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Inner Circle Q & A

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May, 2009

Please advise me of your views on Cisco Systems. Thank you.

May 19, 2009 -  Be the first to comment
Posted by: Pat McKeough

Cisco Systems Inc., $18.79, symbol CSCO on Nasdaq (Shares outstanding: 5.8 billion; Market cap: $109.6 billion), is a leading maker of products that link and manage computer networks. These include routers, local-area network (LAN) and asynchronous transfer mode (ATM) switches, dial-up access servers and software. Cisco’s IOS (Internet Operating System) software ties these products together, delivers network services (which interconnect …

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Dear Pat: Could you give me your opinion on which of the following mutual funds are recommended and which are not? Thank you for this and P.S.: I love the Twitter service!
  • Bissett Multinational Growth
  • Bissett Canadian Equity
  • CI Global Value
  • CI International Value
  • CI Harbour Fund
  • Templeton Global Smaller Co.
  • Templeton Growth Fund

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

We feel that most mutual-fund investors should own no more than five funds. When you own more than this, you run a higher risk of over-diversification. This could cause your portfolio to produce a return that matches that of the market, minus the 2% to 3% cost of fund-management fees and expenses.

Bissett Multinational Growth Fund mainly invests in North American-listed …

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I’d like to ask about Brookfield Asset Management preferred shares. I know you recommend a handful of bank preferreds, and I was wondering if Brookfield’s preferreds might be a good investment for income and possible capital gains. I was looking particularly at the “M” series. Can I have your thoughts on that one? Thanks.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

Brookfield Asset Management 4.75% Series 17 Preferreds, $14.85, symbol BAM.PR.M on Toronto, are perpetual preferred shares. That is, they have no fixed maturity date, and they have to pay their stated dividend forever, or “in perpetuity,” before they can pay common dividends in any given year. The shares began trading at $25 each in late 2006, and have fallen steadily …

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Pat: I am interested in your recommendation of Yum Brands. I am concerned that there has been a lot of insider selling, a high debt load and a poor current ratio. Please advise.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

We think that you need to look at insider selling (and buying) on a case-by-case basis. It’s just one of many factors worth considering.

We also think it’s a mistake to put too much weight on insider trading, since insiders can delude themselves about their employer just as easily as outsiders can. However, it pays to remember that insiders may sell …

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Hello Pat. I bought New Gold on your recommendation and made some gains. Would you please comment on Sherritt International? I bought the stock after President Obama eased relations with Cuba. Should I sell for a small gain or hold on? Thanks and best regards.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

Sherritt International, $5.24, symbol S on Toronto (Shares outstanding: 293.1 million; Market cap: $1.5 billion), is up over 65% since April 14. That’s when President Obama announced an easing of restrictions on American relations with Cuba.

The U.S. is maintaining its 47-year-old trade embargo, but Obama plans to allow Cubans living in the U.S. to make unlimited trips and money transfers …

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Pat: What is your opinion of Husky Energy? Thanks.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

Husky Energy, $30.84, symbol HSE on Toronto (Shares outstanding: 849.4 million; Market cap: $26.2 billion), is an integrated oil and gas company. Hong Kong-based billionaire Li Ka-Shing holds 70.6% of the company’s shares.

Husky produces conventional oil and gas across western Canada, as well as heavy oil (a heavy, black viscous oil) at Lloydminster, Saskatchewan, and from the oil sands at …

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Mr. McKeough: Could you share your thoughts on Shaw Communications? Thank you.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

Shaw Communications, $19.48, symbol SJR.B on Toronto (Shares outstanding: 429.8 million; Market cap: $8.4 billion), is the second-largest cable-television operator in Canada. Only Rogers Communications (symbol RCI.B on Toronto) is larger.

Shaw’s 2.2 million cable subscribers, located in British Columbia, Alberta, Saskatchewan, Manitoba and northwestern Ontario, represent about 30% of the Canadian cable-television market. Moreover, roughly 70%, or 1.6 million, of …

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Hi Pat: I’m a relatively new subscriber, and so far I am very pleased with the info you’ve been sending me. I’ve been tracking many of your recommendations and I’m really impressed with your track record. I only wish that I had my discount brokerage accounts set up earlier, so that I could have bought some of the stocks before they went up so much. I’d really appreciate your advice on one of the stocks I own: What do you think about Goldcorp? Best regards.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

Goldcorp Inc., $34.33, symbol G on Toronto (Shares outstanding: 730.2 million; Market cap: $25.1 billion), is a major gold producer, with 10 operating mines and several major projects under development.

Goldcorp owns the Red Lake, Porcupine and Musselwhite gold mines in Canada; a 37.5% interest in the Alumbrera gold/copper mine in Argentina; the El Sauzal, Los Filos and San Dimas …

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Pat, what do you think of the following strategy: Borrowing on a home equity line of credit and investing those funds in a high yielding ETF, such as the iUnits Dividend Index Fund? The interest becomes tax-deductible, while dividends enjoy preferential tax treatment. Given today’s low interest rates and high yield ETFs, is this too good to be true? Look forward to your perspective. Thanks.

May 5, 2009 -  Be the first to comment
Posted by: Pat McKeough

As a general rule, it’s better to borrow to buy stocks after a drop, rather than when the market has steadily risen for several years. We think you’ll benefit most from this buying opportunity by sticking with the kind of stocks we recommend, as well as the mutual funds and ETFs we recommend in Canadian Wealth Advisor.
These include the iUnits

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April, 2009

Pat: Now that Equinox Materials seems to have their new mine/concentrator up and running steadily, I would appreciate your comments on this company as a suitable investment. Thanks.

April 28, 2009 -  Be the first to comment
Posted by: Pat McKeough

Equinox Minerals, $1.88, symbol EQN on Toronto (Shares outstanding 685.8 million; Market cap: $1.3 billion), is focused on mining and exploration in Zambia.

Equinox first sold shares to the public at $0.71 each, and began trading on Toronto in June 2004. The Perth, Australia-based company is also listed on the Australian Stock Exchange.

Equinox operates its 100%-owned Lumwana copper mine in Zambia, …

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