This is another in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. Today he has stock trading advice relating to the dilemma investors may face if there appear to be questionable dealings among insiders of a stock they own. Specifically, he refers to Canadian engineering giant SNC-Lavalin and a mysterious payment that many suspect to be tied to its involvement in Libya.

Below is the transcription of Pat’s comments.

Qualms About a Stock: SNC-Lavalin

Q: Pat, you often tell readers they should sell a stock immediately if they ever develop qualms about the insiders of a company. How does this apply to the recent reports from SNC-Lavalin?

Pat McKeough: That’s a good question. The idea of getting out of a stock when you develop any qualms about the insiders really applies to qualms about the central insiders, the people who are running the company and the thrust of the company.

Every company’s got bad actors in it. SNC is a multi-billion dollar company. There’s something going on there that shouldn’t have been, but I don’t think it really goes to the core of the company. I think it’s the kind of thing that happens in a big company when people aren’t as disciplined as they should be and there are political events going on. I think right now that SNC has had some problems and it’s going to cost some money. I’ve reduced it to hold. I do think this could turn out to be an attractive buying opportunity. But the problem is we just don’t know. So I’m going to leave it at hold. But it wouldn’t surprise me at all that if you bought now, you’d be very happy in 2 to 5 years.

But that’s a little bit different—just to clarify—if you discovered that in a small company. Just thinking off the top of my head, we advised selling a certain Chinese stock a couple of years ago just because we didn’t like the way that the information was being presented.

And it turned out that there were a lot of ugly things going on at that company that really resulted in a lot of people losing money. We’d have sold it on the basis that we had qualms; we didn’t have any kind of direct evidence of any wrongdoing. SNC is not in that league; SNC is in another league of multinational companies with huge revenues and connections all over the world. So the short answer is, no, I don’t think it’s time to sell SNC due to any doubts about the company.

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