SafetyinNumbers

I'm finding value in small/micro cap commodity/energy stocks. Two that trade below 2x FTM EV/EBITDA are GCM.TO and ASND.TO. The former being a gold company in Colombia and the latter being zinc in Honduras. Both are growing and will be free cash flow positive next year at current commodity prices. On the energy side, PPR.TO, trades at closer to 4x EV/EBITDA but have giant catalysts worth potentially more than the EV of the company in a NAFTA lawsuit (that has already had its arbitration hearing) and legalization of Quebec Shale development where they have huge acreage but have booked zero reserves. Perhaps a third each for one 2018 pick!

There's probably too much margin of safety for them to invest in their own stock right now. Makes them uncomfortable. In all seriousness: I understand the need to maintain liquidity, but I'd like to see them put money into their own stock (or buying back prefs or whatever) rather than make new speculative investments. Pare the operations back to focus only on rationalizing the existing portfolio. Once the market starts giving them some credit, they can try to grow the company again. But the liquidity is to redeem the E class preferred isn’t it which is like buying back preferred.

They can’t buyback shares because they need liquidity to pay down the preferreds that are puttable. You may not like it but there is logic to it. As a D class preferred holder, I appreciate that too. Ha! Yeah they're real short on cash or something that can be turned into cash to buyback the common shares. Sell off some of that consistently disappointing position in Dundee Precious Metals... At the head office level, the corporation held cash of $53.0-million and a portfolio of publicly traded securities with a total value of $194.5-million at the end of the third quarter of 2017. All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.

They can’t buyback shares because they need liquidity to pay down the preferreds that are puttable. You may not like it but there is logic to it. As a D class preferred holder, I appreciate that too.

Bought a little more ELF.TO.

I bought some T.PPR as well. But also T.IPO and V.ATU. What’s equities these symbols? Can‘t for the life of me find what kind of security these are. They are all listed on Toronto or Vancouver. Don't need a prefix or extension on this site: https://www.tmxmoney.com/en/index.html

I bought some T.PPR as well. But also T.IPO and V.ATU. What are the most important metrics you guys use to value these? (both on a relative and absolute basis) I mostly look at EV/DACF, P/reserves, make sure the debt isn’t too high and that they can grow within cash flow. Feel like there is high margin of safety in those names but they aren’t participating as much in rally because of liquidity and tax loss selling (especially PPR).

I bought some T.PPR as well. But also T.IPO and V.ATU.

Does anyone know how to get the gold price from Google Sheets? I’m asking under this forum because gold is a currency (probably).

I disagree on not seeing those types of rent in Toronto. Obviously depends on location and size.

Any thoughts on development of the Utica shale in Quebec? We have seen some preliminary regulation put forward this year: http://www.questerre.com/news/2017/09/20/quebec-government-publishes-draft-hydrocarbon-regulations There is also a conference in a few weeks in Montreal: http://www.apgq-qoga.com/en/conference-2017-2/ The two biggest players are Questerre and Prairie Provident from what I can see. Questerre (QEC.TO) stock has performed well and they have been able to raise money on the back of future potential development while Prairie Provident ($PPR.TO) has been left behind. Questerre definitely seems to market the potential aggressively while Prairie doesn't talk about it all. The shareholder bases are also dramatically different which perhaps further explains the valuation difference. PPR looks cheap on production from Alberta alone so the QC exposure seems to all be for "free" while, QEC seems to have a lot of value in it for the potential of Quebec. I'm long PPR.

Anyone looking at the E's? They have a YTM of over 12% and are putable but obviously don't have the same capital gain potential as the Ds and Bs.

Safe to assume that your company doesn't have a line of credit that it could pay down? Or are you forced to segregate the funds?

I think it's just because the current yield is higher but that is starting to change with the 90-day t-bill rate creeping up. Retail investors focus on current yield because they usually don't know about the interconvertible option or how yields reset. Look at BBD.PR.B / BBD.PR.D, investors didn't notice BBD.PR.D's yield was going up 25% last week until they announced the new coupon even though they had announced the formula a month before. We have seen the less liquid insurance company floaters begins trading in line with their more liquid strong pairs recently as investors are looking for more floating product.

Anyone still own DC.PR.B or DC.PR.D? I've been adding to the floater, DC.PR.D, lately. With the recent change in BOC policy to a bias towards tightening, the 2 year bond yield is around 1.2% so this is is perhaps the best estimate of the 90-day t-bill rate over the next 2.5 years until the option to convert to DC.PR.B is available. On that basis, the best estimate of average coupon on DC.PR.D is 5.3% which implies a current yield of 11% which is more than the DC.PR.B. Further, all else being equal, the $1.30 spread between the DC.PR.B and DC.PR.D should close into interconversion which would add another almost 5%/yr to the return on a relative basis. I'm curious on people's thoughts? Compelling or too much of a bother to pick up 5%/yr?

Yes but they are interconvertible meaning that you can exchange your D's for B's (or vice versa) on the reset date. Theoretically, this means the price of the D's and B's should converge by the reset date regardless of what rates do. The same phenomenon exists in AZP.PR.C vs AZP.PR.B.

The 2016 edition is now available: http://robgrayassetmanagement.com/content/uploads/prefGuide2016.pdf http://newtongroupwealth.com/content/uploads/PREFERRED-GUIDE-2017.pdf Anyone has gotten a hold of the 2017 guide to preferred shares? I think Scotia has done a great job of assembling a manual of Canadian preferred shares.

As we await Card's answer. I suggest buying the DC.PR.D's over the B's as they are interconvertible in 2.5 years. While, the B's look more attractive on a current yield basis at a 9.9% yield vs the D's at 9.3%, all else being equal the interconversion feature adds about 7%/year to your return.

Hey Viking, that podcast was 11 months old so keep what you heard in context.

Most stocks not in an ETF

Rent is still actually pretty cheap. Cap rates are between 2-3%.

The cost of living is being driven up but apparently not enough to raise rates.

I thought CHMC insurance is only applicable if the LTV is more than 80%?

As a debenture holder, I can see why they offered as much as they did. With no bank debt here, its not a bad result for me to get stock for my debentures at would surely be a price much lower than this. Deb holders would end up with substantially more than half the company (which is what the result basically is of full conversion above $1.25). ZAR has less leverage on the deb holders than if there was a bunch of bank debt, like in the TBE.DB case. Speaking of which, there seems to be a constructive resolution for the TBE.DB, but not sure exactly what it looks like.

Not sure how much you can read into that. Bank employees just had options vest following their year end on October 31 and were granted new options so it makes sense they would exercise and sell.