Hi Lou

Here is my situation.
I invested into DGI.UN both in a RRSP account and a regular investing account.
I purchased shares at the beginning of 2010. The shares went up but now they are
below what the original purchase was. The Dividend in the RRSP account gets reinvested.
This seems to help my share value however in my other account, I have not invested any more.

In your opinion, is this stock worth holding onto?

Thanks,

Mike

Hi Mike,

Anna from Montreal asked about Data Group Income Fund (DGI.UN TSX) on June 10, 2011. The units were trading for $5.82 at that time and the yield on the distributions was 11.2%.  What was noted in the analysis was that the units were in a gentle down trend and that the indicators were suggesting continued selling. Take a look at that post as part of your investment review.

Unfortunately the selling did continue and your question is how best to proceed. A survey of the charts will provide some guidance as to a go forward plan.

The three year chart indicates that what had been a gentle downtrend became a rout in July when the units could not hold on to support at $5.00. There is now an established downtrend and a death cross on the chart. These are signals that it’s time to seriously consider taking your loss and getting to your next trade.

The six month chart illustrates the resistance that the shares have met along the 50 day moving average on several attempts to move higher. The bounce off of the rock bottom at $2.39 stalled out at $3.75 on the last test of resistance. The MACD and the RSI are currently flat at best with no indication of direction.

In the June 10, 2011 post there were signs that the units were beginning to weaken. The yield on distributions is now at 21.1% which for a microcap company is indicative of the risk you have to assume if you are going to continue to hold these units. 

Make it a profitable day and happy capitalism!

DEAR LOU,

PLEASE GIVE ME A LITTLE INFORMATION ON THE ABOVE COMPANY. IS IT SAFE TO HOLD BEARING IN MIND THAT THE DIVIDEND IS .65 PER ANNUM.

THE LAST QUARTERLY REPORT WAS O.K. AND THE STOCK WENT UP BUT NOW IT SEEMS TO KEEP ON GOING DOWN AGAIN. ANY ADVISE??

THANK YOU VERY MUCH FOR YOUR INPUT. I KNOW YOUR INFORMATION IS ALWAYS RELIABLE.

ANNA IN MONTREAL

Hi Anna,

Data Group Income Fund ( DGI.UN TSX) is in the  specialty printing business producing business forms, event tickets and the like. The trust is currently in the process of converting to a dividend paying corporation and estimates that it will have completed the process by late 2011.

Lets examine the charts to see what we can discern from the past and perhaps gain some insight into the future.

The three year chart paints a picture of units that are trading in range with a gentle downtrend. The units had a lovely rise from August of 2009 when it traded at $2.25 until April of 2010 when it peaked at $8.50. Since then the units have met resistance every time it has tried to move higher.

The dividend yield at the current payout is 11.2% which is very generous and reflects the risk associated with the investment.

The six month chart outlines the move off the lows of May 2011 when the units hit $5.30 and caught a bounce to $6.50 where overhead resistance stopped the advance. The RSI and the MACD both generated a buy signal at $5.30 and a sell signal at $6.50.

At this point in time it appears that the indicators are suggesting continued selling should be expected. Over the last three months the average daily volume has been 56,469 units. In the last twelve sessions the volume has been below the average. If trust units or shares are going to go up it has to be on better than average volume. 

DGI.UN is a micro cap company operating in the specialty printing business offering what would have to be seen as a very generous yield. Both of these factors indicate a higher risk profile.

MAKE IT A PROFITABLE JUNE AND HAPPY CAPITALISM!

I bought this stock when it still was called Coolbrand (COB.TO). Since they merged with Swisher last September the stock has doubled.

My question is, should I sell and lock in the profit, wait or buy more? Your expert advise (as always) would be greatly appreciated.
Thanks
Bob

Hi Bob,

I last posted research regarding  Swisher Hygiene Inc. ( SWI TSX) on September 24,2010 when it was trading at $3.78. At the time I mentioned that you didn’t want to be betting against Wayne Huizenga the serial entrepreneur who has created a number of Fortune 100 companies.

 Since the deal with Cool Brands was completed SWI has been raising money and buying companies at a rapid pace. The frenzy of acquisitions has been the fuel driving the stock higher. As long as the company can continue to roll up players in the cleaning and maintenance space the stock looks like it has more room to grow. The charts will provide guidance as to the future potential of SWI.

The three year chart illustrates the rapid and continued rise in the price of the stock since August of 2010. The stock pulled back in November of 2010 as it hit $6.00 retreating to $4.00 in December. But after that it got back onto an uptrend, consolidated until late March at $6.00 amd then took off in April of 2011.

The six month chart provides a sharper image of the movement in SWI. The MACD has been providing a series of buy and sell signals since November of 2010. The sell signal in November at $6.00 ,followed by the buy signal in December at $4.00, another sell in February at $6.50 and the buy in March at $5.75.  All of these trades generated great opportunities to clean up with SWI.

As of this post the RSI is clearly indicating that the stock is overbought but not yet pulling back while the MACD has yet to rollover. But that doesn’t mean it won’t. I wouldn’t bet against Huizenga but I also wouldn’t want to buy and hold this stock. SWI is providing attractive trades while it advances and it is also generating effective signals ahead of its moves.  To your question regarding taking a profit I would say yes but think about a strategy of selling on advances and buying on pullbacks.

Happy Capitalism!

Hi Lou,

I have been following COB for a long time from the great highs in the 90′s to the lowest lows. Presently, I don’t own any shares.
Ever since it was announced that they are merging with Swisher (reverse merger) the shares have rapidly increased. What is your opinion about the future of this company? Would it be a good time to buy?

As usual, love your input on 640 AM and your endorsement of Rob Ford as TO’s Mayor.

Bob

Hey Bob,

Thanks for the assignment and your kind words!  I think that Ford is the Ralph Klein of Toronto and would do good things for the city. I have also endorsed Dan Mathieson for Mayor of Stratford and Joe Connelly for Mayor of Calgary. They are all capitalist who are good on my issues. Responsible and accountable management of tax dollars and respect for the citizens in their respective cities.

CoolBrands International Inc. ( COB TSX) is now in the control of renowned capitalist Wayne Huizenga who has built three Fortune 1000 companies and six New York Stock Exchange listed companies over his career. The stock took a jump on the news of COB being brought into orbit around Waynes world. Lets consult the charts to see if the orbit is stable.

The three year chart  depicts a stock that was already moving higher from the December 2009 lows and had established a nice uptrend line that took it to the $1.20 level. After the August 18, 2010 announcement that Huizenga was backing his private commerical cleaning company Swisher International into the public shel,l COB took off like an Atlas Centaur rocket.

The six month chart clearly depicts the most recent events. The MACD and RSI both signaled a shift in momentum as buying started to pick up in early August. Then there was liftoff after the announcement.  As I like to say ” guys in the know – know” if you follow my meaning!

COB is in an overbought situation according to the RSI and the MACD apprears to be making a turn to the downside which should come as no surprise. Charts that have this sort of hockey stick pattern in most cases have gotten ahead of themselves. COB is currently trading way above its moving averages and hasn’t really built much support during its advance.

I wouldn’t want to bet against Huizenga but trees don’t grow to the sky. I would expect a pullback in the near term. You can see that volume is thinning out and all the good news is in the stock. The deal is set to close in November 2010 and it would pay to be patient till then. Once the transaction is finalized the tale of the tape will be about increasing revenue and profits one cleaned  bathroom stall at a time.

Happy Capitalism!

MDOR has held up better than most but isn't without risk

Hi Lou,

I am a novice when it comes to all this stock market stuff, but I am trying to learn more especially with the global economy concerns that most of us have.

I am thinking of exploring some stocks that I may be able to invest in without breaking the bank. I received an email to consider for MAGNUM D OR RESOURCE (OTC BB: MDOR.OB).

Wondering if this is something you may suggest to buy, or even worth looking into further?

Happy Capitalism to you as well!

Gareth

Hi Gareth,

Congratulations on wanting to improve your investment knowledge! It’s the best way to take advantage of opportunities and reduce risks.

The shares of Magnum d’Or Resources Inc., MDOR NASDAQ BB, trade on the NASDAQ Bulletin Board, which in my experience is a higher risk environment. There are limited listing requirements and that can lead to an increased risk for investors.

I’m not sure who sent you the email but if it is not someone you know than I would also suggest that you consider the source. There are lots of schemes out there looking to fish the waters and whatever they drag up in their net is sent to the processing plant if you follow me.

Having said all that, MDOR is in the business of recycling old tires and creating a solution to those mountains of old tires that occasionally get set on fire and cause a huge mess.

There could be some opportunity for the company and it looks like the stock has held up better than most in the current environment. But as a novice should you be chasing a penny stock on the NASDAQ Bulletin Board?

I think that there have to be lower risk environments and opportunities.

Happy Capitalism!