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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: Good afternoon 5i. I own the following stocks. Today there`s been talk about possible sector rotation of funds going from tech to financials. The Nasdaq is down 1.3% today. My portfolio stands as of right now at 22% tech and 15% financials. Would you recommend I leave my portfolio as is or should I lean more towards financials going forward?

Thx/Rob


Read Answer Asked by Robert on November 29, 2017
Q: I just read a Globe and Mail Business headline which read as above: FANG meltdown and then the article talked about face plants, sector roatation etc.

In you opinion, is there something truly fundamental going on here; and do you see a need to bail or significantly reduce exposure?

Or is this another example of “Big Noise” and sensationalistic reporting .... and as you often suggest “stay the course”?

With significant holdings here I am hoping your advice will be to hang in there and maybe even add to some of the FANGs.

Thanks
Read Answer Asked by Donald on November 29, 2017
Q: Dear Abby .... I mean 5i : Given the industry’s past-habit of over building capacity in good times, I half-expected Micron to weaken a bit. Notwithstanding that, I also read that the foundries had learned their lesson and were no longer jumping into adding capacity. The sudden and scary drop from impressive heights in MU’s price doesn’t look wholly justified. Although the share price increase may appear dizzying, it isn’t THAT much when one looks at multi-year price-history. For exemple although this year’s chart shows more than a doubling in price, I show 30 odd percent gain, having held MU for several years . I checked the financial sites and didn’t see much that explains the suddenness in price drop . Morgan Stanley unkindly dropped off on Monday a negative blurb on chip makers and most Semi’s dropped after opening on Monday. I read the said report and was not as convinced as Morgan Stanley seemed to be. I later saw MU had a positive report (Baird) . Obviously, I am missing something important . I am much too shy to ask to see your Bloomberg terminal . Your insight and DEEPER look and subsequent comment into this issue would be most appreciated.
Read Answer Asked by Adam on November 29, 2017
Q: Morning,

I don't view Callidus as a must sell and I think your recent comments have suggested that you are comfortable holding. My question is whether you would expect this to drift even lower with tax loss selling in the next two weeks? I don't have an appetite to hold it down to $8 or 9$ and wonder if it makes sense to sell now and take another look in the new year?

Your advice? Buy sell or hold?
Read Answer Asked by Tim on November 29, 2017
Q: A member just asked about CGX...maybe this is the reason...from TD:

Yesterday afternoon, it was confirmed that Cineworld Group plc (CINE-LN, not rated) is currently engaged in discussions about a possible all-cash acquisition of Regal Entertainment Group (RGC-US, not rated), the No. 2 U.S. exhibitor, at a price of US$23 per share, or ~US$3.6bln (~US$5.9bln including debt).
However, no agreement has been reached.
Impact: SLIGHTLY POSITIVE
A US$23 per share purchase price is a 26% premium to Monday's closing price, but a 44% premium from a week ago. This equates to ~9.0x and ~22.0x 2018 consensus EBITDA and EPS, respectively. Implications for CGX include:
■ The valuation being implied for Regal gives us confidence in the ~10.1x we are applying to CGX's theatre segment within our SOTP calculation. CGX is currently trading at 9.7x our 2018 EBITDA estimate, and our current $47.00 target price is based on an 11.0x EV/EBITDA multiple applied to our consolidated EBITDA estimate for the 12 months ending September 2019.
■ We do not believe that CGX is currently for sale; however, applying Regal's takeover valuation plus the historical 3.0x-4.0x multiple point premium to CGX's 2018 EBITDA suggests that CGX could be worth $50-$55 in a takeout.
However, given its market share, mix of high-margin businesses, and strong earnings profile, we believe that this range would be the floor price.
■ The selloff in CGX shares has been overdone, exacerbated by increasing investor short positions over the past few months. We believe that industry M&A — which could be a consequence of what is perceived to be the diminishing influence exhibitors wield over the major studios — should provide short-term support for the share price. Over the long term, we believe that valuation will start rising once it becomes more evident that Cineplex's ongoing diversification initiatives are lessening its dependence on Hollywood content and when there is greater clarity surrounding the impact of Premium Video on Demand (PVOD). We expect these to become clearer closer to 2019.
Post if you think appropriate.
Read Answer Asked by Silvia on November 29, 2017
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