SafetyinNumbers

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.

That is true and there also may be a bump if there are some holdouts in the various classes. On a broader basis though, this looks very smart from a corporate basis as it directly transfers EV from preferred to equity, all else being equal. It also makes TA easier to take over. Which other preferred share issuers could follow suit?

Could the sell off be related to the DC.PR.B being a rate reset compared to the floaters DC.PR.D? I can see the market expecting a premium on a floater if rates are going to increase. What's weird is if you look at both price charts, the D's were sold off last year around this time even though the interest rate picture was more or less the same. I think the D's sold off hard last year because of the liquidity concerns that came about with the proposed extensions of the C's (now E's). But you are right that the spread between the B's and D's should narrow as we get closer to reset.

I've anecdotally noticed the narrowing of spreads between some floaters and their rate-reset pair but others have remained stubbornly wide. As I think rates likely don't go lower I like the idea of being long a floater with the option to convert to fixed for 5 years. With the spreads being so wide in some cases that it adds 3% to your annual returns. I'm long AZP.PR.C, FTS.PR.I and AIM.PR.B with that strategy in mind. I used own DC.PR.D as well but I'm so frustrated with their performance (the underlying company, not the pref), I sold it, perhaps irrationally.

I've noticed anecdotally in Toronto, that condo cap rates (rental income less expenses / price of condo) are running around the 5 year mortgage rate and prime rate. I think it's important to look at the cap rate for an investment decision versus the cash flow as it seems people are willing to run negative cash flow because prices have continued to rise. Recently rents are really on the rise to catch up to prices and I suppose we'll see if higher prices can be sustained by the market. Full disclosure, I'm a renter who has been wrong on prices in Toronto for almost 10 years!

Thanks Scorpion. I wish I could predict my yearly capital gains ahead of time!

I figure a lot of people on this board make tax instalments or are CA/CPAs so please share your view. I have paid instalments for the past few years and historically it has worked out so that I have a small amount owing or a decent sized refund. This year (knock on wood), I'm looking at a payable more than twice my instalment and I'm wondering if there is any advantage to topping up my December instalment or will my future required instalments be unaffected if I do so?

Pete C, Did you buy the GMP pref? I own some of the TA pref on the potential lift from a takeover but I'm also cognizant that any takeover might leave the pref orphaned. Most buyers, however, will have a better credit rating so the spread may tighten anyway resulting in capital appreciation.

I think Dundee invested about 31m US in total but they did it back when the CAD was more equal to the USD. Its been marked up because because of some equity raises at higher valuations (IFRS). This study was negative and there might be some upside still but there will likely be another money raising round at a down valuation study to fund a monotherapy trial. It's not a write off but its disappointing for sure. There is another potential catalyst this year from an investment in Android Industries. They have it marked at about 2x EBITDA on the books so there is potential for upside of maybe $1/share to NAV. Its equity accounted for so there has been no mark up.

It still seems like there is decent upside in the ZAR bonds with them trading at 80 and 11 months to maturity. They can call them anytime and there is a change of control provision that would require them to offer par if they get taken out.