Benj Gallander Rona Inc RON-T PAST TOP PICK Aug 05, 2016

5.4% bond maturing Oct 20/16. (He is biased towards the short term because the market still feels fairly expensive. Corporate credit still offers pretty good value.) This is a little under 2 years and yielding over 3% while Canada bonds offer 5%, which is a huge yield pick up. However, it is not an investment great company. They have had some pretty good numbers as of late. He is pretty confident they will be able to refinance fairly easy come 2016.

Reset preferreds March 2016. Came out at $25 and are now at $16+, so your payout ratio is pretty good. It won’t be as sweet when they reset in March. It will be Bank of Canada rate +2.65%. The company is doing a turnaround. He likes a CEO. They are looking to buy back their franchises, which will cost them some money. That will eventually help the bottom line more.

(Reset preferreds (A) March 2016). Same-store sales went up 5.4% in the last quarter. Just increased their dividend in the common shares. He likes what management is doing. This is a safer option than common shares. Dividend yield of about 8%.

Preferred A. Not in the Contra portfolio as he doesn’t see it as a 100%+ gain. Likes the company and likes the guy at the head who is a good turnaround person. The recent quarterly results were excellent with same-store sales up 5.5%, income up, and the dividend shares up. Good financial statements. He is buying the preferreds because there is less risk involved. This will reset in March 2016, and he assumes he will get about 3.5%, i.e. Bank of Canada rate +2.6%. For people who buy in now, he thinks it is a potentially good rate of return. He likes it as a safer place to put money. These resets are so out of favour now that they appeal to his contrarian side.

Owns the preferreds which comes due in March/16. Had felt they were safer when the company was having problems. Their CEO is great and is a turnaround artist. The common shares have gone up quite a bit, and preferreds have been badly hit. The common shares are too expensive for him, but thinks there is a lot of upside still.

(Preferred Shares 3.324%, Series A, callable in 5 years.) Had never liked the preferred market, because there was never any institutional ownership. All of a sudden, in this one, you have institutional ownership, and companies can’t push around the small shareholder like they used to.

(A Top Pick Sept 18/15. Up 73.8%.) (Reset preferreds (A) March 2016.) He bought the preferreds because he wanted a little bit less risk. He thinks there is still a possibility that Lowes (LOW-N) might buy out the preferreds at $25 at some point. He loves the dividend tax credit he is getting.

(Top Pick Oct 27/15, Up 72.19%) They were trading low because it was prior to the takeover. He stayed with it until it closed. Takeovers are a big part of his portfolio gains. He bought them because Lowes had already taken a run at them and it was turned down.

(A Top Pick April 5/16. Up 21.5%.) (Preferred Shares.) This was bought out by Lowes, which originally was not going to call the preferreds, but they came back later with a $24 offer.