Opinions by Joey Mack | StockChase
367
Joey Mack

Director, Fixed Income

ON STOCKCHASE SINCE Mar 2009

ScotiaCapital


Opinions by Joey Mack


Signal Opinion Expert Chart

2015-01-27

N/A
A Comment -- General Comments From an Expert 

Interest Rates. The drop of interest rates by the Bank of Canada was a complete surprise. Feels it was the right move. With the situation on real estate in Alberta and the job losses, the move was prudent to prime the pump a little bit. It was a little insurance to help release a little more growth. Expects there will be at least one more cut, if not 2, given the way the market is moving right now. We had a pretty big miss on inflation numbers on Friday when that number started to tick down, Bank of Canada’s primary responsibility is maintaining inflation in the 1%-3% range. Thinks employment numbers in January will not be good.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

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A Comment -- General Comments From an Expert 

Bonds. Global government bond yields are at, or near record lows. However, you don’t want to not be in this market now, because when everything else falls apart, this is the market that is going to perform. From a diversification standpoint and your overall portfolio, you definitely want to have some government fixed income and some long-term bonds to balance out the rest of your returns. It has really been a capital appreciation game for the last several years, and he thinks this can continue. In the long run, he thinks the bond market will beat cash. Compared to Europe and Japan, we can still move quite a bit lower, and still generate some pretty good returns for your portfolio. He is more inclined towards corporate and provincial.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

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A Comment -- General Comments From an Expert 

What do “D+18” and “FF” mean in corporate bonds? FF is a “Fixed Floater”, which means you have a fixed coupon for the 1st period, after which you have a floating coupon. A pretty complex security, so this is one where you want to talk to your advisor to make sure you know what you are getting into. In Canada the “Fixed Floater” typically gets called. In Europe and America it is not so much the case. Those Fixed Floaters are subordinate bonds of the financial companies, not senior credits. The D+18 means the issuer can Call that bond at any time. They take the then Canada yield at 18 basis points to generate a new price. Typically the 18 basis points is well below what the bond was issued at. This rarely, rarely happens.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

N/A
A Comment -- General Comments From an Expert 

3-12 month effects from the recent Bank of Canada rate cut and the European Quantitative Easing on Canadian markets? In his opinion, a lot of the rally in the equity markets has been driven by central bank policies. They have inflated asset prices, and equity markets are one component of that. The European move probably makes Canada look more attractive as a place to invest in. However, Canada is cutting rates because they see sliding growth, which is generally not good for corporate earnings or equities. He doesn’t think rate cuts are going to help drive the TSE further.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

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A Comment -- General Comments From an Expert 

Are Strip Bonds a viable investment option? Canada has one of the most well-developed strip bond markets in the world right now. Effectively you are going from an interest bearing instrument to a compounding instrument. For example, you are buying $100 that comes due in 2025, and today you only pay $.70 on the dollar for that. It’s a great way to lock in a rate of return and a great way to compound your interest in a tax-exempt account. You don’t want to do this in a taxable account as even though you are not receiving any interest, you have to pay tax on it every year.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

N/A
A Comment -- General Comments From an Expert 

Why is there such a large market for low yielding bonds of 1% or less? The main answer is liquidity. In GICs, you are locking in your money. What if you need your money in 6 months time?

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: _N/A

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2015-01-27

PAST TOP PICK
A Comment -- General Comments From an Expert 

(A Top Pick Feb 24/14. Up 13.17%.) Ville de Montreal 3.5% Sep 1, 2023. This one outstripped what the overall market did. This still looks relatively cheap compared to provincials.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: Yes

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2015-01-27

BUY
A Comment -- General Comments From an Expert 

Rate reset preferreds? The preferred share market is very cheap right now. They really haven’t followed the rally in bonds at all. These are perpetual securities. As much as they have lower interest rates (because a dividend does reset every 5 years), it comes along with some Call risks and a lot of credit risks, because it could remain outstanding forever. They are a good investment, and up to 25% of your fixed income portfolio could be in these. You want to hold them in your taxable portion because of the advantages of the dividend tax credit. Be selective and stay with investment-grade of P2 or better.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: Unknown

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2015-01-27

BUY
A Comment -- General Comments From an Expert 

Ontario government bonds? This is probably the credit to Buy right now when you look at what is available. BC, Alberta and Saskatchewan trade at well below what Ontario does. Ontario and Manitoba are the ones that you want to look at right now.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $0.020
Owned: Unknown

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2015-01-27

PAST TOP PICK
Alimentation Couche-Tard (A) (ATD.A-T)

(A Top Pick Feb 24/14. Up 9.48%.) Nov 1, 2019, 3.19%. At that time, he was a little nervous about rates rising which is why he went for the 5 years. Also, on a spread basis, he thought it looked pretty attractive.

food stores
Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $47.770
Owned: Yes

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2015-01-27

DON'T BUY
Bombardier Inc (BBD.PR.C-T)

What are the chances of the dividend being cut? They are cumulative, so does this is help the situation? Because they are preferred, the company cannot just cut dividends. These shares have to be paid 1st and then the common shares afterwards. The fact that they are accumulative is also positive. They don’t have to pay you a dividend in a quarter, but if they don’t they still owe you the money and it accumulates over time. The risk is what if this company defaults, which could very well happen with this company? It is currently well into junk territory.

Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $17.270
Owned: No

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2015-01-27

HOLD
Fairfax Financial (FFH-T)

2021 bond paying 6.4% per annum. Fairfax is one of those unique credits in the bond market. It is BBB, so it is still an investment great company. This is a great one to look at. It has had a pretty good run, but offers a pretty decent little spread over Canada bonds right now.

insurance
Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $664.090
Owned: Unknown

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2015-01-27

COMMENT
iShares Cdn Financial Monthly Income ETF (FIE-T)

These iShares basically take all the dividends, repayments, etc., so the yields can get quite high. Pretty much a flow through. This gives you all of the big banks and the big insurers in Canada along with bonds and preferred shares. It is kind of a funny blend and not one he would recommend.

E.T.F.'s
Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $7.040
Owned: No

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2015-01-27

TOP PICK
Rona Inc (RON-T (Dead))

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.

specialty stores
Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $12.590
Owned: Yes

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2015-01-27

TOP PICK
Russel Metals (RUS-T)

6% bond maturing April 19/22. (He is biased towards the short term because the market still feels fairly expensive. Corporate credit still offers pretty good value.) They have their challenges right now. They are a metals business, so a big part supports oil and gas, but on the other hand there are a lot of maintenance products they provide. Pretty low levered and has a pretty strong balance sheet.

steel
Joey Mack

Director, Fixed Income, ScotiaCapital

Price: $24.330
Owned: Yes

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