Kevin Hall BComm, CFAFording Canadian Coal Trust (Inc Trust)FDG.UN.TOBUYMay 06, 2005
To mitigate interest rate risks, tilt your portfolio towards economically sensitive income trusts such as oil/gas sector, resource plays like Fording Canadian Coal (FDG.UN-T), Labrador Iron Ore (LIF.UN-T) as well as business trusts that can deliver you decent growth going forward. A growth in distributions will do a very good job in offsetting rising rate impacts. Expects high prices for coal will continue in '05 and '06. Restructuring to shelter against taxes.
Being acquired by Teck Cominco (TCK.B-T). If you are holding this in a taxable account, there are some very negative consequences. In an RRSP or RIF you can avoid the tax consequences. He sold the majority of his holdings into the market prior to the transaction.
Being acquired by Teck Cominco (TCK.B-T). Arbitrage companies were forced to sell. There is a financing gap and Merrill Lynch (MER-N) is part of that, so the market is concerned. The deal could fall apart.
If held in an RRSP, you could continue holding. If it's in a taxable account, consider selling the units before the new deal gets done. Take it as a gain as opposed to the tax treatment that will supposedly come on the consummation of the deal. (Editor’s note. Check with your broker.)