Investment Q&A

Q: Hello, Which of these consumer staple names would you consider. I was leaning towards MRU as it seems cheaper that than the other two and the Jean Coutou acquisition sets it up for further growth. I already own PBH but thanks to last year my position is much smaller. Thank you. Shyam

Q: I sold DOL for tax loss reasons at the end of 2018. And now I am allowed to buy back, given the elapsed CRA time period is over. You recently mentioned DOL is a wait and show me company. How would I know went this "wait and show me" period is behind? Is it too early to buy DOL now?.....Thanks Tom

Q: I have in loss DOL,KXS,MG,SIS,TOY, NTR,I BELIEVE they will gradually recover but in your OPINION which weaker stocks in list I should sell and buy stronger for safety and taking
advantage of tax loss,By rolling in to better and more potential stocks,or any other not in my list?

Q: Hello Peter, I own both Dollarama and WSP Global. Both have suffered lately, perhaps even more than the market generally. I still have a long investing timeframe and a balanced portfolio. Would you suggest I hang on to these for better future performance or could the capital be better used in other names. Thank you.

Q: I currently hold small positions on the following. Based on current valuations and growth expectations, which Companies would you add to? in order of preference,

Thanks Valter

Q: Hi , i have 7 stocks that dropped below 2.5% of my holdings. BEP.UN (2.38%), NFI (2.33%), PHO (2.20%), SJ (1.92%), TOY (1.91%), DOL (1.61%), PIF (1.53%).
I also have a 15% cash position. Please Rank all 7 for potentially increasing to a 2.5% position. Also, is there any of the 7 stocks full position (5%) contenders.
Thanks

Q: Hi Peter,
Please deduct as many credits as you see fit. I have some losers (some big) as per below:

Margin account
CLIQ down 52%
PHO down 37%
MX down 20%
TFII down 23%
ECN down 13%
NFI down 11%

TFSA
GUD down 17%
CLS down 20%
DOL down 38%
TSGI down 47%

RRSP
DOO down 43%
COV down 26%

Here are my questions.
1- Should I claim the capital loss with CLIQ and PHO and repurchase in 30 days?
2- Are there any names there that I should just sell and move on to something else? What would be your top 3 replacements for the removed names in that case?
3- My initial thought was to inject new money in CLIQ, PHO, DOL, TSGI, DOO and COV to bring these names back to my initial weight. Would this be a good move in your opinion?
These names are part of a diversified portfolio and don’t need the funds for another 10 years minimum.
Much appreciate your service. Your responses to this market volatility have kept me from panicking as I did in 2008. I thank you for that.

Q: Hello 5i
1) On Nov. 28, 2018 your answer to Charlie regarding CGX was, "a stock that can decline 29% in a year is likely not right for a retiree". As a retiree myself , and down 30% plus on WCP, DOL and KWH.UN, would your answer be the same? Also, would you sell them now, and could you suggest replacements?
2) Including the market we are presently in, is there a percentage decline in price that you would suggest a retiree to cut losses and sell? Thank you for your help. Happy Holidays to Everyone at 5i, Bill

Q: This is a comment more than a question. I often go to their stores. I noticed that they have dropped prices on certain items lately ( eg chocolate bars) and if this is the trend then their margins have to be getting compressed. As well, their stores do not seem as busy as usual. In contrast, I also frequent Walmart and they seem just as busy. I think Walmart may be eating into DOL's business. I don't see any turnaround in DOL's share price anytime soon, although I think if it drops even more than it may get bought out or taken private. They seem have the dollar store market to themselves, just as Shoppers Drug Mart had in their category ( and they were bought out).

Q: Getting hammered today, in spite of an upmarket--your honest opinion where this company is going to level out at.
Should we consider cutting our losses?? and let this one loose?

Q: DOL.TO Earning seems fine. Have 2% position. Looking to add another 1% if market responds positive.

Q: Good morning 5i team
My question relates to concerns raised about DOL's relationship with Dollar City.
The following appeared on a well-known security trading web site: "On October 31, 2018, Spruce Point Capital Management published a report .... that highlighted ..... purportedly "questionable accounting and governance practices that cast doubt on management and the underlying health of the business". Specifically, <among other points mentioned> the report asserted that "management appears to use aggressive FX hedges and an off-balance-sheet relationship with a Central American retail affiliate to boost margins in a non-transparent way."

Separately, DOL's 2018 Annual Information Form says on Page 8 that as part of their South American biz development strategy, "Under the terms of the Dollar City Agreement .... products are sold to Dollar City at cost, except for a small handling fee charged on shipments that transit through Dollarama’s facilities."

How should one reconcile this apparent conflicting information? How might margins be "boosted in a non-transparent way?" as the short-seller alleges? Or should the words "purportedly" or "appears to" scream out "BEWARE" in this report?

Finally, what does 5i think of investing in DOL in today's economic environment?

Thank you for your comments.
Edward

Q: Is there no company report on Dollarama? Is it worth holding on to for the upcoming earnings report, or can one expect to be disappointed again?

Q: Hi Peter/Ryan
I am in the dog house on listed stocks in my registered accounts (RRSP/TFSA/RESP). For TOY and TSGI , I will wait for your review in Q&A section. As part of cleaning up portfolio would you keep these or if not then replace with which stocks? Money requirement and risk is not an issue.

Value your opinion. Thanks

Q: I am writing to following up on some of your recent comments regarding this stock after the release of the Spruce Point report. To what extent are you concerned with accounting irregularities regarding Dol's opaque arrangement with Dollar City? Could Dol be using sales to Dollar City as a way of hiding loses or artificially inflating the books? Are you also concerned with the patent infringement lawsuits, including the one mentioned about the pencils that have been sold since 2002? How do you react to the allegations that the market is saturated and may face increasing competition from Amazon and hence, Dol does not deserve it's lofty valuation? Thank you.

Jason

Q: How much stock do insiders hold in the company.
Garry

Q: Hi 5i
I sold the above for a tax loss. 6 of the 8 are down since with FTS and ECN slightly up.
The 30 day period is almost up. How many of these would you consider buying back in the hopes that their share price will increase. I have a longer time horizon.
Thanks
Jeff

Q: Having read todays word from you on DOL, would you be buying at this time. Also would one be adding to BNS. Presently have a partial position but wondering about the next few years and loan defaults. Regards

Q: Spruce Point has written some quite negative things about Dollarama such as saturation of the market, more competition than expected or mentioned, buying back stock at inflated prices to line the pockets of upper management & buying the distribution centre in the east of Canada rather than building one in the west to enrich the family that began the business in 1992.I'm down a ton on this stock so I'd appreciate your comments on the above accusations. They value the stock at $25 with hopes at best of it going to $43.00. Thanks as always for your valued insights.

Q: When does DOL report next? It falls even on a good day.
Could the chart be telling us something?