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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: I currently have around $30,000.00 to invest. I am selling my losing stocks and taking the proceeds to buy into the equity model portfolio. I do already own some or similar stocks that you have listed. The ones that I do not own or have no sector weight in are CSU,DSG,FM,FSV,MDA AND SYZ. With this amount of cash which stocks mentioned here would be the best to buy. I do hope to buy all as more money come available. I do currently own some Stanec and Enghouse but both are at low weight

Thanks and I must say as other do that this is a great service and site and have enjoyed being a Canadian Money Saver subscriber for many years.

Dolores
Read Answer Asked on January 26, 2015
Q: Thanks for your question replies. I now need to bump up my Industrial-Tech sector and reduce my Resource sector weightings. I am a retired dividend-income investor.

I want to add CSU, but it has jumped lately. Should I wait for a bit of a pullback to around $300? Any other Industrial-Tech companies that pay a dividend and that you would recommend buying at this time?

I own BTE, CPG, SGY. Which of these would you lighten up on? Which of these has the most secure dividend, given lower oil prices and their respective hedging programs?

Should I wait on adjusting my energy weighting for a bit of a rebound? Seems like I'd be selling oil at the bottom to buy CSU at an all-time high?

Thanks in advance,
Steve

Read Answer Asked by Stephen on November 04, 2014
Q: Peter and Team,

I've owned Constellation Software since the model portfolio was created and have done well with it... very happy, great pick!

Reading their quarterly results, it seems like they are firing on all cylinders still - cash is up, debt was reduced, they grew both by acquisition and organically, earnings per share are up - things look good and the company still seems like 'A' quality.

Am I missing anything?
Read Answer Asked by Marc on October 31, 2014
Q: There's an interesting take on CSU rights I found in my inbox from Seeking Alpha (here: http://seekingalpha.com/article/2490895-constellation-software-rights-a-low-risk-high-reward-special-situation?uprof=44) that argues the rights should be trading at 94 cents. One little aspect it ignores is that if you purchase rights as opposed to having received enough to purchase adequate debentures you will be receiving less than 1% interest in the first year on your market price vs. the 7.4% coupon on par. Also they compare this issue with a Microsoft bond without highlighting the difference in credit quality.

This email went to hundreds of thousands of Americans, so we'll see if the rights lift off 55 cents on Monday!
Read Answer Asked by Jeff on September 15, 2014
Q: CSU Rights are trading at ~$0.59 and for every 21.192 Rights held, the holder of such Rights will be entitled to subscribe for C$100 principal amount of Debentures, exercisable at a price of C$95.00 per C$100 principal amount of Debentures purchased. Am I correct in thinking that the effective cost of buying the debentures is then $0.59 x 21.192 = $12.50 + $95 = $107.50? Are you still a fan of these at that price?
Read Answer Asked by Adam on September 04, 2014
Q: Hi 5i: some additional thoughts on the CSU debentures. Shouldn't people think first about whether these debentures are really the right kind of investment for them? For starters, maturity is a long way out (2041?), so the fact that you can buy 100 face value for 95 with your CSU rights is not as material as what the debentures will trade for in the meantime. Second, long term corporates may not be a good idea from a risk standpoint. Hank Cunningham I believe suggests that average fixed income investors keep their corporate maturities at 10 years or less, just because the corporate world does not provide sufficient visibility to justify going longer. Let's remember too; this is no utility; this is a tech company with a significant growth by acquisition component, despite successes to date. Third, if these really are the product for you, shouldn't you be thinking about whether you would use market purchases to top up to your regular position size, essentially with the rights just giving you a small potential discount on the whole position? Along those lines Peter, would you consider making CSU debentures an important addition to the Model Income Portfolio and, if so, take us through the analysis of whether to go ahead with the purchase at anticipated prices and what you would sell to do so? Thanks!
Read Answer Asked by Lance on September 01, 2014
Q: As for Kathy's question on acquiring a small CSU debenture with rights, possibly she ought to check with her broker to see IF a $200 bond could be sold. This quote is from the itrade site "Face value should be in multiples of $1,000.00 as there are no fractional bond units, except for strips where the rule in multiples of $1,000 does not apply." Also it is not possible with them to trade anything less than a $5000 corporate bond online.

Perhaps for most of us small holders of the rights the best course of action is to sell them on the open market; otherwise you might be stuck with an unmarketable security until maturity in 2040. Alternatively if you're really keen on the debentures you could purchase enough rights to get up to the minimum trading levels so you are holding something marketable. Thanks, J.
Read Answer Asked by Jeff on August 30, 2014
Q: As a Constellation shareholder, rights have been deposited into my account and I have been considering an additional purchase of rights (CSU.RT)on the open market to participate more fully in the debenture offering. However, I have no experience in such rights offering and no idea as to how to value them. From the price action in the first week of trading ( ranging from .40 to .70 cents), I suspect I'm not alone. Any advice, suggestions, guidelines appreciated.
Thanks
Read Answer Asked by William on August 29, 2014
Q: I have a small position in constellation software. What would you think of acquiring some more rights and invest in the debentures by borrowing against the home line of credit? Maybe even convert it to a mortgage amount at a lower floating rate?
The interest rate on the borrowing is a floating rate as is with the debenture and the premium offered with the rate reset would more than justify the risk?
Read Answer Asked by Rajiv on August 24, 2014
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