AMA (Ask me anything)…

The irreverent (but not irrelevant!) Nelson has linked to me in the past, so I will link to his post on something non-finance related and repeat the theme here.

I’m compiling the year-end (as today was the last trading day in the markets for 2016) and doing some year-end reflections, in addition to some projections of what we will be seeing in 2017.

In the meantime, I invite readers here to “ask me anything” via the comments below, and I will endeavor to answer in a timely fashion.

Happy New Year.

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Not sure where to start – I’ll just throw out a bunch of random questions.
Do you still see a lot good ‘value’ in the market? If so, what sector / instrument?
What is your take on the chance of a Trump-induced / rising interest-rate induced recession in the next 12 – 24 months?
Are beaten up rate-resets / floating rates prefers a good risk / reward situation? What about CAD/USD – going to 65 cents?

Merry Christmas and happy new year.

What does your magic ball show for MIC this upcoming year? You should really consider starting another DB blog of random musing. Bonne année!

I live in a city nearby you. Would love to get a cup of coffee and discuss stock market. Let me know if you are up for the offer. Either way, Happy new year!

Yeah, I have a question. How does it feel SHAMELESSLY stealing an idea from me? Which I stole from Reddit. Which they stole from someone else. And so on.

Okay, real questions time:

1. What’s your prediction for Toronto/Vancouver real estate prices in 2017?

2. Largest holding?

3. Have you ever considered investing in some of the super cheap stocks in Europe or Asia?

Thanks for a great year of posts Sacha.

What confluence of factors will move the market to price KCG Holdings above book value?

Hi Sacha
I own a very small position in GCM.DB.V…….which is a straight forward debenture.
Can you explain GCM.DB.U…to me. I found this…..
Coupon: 1% Cash / 2% PIK rate
Maturity: 08/11/2018
Ratings: NA
Pays: Monthly
Price: 58.29
Yield to Maturity: ~25.75%
(price is out of date)
Ok, this is USD… YTM is straight forward…..but 1%….what is 2% PIK rate….and it pays 1% /12 each month?
I remember reading that you and several others preferred the 6% debenture and felt it was more secure….but the US is a much shorter term…..care to elaborate.
Thanks
Marc

Marc, for the 1% coupon debenture. GCM has the option to pay for it at maturity with shares issued priced at $0.13 USD. If the avg trading price of the shares prior to maturity is below $0.13 USD, 19% must be settled in cash, with the option to settle the 81% with shares issued at $0.13 USD. With shares trading below $0.1 CAD, hence the significant discount.

The 6% debenture does not contain redeem with share clause and consider secured debt. The 1% is considered unsecure debt.

[…] Divestor, one of my favorite investing blogs, is doing his own AMA. Feel free to go and ask him such questions as “who are you” and “what do you […]

This might be slightly off-topic, but –

What advice would you give to a 26 year old guy with no formal background in finance/investing that just inherited US$1 million cash?

Buffett says just dollar cost average index and forget about it. Is this what you’d recommend?

Also since we’re 8 years into a bull market (Shiller PE ratio 27.7), would it make sense to hold off buying index now and wait until recession starts or just start now?

Thanks.

What do you use for portfolio tracking? Google Finance / Yahoo / customized Excel spreadsheet / other?

Thanks for the input Will and Sacha…..still a little confused…..it pays 1%/12 monthy, as well as 2%/12 shares (PIK) monthly?
Sacha…what does “a near-equity proxy.” mean?

In some ways, I find it amazing how close to parity with the stock that GCM.DB.U trades.

Meanwhile, GCM.DB.V which gives you the upside optionality for over 16 extra months, while giving downside protection, a better sinking fund and decent current income doesn’t reflect much of those advantages in its price.

Hello Sacha,

My name is Alexander John Fisher. My current history and general life are many and varied and uniquely like a Canadian Forrest Gump. Without going into too much detail about the details at this time, I was born in Trail (The Silver City) in ’62, grew up in Rossland (The Golden City), dropped out of a curriculum that I didn’t believe in after grade 11, and have been essentially bumbling and stumbling ever since. Fast forward to Vancouver 1990, the year I became divest. I initiated the RIDE car/vanpooling and Go Green campaigns early that year until I felt they had been left in good hands and I could go out and make some bread money. I also consulted with Blaine Culling of the Roxy downtown and now he or his associates are non responsive. I began whispering things like ‘gold’ to VSE investors and ‘salad’ to MacDonalds managers. And then I went to the Peace Camp in front of the art gallery where I was placed into a position of responsible authority. It was my initial experience with what we now know of as the First Nations peoples and cultures. I phoned the UBC Faculty of Law and asked them to research the question, “Who’s Land is it Anyways?”. I couldn’t possibly tell you the young man’s name, but after the walk from downtown to the faculty building, his response to me was that the land (Vancouver, British Columbia and Canada) are all unceded land. This gave them the legal foothold they needed to level the field in the face of colonial rule. I’ve been an outsider looking in for a long time and would like to find investors (divestors) for my biggest and best ideas as they are continually emerging. Anyways, my motivation is the environment and finding way and means of turning the machine around and fixing everything it has done to damage us. I want to go on a tour of Western Canada to promote wholistic new ways of existing and reupping my effort to shift the machine. Can you help me to find investors/divestors? I need a lot of help in a lot of areas. After all, somebodies got to keep up with Trudeau and Trump. At this point I’ll leave it to you to respond other than to tell you that I’m broker than a joker because more than anything, I’m a principalled individual and because of it marginalized beyond being able to afford my rent anymore or even a set of snow tires. I need some benefaction before being impoverished puts an end to me.

Sacha,

Your take on Zargon’s proposal to debenture holders?

I’m a bit surprised how the common tanked on the news, unless common holder are expecting another asset sale to completely get rid of the debt – otherwise a part-cash / part-stock redemption is inevitable and the stock would be issued at like 70-80 cents area; now at least your dilution is happening at 1.25 instead.