Amica Mature Lifestyles Inc. The yield looks thin given the risk

Mar 4th, 2011 – Comment

When I look at these factors I have to ask myself am I being well paid for the greater risk?


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou
As an income oriented investor I have accumulated a portfolio of the usual blue chip companies along with some high yield income trusts and REITs, reinvesting dividends wherever possible.

 A few months ago I came across ACC but haven’t found a lot to go on. It seems to pop up, hold, then pop up again. It has pulled back recently and I’m wondering if you would have any knowledge about this company.

Would it be something to buy before the yield goes lower? Trading was halted recently and resumed the next day but I don’t know why.
Thanks
Sam

Hi Sam,

I love it when a reader knows their individual investor profile. When you can confidently state that you are an income investor, a speculator, or even a gambler you have a methodology that helps drive your decisions.

In my experience its those investors that get moved off their profile that get side swiped. I can’t tell you the number of times that investors with a risk averse profile have contacted me with tales of being convinced to leave their comfort zone and getting a bad hair cut. If you can stick to what you know and are comfortable with you will always be better off.

Lets consult the charts to see what if there is a case to be made for investing in ACC from an income investors point of view.

The three year chart illustrates the advance that the stock have enjoyed since the late December of 2008 lows below $3.00.  Clearly the advance has faced some challenges. The stock was mostly range bound in 2010 with support at $5.00 and resistance at $6.00 but then in August of 2010 it made a break taking it to the recent highs near $9.00.  Nice ride when you catch it!

The six month chart calls into question the liquidity of ACC. The average daily volume is only 17,000 share over the last three months. In the last thirty days it has traded above the average only 33% of the time.

When I am assessing risk I always consider liquidity. It provides an indication of investor interest or lack of it.In addition the MACD and RSI are at this point  not providing a convincing case  to suggest a return to an uptrend.

With a dividend yield of 4.4%, thin liquidity, a market cap of $150 million and an interesting but not compelling chart I would say that ACC might not compare as well to other opportunities for an income investor. The Bank of Montreal for example has a dividend yield of 4.5%, is very liquid, and has a market capitalisation of $34.9 billion.  When I look at these factors I have to ask myself am I being well paid for the greater risk?

Your question regarding the halt of trading around the middle of February was triggered by the announcement of a $23.6 million equity financing. The action taken by market regulators was more or less a drive by. The halt was announced after the market closed and removed before the market opened the next morning. Nothing serious.

If you want to search the data sphere for answers to  questions as to why a stock was halted, a good place to go is the exchange it is listed on. I went to the TSX Group website and found the answer quite quickly.

MAKE IT A MASSIVE WEEKEND AND HAPPY CAPITALISM!

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