Weekend Review

An update on some trades I made this week:

Sold Manulife (MFC) @ $23.09 (+$0.13 dividend arriving). Cost $22.44. Holding period: 11 trading days. Wife’s RSP.

Sold Manulife @ $22.62 (+ dividend). Cost $22.36. Holding period: 10 trading days. Cash account.

Purchased Nexen (NXY) @ $21.58 & Teck Cominco (TCK.B) @ $27.61. M-in-Law’s RSP.

Purchased Nexen @ $21.62. Cash Account. Current average cost price: $22.04

Purchased Nexen @ $22.50. RSP. Closing Prices: NXY $22.44, TCK.B $27.55, MFC $22.36.

Media and Financial Institution Discrepancies:

You’ll notice that different media agencies and/or financial institutions have differing data on the same corporations which leads one to consider how accurate are any of these agencies’ information. In defining Price-to-Earnings Ratios, irrespective if they take into account historical or future ones, these institutions have widely different data on numerous occasions. Who’s right ? Who knows ? Please review some examples of P/E Ratios as defined by (in order): Financial (National) Post, Globe & Mail, TD Waterhouse & Wall Street Journal. Please note that the WSJ doesn’t use decimal points.

CIBC (CM): 28.6, 29.96, 28.6, 26. RY: 22.2, 22.0, 23.38, 22. Encana (ECA): 6.9, 6.46, 6.46, 7. NXY: 13.6, 13.77, 13.6, 15.

CNR: 6.9, 13.05, 13.14, 14. Agrium (AGU): 9.5, 8.92, 8.89, 10. TCK.B: 24.4, 27.55, 22.4, 26. Goldcorp (G): 20.1, 19.18, 18.58, 21.

The Reliability of Market Analysts “Analysis’:

July 8: Canaccord Adams analyst put his target price on Crescent Point Energy (CPG) @ $31.00. Closed Friday @ $37.59.

July 10: Peters & Co analyst lowered his 12 month target (then @ $15.25) on Talisman (TLM) to $17.00. Closed Friday @ 17.90. Traded over $18.00 most of the week. While in August: UBS Inv. Research analyst raises his 12 month target on Talisman to $22.00.

In May: Edward Jones analyst put a hold on BMO, then trading @ $33.20. Closed Friday @ $52.45. All of my recommendations are for short term (1-6 week) periods to take advantage of opportunities in momentum.

Stock Pick for the Week Ahead:

Based upon a positive market, take advantage of dips in price for: Canadian Natural Resources (CNQ), RIM, Potash (POT) and Teck Cominco (TCK.B). Good luck and remain cautious. Keep a good portion of cash available to take advantage of short term opportunities. Warren.

Monday Morning Call

Some reviews of Preferred Shares recommended on July 30^th (16 trading days), including intra-(52) week highs:

BMO.PR.L $24.95 - $25.18 (+ $0.36 ex dividend)

RY.PR.D $19.68 - $21.31 (week high $21.89)

RY.PR.X $27.68 – $27.67

SLF.PR.A $19.00 – $21.60 (week high $21.86)

SLF.PR.B $19.25 - $21.56 (week high $21.94)

Some Trades I made this past week:

Sold TLM @ $17.37 (cost $16.93) holding period between 17 and 10 trading days

Sold CNQ @ $65.24 (cost $64.28) holding period 10 and 4 trading days

Bought NXY @ $22.16 Sold it @ $23.25 holding period 4 trading days

(All 3 trades in M-in-Law’s RSP account)

Bought more shares of NXY @ $22.20 in my Cash Account (average cost = $22.11)

Assuming a positive week on the market, I’ll continue to recommend accumulating on weakness:

CNQ, TCK.B, POT, AGU, MFC, & SLF.

Canadian banks are beginning to report this week. Should make for interesting watching. The Banks ran up a lot of recent times where the price to earnings valuations are quite lofty and don’t appear to have much mid-term upside. However, some short term momentum trades might prove fruitful. Stay cautious for any late summer declines. Have a good week, Warren.

Monday Early Morning Review

Some reviews of Preferred Shares recommended on Thursday AM July 30^th (11 trading days):

BMO.PR.L : $24.95 - $25.25 (+ 36 cents dividend to follow)

RY.PR.D : $19.68 - $20.60 (+4.7%)

RY.PR.X : $27.68 - $28.00

SLF.PR.A : $19.00 - $20.97 (+10.4% !!!)

SLF.PR.B : $19.25 - $21.19 (+10.1% !!!)

According to the National Post (Financial Post) this past weekend, 67 stocks on the TSX hit 52 week highs on Friday.

Of these 67 listings, 46 were for Preferred Shares. 3 were for I Shares, 3 Trust Units, 4 warrants/debentures/receipts, and

only 11 were for common shares.

Bond Yields: Provincial Coupon Bonds 8 -15 years out are yielding between 4.0 – 4.8%. Canadian Corporate Bonds of the same period are yielding between 4.4 – 6.7 %. Corresponding US Corporate Bonds are yielding 5.5 – 7.5%. High Yield US Corporate (“Junk”) Bonds including Ford 2012 and Hertz 2014 are yielding approximately 10%. If one has US Cash and requires income and reasonable security, it appears (currency risk notwithstanding) that the US offers better value for the risk.

The market appears to be somewhat overbought at present. When P/E ratios of major banks (e.g. RY)are approximately the same as technology firms such as RIM, it would indicate that share prices of the banks are a little high and/or those of the technology firms too low. I assume the former to be most accurate. Stay cautious and keep the powder dry for upcoming opportunities. See you later during the week. Warren.

Monday Morning Review

Some reviews of Preferred Shares recommended on Thursday AM July 30^th (6 trading days):

BMO.PR.L $24.95-25.00 (+ex dividend of $0.3625)

RY.PR.D $19.68-20.19

RY.PR.X $27.68-27.83

SLF.PR.A $19.00-20.15 (+6.05% !!!)

SLF.PR.B $19.25-20.32 (+5.56% !!!)

Common Share recommendations of Thursday AM July 30^th:

NXY $21.57-23.11 (inter-week high of $23.57)

TLM $16.27-17.09 ($17.28)

CNQ $61.75-64.58 ($68.54)

ECA $55.75-56.62 ($58.92)

SU $33.32-36.32 ($37.30)

POT $100.36-105.20 ($109.53)

AGU $48.22-53.38 ($53.95)

CNR $50.11-54.77 ($55.00)

RIM $82.37-83.61 ($86.28)

Some trades I completed this past week :

CNQ: Sold @ $66.86 (cost $62.49 over 5 & 7 trading days). Repurchased @ $64.89. M-in-Law’s RSP.

POT: Sold @ $107.55 (cost $103.58 over 3 & 8 trading days). Repurchased @ $105.53. M-in-Law’s RSP.

NXY: Sold @ $22.95 (cost $21.75 over 10 & 11 trading days). My RSP.

NXY: Sold @ $22.98 (cost $22.05 over 10 & 11 trading days). My wife’s RSP.

NXY: Sold @ $22.92 (cost $21.89 over 5,9,10, & 11 trading days). M-in-Law’s RSP.

Other recommendations and trades: In the last blog I mentioned to keep an eye on Manulife (MFC) and Sunlife (SLF) to purchase upon potential stock weakness. I never could have imagined the type of stock weakness that occurred ! Manulife cut its dividend in half and the stock suffered a 15.5% weekly drop in price. Sunlife suffered only a 9% weekly drop. I considered that to be a signal to make a small move into both stocks and purchased them in several accounts at the following prices: MFC: $23.52, 23.32, 22.44 & 22.33. SLF: $34.75, 35.29, 32.86 & 33.16. As I only made small purchases, I can buy more to reduce the overall cost in the accounts where I purchased them at the higher of prices. In particular I’ll recommend Sunlife to be bought on weakness this coming week noting that the company did not cut its dividend. Other specific recommendations based upon stock weakness continue to Canadian Natural Resources (CNQ) and Potash (POT). I’ll try to follow up later this week with info on US corporate bonds and some peculiarities on how corporate statistics are reported by different news and investment organizations. Keep cool, stay calm and look for opportunities. Good luck, Warren.

Weekend Review: GIC's, Bonds vs. Preferred Shares

As promised, please review data comparing GIC’s, Government and Corporate Bonds and Preferred Shares:

2014 Maturity: GIC’s: London Life (3.5%), Manulife Bank (3.4%), Canada Western Bank-Canada Life-Standard Life-Desjardins (3.25%).

Gov’t Bonds: Ontario (2.82%), Quebec (3.11%), Canada (2.64%).

Strip Bonds: Nova Scotia (3.36%), Ontario (3.28%), Manitoba (3.43%).

Corp. Bonds: Bank of Montreal (3.28%), Cogeco (4.75%**), Bank of Nova Scotia (3.15%).

2015 Maturity: Gov’t Bonds: Ont (3.18%), Fin. Qbc (3.5%), Can (2.74%).

Strip Bonds: Nfld. & Lab. Hydro (3.6%), BC (3.51%), Ont (3.52%), Can (2.74%).

Corp. Bonds: GE Cap. (4.41%), CNQ (4.25%**), BMO (3.35%), Manulife (4.05%), Westcoast Egy. (4.36%*).

2016 Maturity: Gov’t Bonds: Ont (3.47%), Can (2.93%), Qbc (3.68%).

Strip Bonds: BC (3.91%), Can (3.2%), Qbc (3.94%), Ont (3.90%).

Corporate Bonds: Shaw Comm. (4.53%**), Enbridge (4.14%), Rogers (4.39%**), Loblaws (5.04%**).

2017 Maturity: Gov’t Bonds: Ont (3.72%), Can (3.12%), Qbc (3.91%).

Strip Bonds: Can (3.41%), Ont (4.08%), Hydro Qbc (4.27%), BC (4.4%).

Corp. Bonds: Gtr. Tor. Airport (4.45%), BMO (3.88%), GE Cap. (5.28%).

2018 Maturity: Gov’t Bonds: Ont (3.92%), NB (4.0%), Can (3.28%), Qbc (4.11%).

Strip Bonds: Canada (3.61%), NS (4.68%), Qbc (4.46%), Ont (4.31%).

Corp. Bonds: Alberta Energy (4.53%*), BMO (4.19%), Finning (5.34%*).

-note- Italicized yields are for lower quality bonds, the more asterisks, the lower the overall grade.

Preferred Shares: Manulife.D - rate reset 06/2014 (5.89%), Sunlife.A - perpetual (6.08%), Power Financial. K- rate reset 10/2011 (6.07%),

CIBC.M – rate reset 07/2014 (5.87%), BMO.O – rate reset 05/2014 (5.77%), RY.X – rate reset 08/2014 (5.64%).

In case of bankruptcy, preferred shares have a lesser guarantee than bonds. However, reviewing the statistics above, it appears that they offer a much better return.

Review of Thursday AM, July 30 Blog: Following the strong recommendations by Jim Cramer of CNBC’s Mad Money on Wednesday evening, both Potash and Agnico Eagle gained substantially the next day on large US volume. The “moral” of the story for me would be that whenever Jim Cramer highly touts a Canadian company where the stock is co-listed in the US, it would make sense to take advantage of that “opportunity”. He obviously commands a great deal of influence.

Review of Thursday AM stock picks (price before market opening versus Friday close): NXY ($21.57-$22.33), TLM ($16.27-$16.65), CNQ ($61.75-$64.76), ECA ($55.76-$57.78), SU ($33.32-$35.47), POT ($100.37-$100.36), AGU ($48.22-$49.51), CNR ($50.11-$52.39), RIM ($82.37-$81.82), BMO.PR.L ($24.95-$25.05), RY.PR.D ($19.68-$19.93), RY.PR.X ($27.68-$27.69), SLF.PR.A ($19.00-$19.54), SLF.PR.B ($19.20-$19.68).

I’ll stick to the same picks for now but will add that you watch for and accumulate Manulife (MFC) & Sunlife (SLF) on any weakness. Continue with summer caution and good luck. Warren.