investment

THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) gets 55% of its revenue by selling news and information to professionals in the banking industry. The remaining 45% comes from providing specialized information products to clients in the legal, accounting and scientific research fields. Thomson earned $137 million, or $0.16 a share, in 2013 (all amounts except share price and market cap in U.S. dollars). That’s down sharply from $2.0 billion, or $2.39 a share, in 2012....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you advice on stock market trading and other investment topics that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “The saying ‘Sell in May and go away’ is based on an approach to the stock market that works only sporadically and could actually cost you money if you go along with it.”...

Most successful investors have a good grasp of “bells & whistles” as an investment concept, even if they think about it under a different name. The term refers to nonessential features or enhancements that aim to add commercial appeal to a newly created product. Like real bells and whistles, these features or enhancements attract attention but add little if any value. In fact, they may detract from a product’s value. When investment firms create new financial products, they follow the lead of top marketers in fast food, consumer products, smartphones and so on. All these marketers study their customers to see what appeals to them. If they see a feature has appeal—it may be “high definition” or “gluten-free” or “hedged against the Canadian dollar”—they may add it to the mix to make the product more salable. The feature need not be a good use of the customer’s money, or a healthful choice, or otherwise in the customers’ best interest....

Flaherty & Crumrine Investment Grade Fixed Income Fund, $12.36, symbol FFI.UN on Toronto (Units outstanding: 9.1 million; Market cap: $112.5 million; www.bromptongroup.com), mainly holds preferred shares of U.S. companies. Firms in the banking, insurance, utilities and financial services industries make up a combined 87.7% of the fund’s portfolio. Corporate bonds comprise 6.9%, and the remaining 5.4% is cash. The fund’s MER is 1.0%. The fund is hedged against movements of the U.S. dollar against the Canadian dollar. Its value rises and falls solely with the stocks in its portfolio, so it would not give you U.S. dollar exposure. However, hedging costs money, and we feel these outlays are wasted. They can cut the fund’s volatility from one year to the next, but they won’t add to its performance. In addition, we see U.S. dollar exposure as a plus—a valuable form of diversification....

Empire Company Ltd., $66.83, symbol EMP.A on Toronto (Shares outstanding: 92.3 million; Market cap: $6.1 billion; www.empireco.ca), is a diversified Canadian firm based in Stellarton, Nova Scotia. Empire sells and distributes food through national grocery retailer Sobeys. It also invests in real estate and various publicly traded companies. In June 2007, Empire paid $58 per share (a total of $1.06 billion) for the 29.9% of Sobeys that it didn’t already own. (Sobeys was a recommendation of our Successful Investor newsletter. We first recommended the stock in April 2003 at $36, so the buyout left our subscribers with a 61% gain.)...

A: HSBC Holdings plc (ADR), $51.57, symbol HSBC on New York (ADRs outstanding: 3.8 billion; Market cap: $190.7 billion; www.hsbc.com), like many global banks, faces tighter regulations and capital requirements. In response, it continues to sell off non-core assets, streamline its business and cut its costs. The bank has already reduced its global workforce to 254,000 from 300,000 by not replacing departing employees and selling or closing 63 businesses since 2011. It is expected to make further job cuts. HSBC needs stronger growth in its key China market to significantly increase its revenue and profits. However, the ADRs are okay to hold if you want to own an international bank....

We’ve had great success with companies spun off from larger parent firms in the past few years. That’s mainly because spinoffs let both companies focus on their already well-established businesses. As well, a parent will only hand out a subsidiary’s shares to its own investors if it’s confident the spinoff will benefit both companies. Shares of this food producer we cover in Wall Street Stock Forecaster have jumped since it was spun off to become a separate firm. Here is our analysis of its future prospects....

AURICO GOLD (Toronto symbol AUQ; www.auricogold.com) operates the El Chanate gold mine in Mexico, which produced 71,864 ounces in 2013. The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The project’s output should rise to over 152,000 ounces this year....

APPLE INC., $571.94, Nasdaq symbol AAPL, rose 9% this week after it announced several moves to enhance its investment appeal. These initiatives include raising its quarterly dividend by 7.9%, to $3.29 a share from $3.05. The new annual rate of $13.16 yields 2.3%. Apple also increased its share buyback program by $30 billion. It can now repurchase up to $90 billion worth of its stock by the end of 2015. That’s equal to 18% of its $492.9-billion market cap. Apple will also split its outstanding shares on a 7-for-1 basis in June 2014. In addition to making its shares more affordable, the split would make Apple a candidate for the Dow Jones Industrial Average. If Apple does join the widely followed Dow, mutual funds and exchange traded funds that mimic the index would have to buy the stock, which would push up the share price....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice and stock picks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week an Inner Circle member asked us about a Canadian stock whose products came into sharper focus following the disappearance of Malaysia Airlines Flight MH370. Flyht Aerospace Solutions makes a number of products, but the two attracting the most attention are devices that collect and stream flight data and could have shed light on the fate of the Malaysian airliner as it disappeared. Pat examines the company’s business and assesses its prospects for growth in a highly competitive market. ...