takeovers
This past year brought richly rewarding takeovers of several of our long-time favourites including Falconbridge, Inco, Fairmont and Sleeman. As a result, you may face a substantial capital-gains tax bill. Before yielding to the year-end tax-loss selling urge, keep in mind that it’s always a mistake to sell good stocks at this time of year. Tax-loss selling sometimes drives share prices down way too far. Prices of good stocks often snap back in January. Note that if you sell next year, you can carry your loss back to offset capital-gains taxes you’ve paid since 2003, or carry it forward indefinitely. If you need to sell in 2006 (possibly to offset capital-gains taxes you paid in 2002), December 22 is this year’s tax-loss selling deadline for Canadian investments. The deadline for selling U.S. securities is December 26....
At one time, mutual funds within a particular ‘fund family’ often shared some key investment characteristic, such as a conservative or aggressive investment approach, or a stress on value as opposed to growth. However, due to trends in the mutual-funds industry such as corporate mergers and takeovers, and more aggressive marketing, a fund’s membership in a fund family now has little bearing on its investment approach or appeal as an investment. Below, for instance, we analyse five funds from the Ivy Group. (Note that Ivy is now part of Mackenzie Financial, which in turn is part of IGM Financial. The contact information listed for Ivy Growth and Income also applies to the other four.)...
Our Successful Investor Hotline aims to keep you up-to-date on our advice in between our monthly editions, particularly for fast-changing situations — like these takeovers. The Hotline is a free service for our subscribers. We update it 44 or more times per year, generally on Friday after 7 PM Toronto time (any changes in timing are always announced in the previous Hotline). The current Hotline number always appears at the top of the first page of each issue. You can also receive the full text of each Hotline automatically, by email, at no extra charge. For email delivery, send an email with the name and address under which you subscribe to service@thesuccessfulinvestor.com. Subscribers can also view the last four Hotlines at www.inner-circle.ca, using the user name and password that also appear at the top of page one each issue....
Some of our biggest gainers in the past few years have been in stocks from the Resources sector. Investors need to keep the risk and volatility of this sector in mind. TECK COMINCO LTD. $75 (Toronto symbol TEK.SV.B; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s biggest supplier of zinc, a metal that prevents steel from rusting. The company also a major producer of copper, gold and indium, a metal used in flat-screen TV sets. Thanks to the huge run up in metal prices in the past few years and its growing cash flow, Teck is now looking for acquisitions that broaden its operations, such as its recent investments in Alberta’s oil sands and its 40% stake in the Elk Valley Coal Partnership, a major supplier of metallurgical coal to Asian steelmakers. Fording Canadian Coal Trust owns the other 60%....
We’ve often pointed out that growth by takeover or merger is riskier than internal growth. It’s especially risky when companies make a habit of it. However, well-established companies do sometimes pole-vault over their growth targets with well-thoughtout, well-timed, one-of-a-kind mergers, with or takeovers of, well-established companies that have complementary profit centers or growth potential. These three companies have done just that recently. Right now, however, only two are buys....