How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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OCI Resources, $24.50, symbol OCIR on New York (Shares outstanding: 9.8 million; Market cap: $483.7 million; www.ociresources.com), is a limited partnership that operates OCI Wyoming LP’s trona-ore mining and soda-ash production business. Through its facility in Wyoming’s Green River Basin, OCI Wyoming is one of the world’s largest and lowest-cost natural soda-ash producers.
OCI Resources listed on the New York exchange and sold shares to the public on September 18, 2013, at $19 each.
The Green River operation mines trona, which is abundant in nature, and processes it into soda ash for a variety of consumable and industrial products, particularly glass, sodium-based chemicals and detergents. The Green River Basin has the world’s largest deposit of natural trona and supplies over 90% of U.S. soda ash production.
The facility has been operating for more than 50 years and has roughly 75 customers, including manufacturers and chemical producers.
In the three months ended June 30, 2015, OCI Resources’ revenue rose 8.1%, to $122.2 million from $113.0 million a year earlier. Earnings per share gained 15.7%, to $0.59 from $0.51.
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OCI Resources listed on the New York exchange and sold shares to the public on September 18, 2013, at $19 each.
The Green River operation mines trona, which is abundant in nature, and processes it into soda ash for a variety of consumable and industrial products, particularly glass, sodium-based chemicals and detergents. The Green River Basin has the world’s largest deposit of natural trona and supplies over 90% of U.S. soda ash production.
The facility has been operating for more than 50 years and has roughly 75 customers, including manufacturers and chemical producers.
In the three months ended June 30, 2015, OCI Resources’ revenue rose 8.1%, to $122.2 million from $113.0 million a year earlier. Earnings per share gained 15.7%, to $0.59 from $0.51.
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This week’s first question helps illustrate a common practice in today’s investment business, particularly in ETFs (Exchange Traded Funds). ETFs are a little like conventional mutual funds, but with two key differences. First, ETFs trade on a stock exchange throughout the day, much like ordinary stocks. So you can buy them through a broker whenever the stock market is open, and generally you pay the same commission rate that you pay to buy stocks. In contrast, you can only buy most conventional mutual funds at the end of the day. Commissions vary widely, depending on negotiation with your broker for fund dealer....
iShares Core S&P 500 Hedged ETF (CAD-Hedged), $23.17, symbol XSP on Toronto (Units outstanding: 125.4 million; Market cap: $2.9 billion; www.blackrock.com), holds the stocks in the S&P 500 Index, which is comprised of 500 major U.S. stocks chosen by market size, liquidity and industry group.
The index’s 10 highest-weighted stocks are Exxon Mobil, Apple, Berkshire Hathaway, Microsoft, Wells Fargo, General Electric, AT&T, Johnson & Johnson, JPMorgan Chase & Co. and Pfizer. It has a 1.6% dividend yield.
iShares Core S&P 500 Hedged ETF (CAD-Hedged) is hedged against movements of the U.S. dollar against the Canadian dollar. The fund’s Canadian-dollar value rises and falls solely with the movements of the stocks in its portfolio.
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The index’s 10 highest-weighted stocks are Exxon Mobil, Apple, Berkshire Hathaway, Microsoft, Wells Fargo, General Electric, AT&T, Johnson & Johnson, JPMorgan Chase & Co. and Pfizer. It has a 1.6% dividend yield.
iShares Core S&P 500 Hedged ETF (CAD-Hedged) is hedged against movements of the U.S. dollar against the Canadian dollar. The fund’s Canadian-dollar value rises and falls solely with the movements of the stocks in its portfolio.
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BMO U.S. High Dividend Covered Call ETF, $18.41, symbol ZWH on Toronto (Units outstanding: 14.7 million; Market cap: $270.6 million; www.etfs.bmo.com), uses covered calls to try to boost its cash flow so it can provide higher distributions to investors.
Covered call writing is where you sell a call option against a stock you own. You receive cash for selling the call but are obligated to sell the stock at a fixed price (the “strike price”) if the holder of the call exercises the option. In other words, in exchange for being paid the price of the option, you give up any increase in the stock above the strike price.
Selling call options generates an income stream. However, it also tends to shrink any capital gains the fund’s portfolio might generate. When the stocks the fund owns rise above the strike price, holders of the call options it has sold will exercise those options and buy the stock from the fund at the price fixed by the option’s terms. This introduces a filtering mechanism under which the fund has to sell its best picks to call holders at a fixed price, while holding on to stocks that go sideways or down.
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Covered call writing is where you sell a call option against a stock you own. You receive cash for selling the call but are obligated to sell the stock at a fixed price (the “strike price”) if the holder of the call exercises the option. In other words, in exchange for being paid the price of the option, you give up any increase in the stock above the strike price.
Selling call options generates an income stream. However, it also tends to shrink any capital gains the fund’s portfolio might generate. When the stocks the fund owns rise above the strike price, holders of the call options it has sold will exercise those options and buy the stock from the fund at the price fixed by the option’s terms. This introduces a filtering mechanism under which the fund has to sell its best picks to call holders at a fixed price, while holding on to stocks that go sideways or down.
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Slate Office REIT, $7.23, symbol SOT.UN on Toronto (Units outstanding: 30.5 million; Market cap: $220.5 million; www.slateam.com), owns 48 office and industrial properties in Atlantic Canada (46% of square footage), Ontario (33%) and Western Canada (21%). Slate changed its name from FAM REIT in March 2015.
In June, the trust completed its $430-million purchase of Fortis Properties Corp., Fortis Inc.’s commercial real estate portfolio. These properties, located in New Brunswick, Nova Scotia and Newfoundland and Labrador, include 10 office buildings, one mixed-use office complex and three shopping malls. In all, they comprise 2.8 million square feet of space.
Some notable Newfoundland properties included in the sale are Cabot Place, the Fortis Building and TD Place in St. John’s; the Fortis Tower and the Millbrook Mall in Corner Brook; the Fraser Mall in Gander; and the Marystown Mall.
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In June, the trust completed its $430-million purchase of Fortis Properties Corp., Fortis Inc.’s commercial real estate portfolio. These properties, located in New Brunswick, Nova Scotia and Newfoundland and Labrador, include 10 office buildings, one mixed-use office complex and three shopping malls. In all, they comprise 2.8 million square feet of space.
Some notable Newfoundland properties included in the sale are Cabot Place, the Fortis Building and TD Place in St. John’s; the Fortis Tower and the Millbrook Mall in Corner Brook; the Fraser Mall in Gander; and the Marystown Mall.
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Cott Corp., $13.87, symbol BCB on Toronto (Shares outstanding: 109.7 million; Market cap: $1.5 billion; www.cott.com), is a leading maker of beverages for retailers and distributors. It also makes drinks for companies that sell them under their own labels.
Cott makes a range of products in a variety of packaging and sizes, including carbonated soft drinks, juice and juice-based beverages, flavoured water, tea and energy drinks, as well as alcoholic beverages.
The company has over 60 plants and 180 warehouses in the U.S., Canada, the U.K. and Mexico. North America supplies 80% of its revenue and 65% of its earnings. Around 26% of its beverage sales come from Wal-Mart.
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Cott makes a range of products in a variety of packaging and sizes, including carbonated soft drinks, juice and juice-based beverages, flavoured water, tea and energy drinks, as well as alcoholic beverages.
The company has over 60 plants and 180 warehouses in the U.S., Canada, the U.K. and Mexico. North America supplies 80% of its revenue and 65% of its earnings. Around 26% of its beverage sales come from Wal-Mart.
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Chorus Aviation, $5.61, symbol CHR.B on Toronto (Shares outstanding: 114.6 million; Market cap: $685.4 million; www.flyjazz.ca), formerly known as Jazz Air Income Fund, is Air Canada’s main regional affiliate. Chorus owns Jazz Air, Canada’s largest regional airline and second-biggest airline overall, based on the number of planes it operates and routes it flies. Jazz Air and Air Canada have a capacity purchase agreement (CPA) under which Air Canada buys almost all of Jazz’s seats based on predetermined rates. The company’s current CPA with Air Canada provides the stable long-term cash flow it needs to maintain its monthly dividend and buy new aircraft....
Bank of Nova Scotia has considerable exposure to Latin America, where lower prices for commodities like metals and oil have slowed growth. However, the bank’s focus on lending to the region’s growing middle class—including credit cards, car loans, insurance and mortgages—has let it sidestep most of the slowdown and keep reporting rising profits from the area. BANK OF NOVA SCOTIA $60.29 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $72.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with $863.1 billion of assets. In its fiscal 2015 third quarter, which ended July 31, 2015, the bank earned $1.85 billion, up 2.8% from $1.80 billion a year earlier. Earnings per share rose 3.6%, to $1.45 from $1.40, on fewer shares outstanding....
SUN LIFE FINANCIAL $44.38 (Toronto symbol SLF; Shares outstanding: 610.6 million; Market cap: $27.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.sunlife.ca) continues to expand in the U.S. At the same time, it’s cutting its risk by focusing on highly profitable niche markets with low capital reserve requirements. In June 2015, the company bought U.S. asset manager Prime Advisors for an undisclosed amount. Prime has about $13 billion under management, mainly bond portfolios for U.S. insurance firms. In September 2015, Sun Life paid $560 million for Bentall Kennedy Group, which manages $27 billion in real estate for over 550 institutional clients across the U.S. and Canada....
RIOCAN REAL ESTATE INVESTMENT TRUST $25.78 (Toronto symbol REI.UN; Units outstanding: 318.8 million; Market cap: $8.1 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) is Canada’s largest real estate investment trust. In the three months ended June 30, 2015, RioCan’s revenue rose 6.3%, to $322.3 million from $303.2 million a year earlier. Cash flow per unit gained 2.4%, to $0.42 from $0.41. The trust has now agreed to unwind its 50/50 joint venture with U.S.-based Kimco Realty. This business manages 35 malls across Canada....