SafetyinNumbers

Any particular names? Based on 2018E and not all have analyst coverage but GCM.TO (gold), ASND.TO (zinc), JAG.TO (gold), and PPR.TO (oil). PPR also has a few other catalysts with respect to Quebec shale assets which currently have zero booked reserves. ASND.TO just put out 2018 guidance this morning. The company has a market cap of US$45m and their guidance is EBITDA of US$32-40m and FCF of US$14-20m. I’m not sure what the right multiple is but it seems too low right now or even up 50% from here. https://web.tmxmoney.com/article.php?newsid=6899444052652449&qm_symbol=ASND

Any particular names? Based on 2018E and not all have analyst coverage but GCM.TO (gold), ASND.TO (zinc), JAG.TO (gold), and PPR.TO (oil). PPR also has a few other catalysts with respect to Quebec shale assets which currently have zero booked reserves.

It seems like the price action in a lot of commodities has already been very good and a lot of equities associated with those commodities have lagged. I find this to be the case in microcaps in particular where many names trade at less than 3x cash flow.

Noranda Income Fund (NIF-U.TO) and Prairie Provident (PPR.TO) I still like both. I thought net assets would act as lower bound for NIF following the end of a long-term contract with Glencore but I was wrong when combined with the dividend elimination and labour strike. Still trading below net assets and well below book value. The strike is now over and zinc prices are hitting 10 year highs. We'll have a better idea of earnings power soon but Glencore controls the manager and might have an interest in keeping earnings suppressed. I have heard some rumblings of activist involvement which might come to fruition before the next AGM. As for PPR, it's a cheap oil and gas stock, trading at a third of reserve value while having two potentially giant catalysts relating to its Quebec shale gas assets (resolution of law suit + legalization of drilling). Both appear to have high margin of safety with decent upside.

How much has your life changed after a 12000% year? Congrats, that’s awesome.

How much has your life changed after a 12000% year?

The gas price (AECO) is obviously awful too which impacts some but not all companies. The differentials between WTI/WCS usually ebb back and forth so eventually they will come in again. I think the interest is well timed as 12/27 was the last day for tax loss selling for Canadians. I own PPR, ATU, IPO, CPG, and GXE. All oil weighted and trading well below peers on valuation. PPR is the most interesting if you like event driven optionality as they have some Quebec assets that may become suddenly very valuable (regulation changes) and a lawsuit with the Canadian government (arbitration hearings completed in Nov) that should be resolved in 2018. All of that upside is for free as the current producing assets and reserves exceed the value of the current EV. Goldman Sachs owns over 50% of it as well so I think once the Quebec catalysts play out, they will sell the company.

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.