withdraw money)? Or another way to ask the question: how many different companies would be needed?
Thank you for your collaboration,
Eric
Read Answer Asked by Eric on March 11, 2019
Q: Good morning. I was wanting to put lightspeed on a Watchlist to track for a while. I was reading the articles in the Financial Post and the Globe and no ticker symbol anywhere to be found. I tried the Globe's Barchart look up...nothing there. So I go to 5i to ask my question and the ticker sticker pops up automatically. Thanks for being ahead of the curve for the little guy retail investors . So when this settles down can you guesstimate a reasonable entry point and a % weighting? Thanks david
Read Answer Asked by David on March 11, 2019
Q: I have recently added to VET and YGR to a reasonable weighting in my portfolio.
The gloom and doom news today of the Norway Sovereign wealth fund selling off oil and gas stocks across the board is causing quite a panic. Is there cause to be worried or is this a tempest in a teacup.

Peter
Read Answer Asked by Peter on March 11, 2019
Q: I currently hold Fairfax India and Faifax Africa. I consider them long term investments but I’m concerned about recent performance as well as (mainly) the longer term grind of the high management fees. I want direct exposure to growing populations and economies for a multi decade Rrsp.

I have the same questions for both (please deduct accordingly):

1. What would be your preferred investment for a multi decade Rrsp, for exposure to Africa: FAH, or an ETF, or something else? If something else, what would it be? Why?

2. Same questions for India and FIH.

Thanks you for your great service.
Read Answer Asked by Chris on March 11, 2019
Q: Hi there, it seems like more and more commentary is stating we are in late cycle. Assuming this means that we will soon see a recession in the next 12-18 months, would it make sense to hide out in a low volatility ETF for the time being? It seemed to have held up pretty well in the 2018 Q4 drop. What are your thoughts regarding this strategy and between ZLU and ZLB which would be preferred to be in, or would you split your portfolio 50/50 for diversity? Thanks!
Read Answer Asked by Michael on March 11, 2019
Q: Hello,

I took a 1% position, total, in these 3 names about a year ago, as a speculative buy. They have all declined, rather significantly since my initial buy, making all 3 names less than 1% of my total portfolio. I have however noticed some recent relative strength. Would you move on or do you see this area as an interesting speculative buy? To note, I also own a 1.5% position in Illumina. Thanks as always
Read Answer Asked by Aaron on March 11, 2019
Q: I would like to get your opinion on Verde Agritech's current achievements and what you would like to see them achieving in the next 1 to 5 years. And if you could specifically address several different discussions regarding 1) the speed which they should attempt to increase production 2) the markets they should be targeting 3) the possibility of a dividend at a future point. I would assume a dividend would be a long way off but it is an idea that I find very interesting.

Thank you for your time.
Read Answer Asked by Frederick on March 11, 2019
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