Investment Q&A

Q: when should tender papers arrive , what happens if I dont get them ? If I do nothing will I still get the Brookfield shares and cash. thx Jack

Q: ECI is considered an Industrial and with its removal I am going to be light in the Industrial space. Any suggestions on replacements? Income is not a concern.

Q: This question is relating to the tax consequences of accepting the offer by BIP. The ECI shares are held in a non-registered account.
By tendering ECI shares, an investor will receive in exchange cash and units in BIP.UN. The exchange for cash will result in a capital gain which is taxable. Will the exchange of ECI shares for BIP.UN be a deemed disposition of the ECI shares or is it a tax free roll over?

Q: What are your plans regarding the takeover of ECI...selling or waiting it out? Sold all of mine and bought or topped up positions in TCL, PBH. Thinking about topping up CGX...we'll see what it's quarter looks like tomorrow.

What are your plans regarding the 6.67% cash position in the Income portfolio? In the past you have indicated you are not keen on having large cash positions.

Thanks...Steve

Q: Hi Peter. Seems like a good idea to let my shares of ECI roll over into BIP.UN. It's in a TFSA. Keep collecting the ECI dividend, pay no fees, and have roughly the same dividend when converted to BIP.UN. What could go wrong? Deal not going through, not all my shares being converted, anything else? As to sector allocation, does it really matter that I go underweight Consumer and overweight utilities?
Thanks so much for this and PUR!

Q: Hi Peter, Ryan, and Team,

I'm certainly not complaining, but can you account for the pleasant surprise from Gildan yesterday (up 21.6%)? It's been languishing lately and this bounce was very welcome.

Also, thanks very much for the ECI recommendation. My TFSA benefited greatly from this stock.

Q: My ECI shares are held in an RRSP and thus there are no tax issues to worry about. I am content to sit back and collect the 3.45% dividend until the deal closes in several months. So if I do nothing (IE not tender to the offer) am I correct that my shares will be
bought by BIP for cash ($29.00) upon closing?
Scot

Q: Hello 5i,
We too have ECI stock. Thank you. Tendering is new to me. After a Google search we have enough information to be dangerous. Our portfolio is with RB. We only see an option to sell. Can you help by explaining how we tender our stocks? Is it easier just to sell? With FTS and AQN at 5% weighting we are not sure converting to 100% BIP shares is the best plan for our portfolios. Any help is appreciated.
Thank you
Debbie and Jerry

Q: Hello, like many other investors I have an happy problem today, thank you. I have read all the questions on ECI today. Let's say I have 1000 ECI shares and I choose to tender my shares, does this mean that 750 ECI shares (75%) will be sold for a cash deposit in my account and that 250 ECI shares (25%) will be rollover in BIP shares at takeover date? The ECI price on TMX Money is $28.88 right now, do you think this price can fluctuate significantly in the meantime of deal completion? Thanks, Gervais

Q: I have the above securities as well as RBC Cdn Equity Inc-D shares, Sentry Cdn Income, Sentry Global REIT. I am a retired conservative dividend income investor with a company pension, CPP, annuities and Fisgard Capital for fixed income.

I currently own ECI and will sell and look for a Consumer stock to replace it (not interested in BIP...I have a full slate of Utilities). I filtered several candidates using fundamental metrics (P/E, beta, P/BV, P/CF, P/S) and technical metrics (200 dma, etc), as well as yield and price targets (for what they are worth).

I will keep my CGX and PBH. I'm looking for a long term hold (conservative, liquid stock with a good and growing dividend). My short list of candidates include CLIQ, CTC.a, PLC, TCL.A. I already flushed ADW.A, KBL, RSI and since I already have 1 food stock, I flushed L and NWC.

Please provide your insights into the appropriateness of these Consumer stocks (CLIQ, CTC.A, PLC, TCL.A) for my portfolio, given my circumstances and existing stock positions.

Are there other securities I should consider, even those that I have flushed?

Thanks for your help...Steve

Q: hello
would you suggest I purchase these companies in my RRIF

Q: I hold 2000 shares of ECI with a significant unrealized capital gain in a taxable account. I read in an RBC report that the offering of exchangeable shares "intent would be to provide a taxfree rollover" . Could you provide some explanation of how this would work. Thanks.

Ross

Q: Why the seemingly large premium?
Thanks

Q: Hello 5i,
Sorry for another ECI/BIP question, but the questions to date that I have seen haven't addressed my question.
Given the dividend that ECI currently pays out of cash flow, and that BIP will ultimately receive that cash flow, and the nature of the funding, might it be reasonable to expect that BIP would increase their dividend in one of the first two quarters of 2019? Or, would their acquisition make debt re-payment a priority do you think?
Obviously, I know you cannot read the minds of BIP's Board and Executive team, but given their financial ratios, I though you might have some insight.
Thanks!!
Cheers,
Mike

Q: If you don't choose to tender, will the stocks automatically be sold? if you aren't choosing to tender, should you wait or sell now? Sorry. I've no idea how this thing works: i was just stunned to see how much my ECI had gone up!

Q: Tks for all your insightful info. I am a fairly new investor and am wondering how to go about "tendering" my ECI shares as you have recommended to other members? Glynn

Q: Hi 5i,
Just a comment in relation to BIP.UN’s buy-out of ECI. I have held both of the securities for a number of years. ECI shareholders who have not previously held BIP.UN should take a careful look at it to determine if it is appropriate for their needs. ECI pays a fully eligible Canadian dividend on a monthly basis at a higher yield, relative to the recent past price range of ECI. It may be that the takeover premium makes BIP’s yield higher but only by dramatically lowering ECI’s. In contrast, BIP pays a quarterly distribution that is not an eligible dividend, is broken into three categories for tax purposes, and is paid in $US. Depending on one’s brokerage account set-up, some people may find that they are paying a currency transaction fee on each BIP distribution. It is important to be sure that BIP is really the kind of vehicle one wants to own. I hold BIP in an RSP account and it works well for me in that context but I would probably not want to have it in another kind of account. In regard to tendering to the cash and shares offer, people may want to consider how many BIP shares they would expect to end up with. If one’s ECI holding is relatively modest in the first place and one is likely to receive only 25% or less of the value in shares, a person could end up with a BIP holding that 5i would advise selling as “too small to have a meaningful impact on the portfolio.” If that is the case, it may be better to go for all cash (or sell it all at once in the meantime) and avoid paying a transaction fee later on an unnecessary tag end.
Cheers!

Q: Always nice to have a problem such as where to put the new money received from a 53% premium takeout of ECI. Thanks 5i!
Thinking of getting into CAE or PBH. Any preference? Looking for a bit more growth with some dividend over a 4-5 year period.
Thanks
Sal

Q: Hello,

Currently a very happy ECI shareholder. Some questions on the transaction.
1. Based on $29 eci share and current bip.un price, if you accept the rollover there would be a bump up in yield as well, correct?
2. Do we know how the distributions from the rollover security would be taxed?
3. Which option (cash or rollover) would you prefer?

Appreciate your service. Regards.

Robert

Q: What are the tax implications if I take the part cash-part stock deal? Are capital gain taxes due only on the "part cash" portion?

Thanks...Steve