Investment Q&A

Q: Goeasy is a disaster post this government decision.At what price level do you consider a very attractive entry point?

Q: With the recent mini-banking crisis and banks restricting their lending; could this not be seen as a growth opportunity for loan generation for GSY? Even if they can't lend at the same higher rates as before they can still obtain higher loan volume growth - or at least that is my thesis.

Conversely, as consumer spending on discretionary items (eg. furniture, electronics) may be decreasing - could this be a head wind for loans related to their EasyHome segment?

If both of these trends are at play - which do you think will play a larger role on the stock if any? Even with the large drop in the share price, it can't be far off from a PEG close to 1 so it seems attractive as well.

Thanks.

Q: There has been some action lately in some of your usual top picks like GSY, BN, NVEI, etc. I'm planning to deploy some cash soon when I see a decent red day. With all the recent changes, what are your top 3 highest conviction names in order, now that you would deploy money to? Thx

Q: Hi 5i,
I have 3 different questions- please deduct accordingly.
1.) Since March 24 KEY (+12.46%) has outperformed each of ENB (+6.21%), TRP (+8.75) and PPL (+8.06%) by fairly substantial margins. I know that's a short time frame, but can you offer an explanation for KEY's better performance, and would you expect it to continue to lead the others over the next year?
2.) GSY is at or close to its lowest level since January 2021 - do you think the relevant company, sector and economy related bad news is now priced in and expect it to recover to the $150 range over 12 - 18 months, or do you think that's a pipe dream, and why or why not?
3.) In your opinion is ET likely to recover to at least the $14.00 level (where I bought it some time ago) this calendar year - and why or why not.
Thanks!
Peter

Q: I bought GSY in $32 area in 2020 in my TFSA, have sold some since late last summer, still at about 8% of portfolio, was thinking of selling half what I have and replacing with NVEI. Partly due your one of your recent responses to a question, that NVEI likely to have greater growth potential over next 1-2 years, I bought and own GSY for it's growth potential but if NVEI could produce better results, trade makes sense. I have lots of financials, low in tech in portfolio, so also increases diversification, would you agree with this idea in general?

Q: Wondering what your crystal ball predicts regarding which of these 3 will provide the best return at year end, and after a two year period?

Q: I am down 26% on goeasy this quarter.Should I dump or add at these price levels?

Q: There was a recent question as to the significance of GSY's $41m credit risk at Canada Drives and why it was not reported, I asked this very question of a Hedge fund tht holds GSY and below is their response. Feel free to publish if you think it will be of interest to your members.

"The are a few moving parts to the Canada Drives story.

The business is split into two segments 1. Retail 2. Lead Business

The retail business is the new business that was losing money and is being wound down. They expect to liquidate their inventory over the next couple months and pay off all existing debt facilities.

The Lead business was Canada Drives original business from 2010 and has been consistently profitable. It generated $11m in EBITDA on $86m in sales in 2020. This business is asset light and doesn’t take the balance sheet risk like the retail business did.

GoEasy owned $40m of the $50m of convertibles notes. The court documents show that GSY may acquire or end up owning the Leads business which has been stated that it will continue to operate.

Overall, I don’t think GSY disclosed much of this publicly because it doesn’t breach materiality. $40m of capital on a $2.9B enterprise value."

Q: Hi Peter, Ryan, and Team

In your answers to other members, I’ve observed that National Bank isn’t one of your recommendation, and I’m wondering why.

Their 5 year CAGR is 9.4%. For the 3, 5, and 10 year periods, the beat their peers (BMO, CM, RY, BNS, and TD) by 6%, 6%, and 3% respectively.

Watching the negative news involving GSY, I’m considering switching it to NA. Since we’ve held GSY for some time, we’re still up quite substantially.

In our combined accounts, we also own TD, which we’ll keep.

I’d appreciate your thoughts on this proposed switch. Thanks in advance for your insight.

Q: Hello,

If you ultimately think Go Easy will be fine. And as per their CEO at the National Bank conference saying that they will “continue to grow and meet targets”. How is this not a buying opportunity with the company down 25% and out of favour?

Q: Hi

We still have 500 shares of GSY in our RRSP accounts

Thinking of selling and buying BAC. Both are beaten up. However I am thinking BAC
has a better chance of recovering in a shorter time frame with less government interference.

Your comments or other suggestions in the US are most welcome.

We already have CROX, BRK.B, CELH, PERI, NIO, INMD, LNTH, IFRA,XYLD, IYW

Thank you

Mike

Q: I have 3 positions at a total equity weight below 0.5%. Which one I should consider selling or increasing position size?

TOI (Size 0.39%, small profit)
MG (Size 0.41%, small loss)
GSY Size 0.54%, substantial loss)

This is in a well-diversified portfolio.

Thank you.

Q: Hi

Would it be wise to take the capital loss in our cash accounts to off set some of our gains to date by selling GSY?

Then buying SU for growth and the dividend.

Thank you

Mike

Q: Sold GSY yesterday. Likely would have stayed the course, but the company's failure to divulge information with regard to Canada Drive in a timely manner tipped me over the edge. So, I have 3% of my portfolio in cash that I would like to reinvest in a Canadian stock with a similar growth/dividend/risk profile. Minimum dividend of 2%, preferably >3%. Canadian stocks already held are: T, X, WSP, TFII, ATZ, SIS, BIPC, BEP, SU, NPI, NTR, PBH, BAM, BN. (US stocks are: GOOG, IHI, COST, NVDA, J, ABBV, MSFT, V, HD and AMZN.) I would appreciate 3 suggestions that would meet my criteria. No industrials or financials please, as I am already overweight. Thank you.

Q: I hold Goeasy and am down over 40% on my purchase price. I am thinking of getting out. Do you have anything in mind as a suitable proxy. Thank you.

Q: I an down about 25% on gsy. Would you suggest to hold, sell or buy more on this down turn? And do you think that the company may reduce their dividends as well? Would appreciate your advise here. Thank you

Q: Goeasy has always traded at a reduced multiple due to the risk of the government lowering the maximum legal interest rate. Now that has happened, do you see a multiple expansion opportunity once GSY has proven they can still grow the business? Also, do you still see it as a dividend growth story?

Q: Hello,

Has management responded to your inquiry about Canada drives? Can you please shed some light on where you sit with go easy at these levels .

Q: I'm still up 12% even after this second day of dropping. GSY is in the growth section of my portfolio. Is it still worth holding? Do you think there is a rebound here? I was wondering about a switch to something with a little more umph, I have a few of the big banks, or I'd look at ZWB. Can you suggest something? Thanks.

Q: Morning, GSY makes us a total of 3.4% (or did lol) of my portfolio with half in a non registered account. My thinking is sentiment will be bad for a while and the true impact of the budget will need to be assessed. I'm contemplating holding the GSY in the registered accounts while tax loss harvesting the non registered. If it were your account would you do it differently?

Rhetorical question - how much of yesterdays selling was leaked information from the budget vs the potential $41M loan loss?... I'm feeling like the latter was a key driver in the 9% fall yesterday.