Hi Lou,

 My husband always took your advice seriously and since he has passed away I am trying to re invest his portfolio. What do you think of InterRent? I am looking for return on my investments i e dividends. Thanks ever so much. Have a good one.

Anonymous.

Dear Reader,

I am so sorry for your loss. My thoughts go with you and your family on the passing of your loved one.

InterRent Real Estate Investment Trust (IIP.UN TSX) is a small cap player, $110 million, in the multi-unit residential property segment. The smaller the cap of an investment the higher the level of risk associated with it. In the world of risk management size does matter.

The focus of the enterprise is to find run down assets, fix them up, lower the vacancy rate, and increase rents. Cleary the efforts of management have contributed greatly to the increase in the value of the units over the last year.

A review of the charts will provide better guidance on how to evaluate the risks and opportunities associated with IIP.UN.

The three year chart illustrates the advance that started in late March of 2011. There is support along the trend line and the 50 day moving average which has not been breached.

The MACD and RSI on the six month chart are both indicating that there is more gas left in the tank to fuel further gains. Before you hit the buy button let’s review some of the factors you should consider.

The small cap nature of the company has been identified as a risk factor. In addition the trading volume is somewhat choppy which adds another level of risk. Typically an investment with healthy liquidity provides for ease of entry and exit.

The market for fixer uppers provides many opportunities for the trust.  The search for undervalued properties to which  IIP.UN can apply capital and professional management offers many targets. As management drives growth the likelihood of increased distributions to unit holders will contribute to higher prices for the units.

If IIP.UN fits your investor profile and it is being considered as a component of a well structured portfolio of income producing assets then I would say it could be added into the higher risk tranche of your holdings. It is a case of buy high – sell higher.

Make it a profitable day and happy capitalism!

Hi Lou.

I’m looking at STB-T as an income on my TFSA. What are your thoughts on it?  Safe time to buy without to much down side?

Ben

Hi Ben,

I last posted on the prospects for Student Transportation Inc. (STB TSX) on March 15, 2010 on a request from John. At the time it looked like the shares of the company had more to give and it certainly did. Just over a year ago the dividend yield was 11.6% and the stock was in an uptrend. Currently the yield is 8.4% and the stock is in a downtrend. Lets put the charts under the scope and see if this is a good time to get on the bus.

The three year chart embellishes our appreciation of a solid uptrend and the wealth it generates for investors who get on the ride at the right time. The advance started in June of 2009 when the shares were trading at $2.75. When John asked about STB in March of 2010 it had already made a nice move to $4.85 but it appeared to have more left in the tank. By April of 2010 it got overbought and pulled back in May to $4.50 where a double bottom formed sending the stock to the recent high of $7.00. 

The six month chart depicts the overbought situation signalled by the RSI in February of 2011. The MACD also indicated that the momentum was shifting to the sell side at the same time. STB met resistance at $6.90 and then pulled back to $6.60 where it caught a bounce off its 50 day moving average. The move to $7.00 in late March was followed by a lower high in early April setting up a breach below the 50 day moving average.

I am not sure that now is the best time to be buying STB. The company is set to report its Q3 results on May 11, 2011 which is an event that can cut both ways. That in concert with the fact that neither the RSI or the MACD are suggesting a shift in momentum to the buy side puts a yellow flag on the track for me.  Best case scenario is that it retest support at $6.60 and catches a bounce. Worse case we have to retest support at $6.00 along the 200 day moving average.

Happy Capitalism!

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!

Lou,

I have been a share holder for many years of CWC. Entered around the $2 range. The stock is now in the .23 cent range. In order for me to try and recover some of my losses I would have to take a pretty strong position at these levels. Would you go after it aggressively, hold or sell and get the taste out of my mouth.

Thank You

               Ted

Hi Ted,

Central Alberta Well Services ( CWC TSXV)  provides a great point of departure for a discussion of capital preservation and developing a wider range of opportunities for your investment dollar.

The first thing to realize is that  we have all taken a haircut on investments so don’t feel like you’re alone.In fact I could run for President of the Bad Haircut Club and win handily! The best we can hope for from our losses is to learn not to make the same mistakes again. That will help reduce the risk we take in an effort to generate gains and give us confidence when we have a winner.

The first chart is the ten year chart for CWC which doesn’t have a lot of details but I think you get the point. The stock has been generally in a sell off except for one opportunity to make some cash on a huge spike in August of 2005. When we see a chart like this we should ask ourselves what  exactly would make us want to buy into this company. No matter what the story is the chart is asking  ” is that a good enough reason?”.

The five year chart, at right, doesn’t give us a better outlook. It does show support at $2.00 that then became resistance and then the total collapse to where it is today.

What is clear is that there were many opportunities to preserve capital by heading to the exits sooner.

Capital preservation is code for cutting your losses and getting to your next trade. What I have learned in my 43 years as an investor is that most of the time your first loss is your smallest loss. Its never easy to admit when we are wrong but some of the pain will ease when we have say 70% of our original investment to use for a new opportunity instead of only 10%.

As far as plowing more capital into CWC please ask this yourself this simple question. Has CWC been a good investment so far? I think you know the answer.  Take the time to find a better opportunity for your hard earned capital. It will require some work to find a new stock to invest in but I think you would be better served. In general it is rarely recommended to chase your losses with new capital.

Happy Capitalism!

Hi there,

Whats happening with Timminco long term? Shares have dropped since I bought.

Nancy

Hi Nancy,

Timminco Ltd. ( TIM TSX) has been in a sell off for quite some time.  I just addressed the core issues that are relevent  to this case in a presentation  to the  Oakville Chapter of  the Canadian Society of Technical Analyst . Idea generation and validation are central to reducing risk and enhancing opportunity when considering an investment.

When we are attracted to a potential investment it behooves us to conduct some due diligence to at least have a fighting chance of making a profit. The first level of validation of a potential investment is to get the direction right. In the dot com days people were jumping into the market without any idea what the companies that they were buying did. But at least they were buying shares  that were going up! 

I’m not sure when you bought the shares of TIM but the three year chart provides a good reason not to. The best time to buy a stock is when its going up and there is a strong trend to support the advance. Nothing on this chart suggests that the downtrend in place since the summer of 2008 was about to reverse. Yes there was a spike in the fall of 2009 but it was not sustained.

In addition the stock couldn’t hold onto support at $1.25. When I see a chart like this I ask myself is there any reason to spend more time looking into the background of the company. Not really. This train is not going in my direction. It doesn’t matter that TIM is a producer of silicon for the solar panel industry or anyother  fundamental detail. The price of the stock has all that information in it already and its been proving a sell signal for a long time.

The three month chart is also not providing an endorsement for TIM.

The idea of a company that can produce solar panel quality silicon is great but the idea is no longer validated by the charts.

MAKE IT A HUGE WEEKEND AND HAPPY CAPITALISM!

Hi Lou,

Whats your take on- STB TSX

Always enjoy your comments.

John

Hi John,

Student Transportation Inc., ( STB TSX) provides bus services to school districts in Canada and the US. Thirty percent of school bus services in North America are provided by some 4,000 private operators which looks like a segment ripe for consolidation.

STB has already racked up 35 acquisitions to date and will continue to search for good quality assets to add to their portfolio. The company operates 6,300 vehicles and is one of the largest operators in the industry. In addition the company offers a generous dividend which at its current price yields 11.6%.

The three year chart paints the picture of a stock that has broken to the upside and is enjoying a nice ride from the 2009 lows. There is resistance at $5.00 that needs to be overcome if STB is to continue to generate capital gains for its shareholders. There is an unbroken trend line in place as well as a golden cross which suggests that there is still some gas left in the tank.

The six month chart provides a view of the recent trading indicating that the shares of STB have tested support on the 50 day moving average repeatedly which suggests that investors are buying on the dips. The MACD is aslo providing a good signal generator for entry and exit points for the stock.

Given the generous dividend, in addition to an unbroken uptrend and a golden cross STB is providing ample evidence of a stock that has more to give. The one factor to keep in mind is that the summer season is a difficult one for school bus operators. With schools out for summer holidays revenue dries up for the bus operators who scramble to find bookings to make up for the regular income that flows during the academic year.

Happy Capitalism!

Hi Lou,

My question is where can I find companies, both public and private, and detailed information about their operations, marketing and current plans. I am trying to read the business section of most of the Canadian newspapers as well as  the New York Times, and USA Today for my search for information on Canadian and US companies. But the result is not that promising. If you have any good tips for me, I would be grateful for your advice.

Thank you.

Kenneth

Hi Kenneth,

Thanks for asking the foundation question for all investors. Finding information from qualified sources is really a question of how much you want to spend for the information. Online sources such as globeinvestor.com provide value at no cost and are excellent when it comes to covering the capital markets in Canada. There is also a premium service, globeinvestorgold.com which is available on a subscription basis, and provides more features depending on what your needs are.

Over the course of my 42 years as an investor I have come to appreciate a number of sources that have served me well. Barron’s is a weekly publication that is available on the news stand every Saturday. It is well written and generates lots of investment ideas that you can follow up with your own due diligence. Lets be clear, no matter what source you are using to generate ideas, it is your responsibility to confirm that the opportunity fits your investment profile. Just because you saw a stock mentioned in a publication, or heard it mentioned on TV or radio does not mean you should buy or sell it!

My favorite investment research platform is the Bloomberg Professional terminal. But keep in mind that it costs over US$1500 a month. The reason that I like the service is that it is so robust and comprehensive . It provides a one stop shop that can save time when conducting investment research. Given the cost I would suggest that you look for a library that might have a terminal, or a business school that provides access to enrolled students.

Other sources of equity idea generation can be found in specialty publications such as The Northern Miner, and Nickle’s Daily Oil Bulletin. Every industry has a journal of record that can provide leads that you can follow up on.

There are also investment newsletters that charge a fee for their publications but can provide a particular view on certain aspects of the investment universe from small caps to fixed income. Another source of information are the websites of the companies that you are researching. I have found that a well designed website with comprehensive information can get you a good way down the road to making a decision.

Knowledge is power in the captial markets so be prepared to struggle with new ideas and concepts until you have gained some mastery over the data. Investment research can become an all consuming passion, but make sure that it doesn’t lead to analysis paralysis.

Happy Capitalism!Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

I wanted to share this resource with those of you who have a young entrepreneur under wing.

As part of Impact culture, we are always striving to improve/expand the reach of our programs one step further from the previous year. We plan to do this with the likes of our new programs Global Youth Entrepreneurship Congress, Connect Ontario, and the I am my Ambition Campaign, while still building on our flagship initiatives the Impact National Conference and Impact Connect.

It is by far the most exciting time of the year for Impact, and we’re excited to see all of you at our events.

Visit http://www.impact.org/

Happy Capitalism!

Hello My Friends,

I hope you are all enjoying a day for rest and time with your families. Make the most of the celebrations held in honor of our great country and lets keep this wonderful experience safe for all time.

Happy Capitalism!

How can you tell which men are fathers?

Generally, as they are the workhorses of the economy, a good rule of thumb is, if they have harness marks on their shoulders from pulling a heavy load over a long distance with some rough patches along the way and for a very long period of time that have earned the esteemed title of Dad.

Fathers are the economic engines of our capitalist democracy and on this day they deserve our thanks, respect, and gratitude for having divested themselves of most of their personal desires and invested their time and resources into their families and communities.

Father’s Day is the holiday that celebrates accountable men who might appear old to their children but are, in fact generally young men who have willingly accepted tremendous social and economic responsibilities.

Through their selflessness fathers help their children develop so they can participate as contributing members of society. They also give generously outside the home. Some of the bounty we enjoy in our communities can be directly attributed to the efforts of fathers working in concert.

They volunteer and donate money to make sure that there are healthy sports leagues, community associations, historical societies, PT A’s, and other activities that help children learn the necessary basics of discipline, team work, self respect and community spirit.

Fathers make extremely long term investments in their children.

The regular expenses related to providing a child shelter, food, clothing, education, supervision, transportation, and entertainment, to age 18 is significant to say the least.

When the fees for post-secondary education and the opportunity cost of raising a child are taken into account, the final tab is in the range of $600,000 per child. No wonder fathers often refer to their children as priceless treasures.

The relationship between fathers and the economy is best described as the relationship between the keeper of the magic wallet, that never seems to be run out of cash, and the suppliers who want to satisfy the needs of his family.

Imagine the reduced cash flow to piano teachers, skating coaches, driving schools, George Lucas, and Tim Hortons without the regular sponsorships of Dads.

Given the tremendous investment fathers make in their children and communities, it begs the question what do they expect in return?

Not much really.

A little peace and quiet every once in a while, an occasional round of golf with some pals, children who grow up to be people that they like, communities that are safe and clean to live in, an enthusiastic and vigorous relationship with their spouse. And generally less headaches.

To all the fathers who make this world a better place to live keep up the good work and enjoy every second of your special day, it only comes once a year and is always too short!

Happy Capitalism!