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| Mike MacBain of East Coast Funds Management |
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| TOP PICK | Shaw Communication (B) | SJR.B-T | 21.680 | (A Top Pick April 12/11. Up 1.5%%.) Buy Shaw 6.75%, 2039 and Short GOC 5%, 2037. Shaw has under performed the sector for about 4 months but expect this will change in the next while. | 2011-07-11 | ||
| SELL | Yellow Media Inc | YLO-T | 2.250 | Are bonds still a safe investment? Had a difficult time transferring business model from print to online. 2 key issues. Management used some of the Auto Trader money to buy back equity, which has a negative effect on bondholders. Also their bonds don't have a “change of control” covenant so won't be taken out at par if company merges or is taken out. Tricky call. | 2011-07-11 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Government Bonds. Yields of government bonds are at all-time low. Looks like a slowdown in the US economy through the summer and everyone is piling into the bonds. Yields of 2.9% for 10-year bonds are not much of an investment. Very challenging market and is not a “buy and hold” time. | 2011-07-11 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Tax-free savings accounts. The most secure bonds are government but they are not yielded very much. Likes the cable and telcos sectors. (See Top Picks.) | 2011-07-11 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Bond ETF's. You will lose money if interest rates rise. To protect this from inflation, you would have to have a long, short component to your fixed income strategy. The only way to do this is to hedge out interest rates on your own or put your money with a long-short manager in the fixed income space. | 2011-07-11 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Construction of corporate strip bond portfolio and how far out should the term be? Effectively this is a leveraged bond. If looking at a long-term, such as 30 years, it really trades at about 120%-130% of your actual bond. If you think interest rates are going down, you should buy them otherwise, sell them. | 2011-07-11 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Canadian bank preferreds? Essentially an equity investment that pays a fixed coupon. Some coupons are perpetual, which don't have the maturity date and will behave just like a bond, i.e., will go down in the lower interest rate environment. | 2011-07-11 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | 24-year Gov. of Ontario bonds at 4.6%? No danger of bankruptcy so will probably pay all your coupons and your principal back at maturity. 4.6% has to be within 50-75 basis points of the lowest yield you could ever receive. Over the next 5-10 years, it will yield around 7%-7.5% but you would see a capital depreciation of about 35%. He always tries to avoid capital loss. | 2011-07-11 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Floating-rate bonds? Securities where interest rates changes every 3 months. The problem with them is that they are extremely illiquid. Also they look more like bank loans in terms of how they are structured and tend to have bank loan spreads. You could take the same risk and invest in a fixed rate product and get a better all round risk return. | 2011-07-11 | ||
| TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Buy Videotron 6.78%, 2021 and Short GOC 3.25%, 2021. Videotron has all the fundamentals of an investment grade company and yet still are high yield. They're on the move and doing good things and spread is almost double what the other cable companies are offering. | 2011-07-11 | ||
| TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | (A Top Pick April 12/11. Up 0.6%.) Buy Cdn$ and Sell US$. Buying Cdn$ at around $1.01 or $102.5 and selling it at $1.05 is a good, low risk way to earn some income. 0% interest rate policy in the US is to 1) inflate asset prices and 2) devalue the US$. | 2011-07-11 | ||
| PAST TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | (A Top Pick Apr 12/11. Down 4.3%.) Short 10-Year GOC bonds. Still likes this strategy. | 2011-07-11 | ||
| BUY | PowerShares 1-5 year Laddered | PSB-T | 20.250 | 1-5 year Laddered ETF. This will have a pretty short duration so will probably give you in the 2.5% range. It will suffer too much from rising interest rates. Not a bad place to park for a while. | 2011-07-11 | ||
| DON'T BUY | Loblaw Companies Ltd | L-T | 38.690 | Strip bonds maturing 2029 triple, which triple in value if held to maturity but have no interest along the way. This is just simple compound interest. Very volatile and the longer the bond, the more volatile. If you are worried about interest rates and inflation, this is more risky than a coupon bond. | 2011-04-12 | ||
| PAST TOP PICK | Rogers Communcations (B) | RCI.B-T | 35.040 | (A Top Pick Dec 13/10. Up 3.64%.) 6.11% bond due Aug/25/40 with a Short of equal term of Gov’t CDN bond. | 2011-04-12 | ||
| TOP SHORT | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Short 10-year Gov’t of Canada Bonds. (Canada and US Bonds move in lockstep with each other.) Likes this short because of 1) inflation, 2) currency devaluation, 3) fiscal stimulus and 4) potential for a sovereign debt crisis. US government has embarked on a policy of inflating their economy and devaluing their currency as a way of getting out of their debt problems. | 2011-04-12 | ||
| TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Buy Cdn$ versus US $. US government plan is to inflate the economy and devalue the US$. Put this trade on when the Cdn$ drops to $1.01.5 or $1.02 area. Believes the Cdn$ will stay between $1 and $1.12 over the next 18 months. | 2011-04-12 | ||
| TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | A Pairs Trade by going Long Shaw Communication 6.75% bond due Sept/11/39 and Shorting the Equal Term Cdn Gov’t bond. Likes the cable and telecom sector. | 2011-04-12 | ||
| PAST TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | (A Top Pick Dec 13/10. Up 5.34%.) Buy Cdn$ versus US$. | 2011-04-12 | ||
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| SELL | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Sell off a bond mutual fund? Bond mutual funds are Long only bond funds, which prevent the bond mutual fund manager from having the ability to protect the fund against rising interest rates. He expects interest rates are going to rise. You would be better in a long/short fixed income fund. | 2011-04-12 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Inflation and Preferreds. Risk characteristics between bonds and preferreds are quite similar. In the event of a default event, you could get less back in a preferred. Also, some preferreds don’t have a maturity date but are perpetual, so they are as long as any bond you could possibly have. Wouldn’t own either, would just own long/short strategies right now. | 2011-04-12 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Iraqi Dinars? Would never consider putting money in here. Very high risk and there is the problem with corruption. | 2011-04-12 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Real Return Bonds for retired investors? Theoretically if he were going to invest in these as a retiree, he would want about 40% of his investments in inflation protected securities. The problem is that Real Return Bonds are a crappy investment as they are extremely illiquid and is a very expensive market to access. | 2011-04-12 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Negative Bond ETFs or Shorting Bonds? There are negative ETFs on bonds, or if you have a margin account, you can short bonds. If you short bonds, you are on the hook for the interest payments. | 2011-04-12 | ||
| PAST TOP PICK | Bell Aliant | BA-T | 26.830 | (A Top Pick Dec 13/10. Up 0.77%.) 4.72% bond due Sept 26/11. | 2011-04-12 | ||
| DON'T BUY | iShares Advantage High Yield Bond ETF | CHB-T | 21.140 | High Yield Bond ETF. High Yield Bonds are the least correlated of all interest rate products to the actual interest rate market. They are with the less liquid and more volatile companies. Historically, the spreads with these have really come in. High yield bonds are more expensive than they were in pre-prices in 2007. | 2011-04-12 | ||
| SELL | BCE Inc. | BCE-T | 35.630 | May 2029 strip bond. Good company and great management but a strip bond is basically a leveraged play on interest rates. You want to own Strips when rates are high, not when they are low, as is the case now. | 2010-12-13 | ||
| Comment | Brookfield Office Properties | BPO-T | 17.160 | 30-year bond. Good company and well managed. A bit higher yield than most plays. He owns it as a Short against a 30-year Government of Canada bond interest rate as a hedge. | 2010-12-13 | ||
| HOLD | Fairfax Financial | FFH-T | 405.080 | 7.5% bond due August 2019. Good company and decent spread. Likes the bond but recently sold his holdings because it has come in such a long way in terms of credit narrowing. | 2010-12-13 | ||
| TOP PICK | Rogers Communcations (B) | RCI.B-T | 34.880 | 6.11% bond due Aug/25/40 with a Short of equal term of Gov’t CDN bond. Cheap. | 2010-12-13 | ||
| DON'T BUY | Shaw Communication (B) | SJR.B-T | 20.700 | 5.75% bond due march 2017. Great company and great management team. Likes longer dated Shaw paper rather than shorter dated so consider the 2039 bonds. However he would also Short a 30-year Government of Canada bond interest rate as a hedge. | 2010-12-13 | ||
| TOP PICK | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Buy Cdn$ versus US$. Bullish the Cdn$ which has traded in a $0.90-$1 range in the last year. With current oil price, Cdn$ should be at $1.035. He’s been Buying below $0.955 and Selling above $0.985. Be cautious of timing as it is currently about par and could easily go back to $0.95 on a global crisis. (This will happen over the next couple of months.) | 2010-12-13 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Bond funds? Wouldn’t go this route. With interest rates going higher, it will lose you money. | 2010-12-13 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | “Backup in Yield” phrase. What does it mean? Means bond yields are increasing. Today bond yields are backing up and everyone is worried about it so you so you don’t want to be long interest rates. | 2010-12-13 | ||
| TOP PICK | Bell Aliant | BA-T | 26.380 | 4.72% bond due Sept 26/11. 4-month bond that will preserve your capital when interest rates blow out. You’ll still have your money and you’ll have a better idea of what is happening in bond yields. | 2010-12-13 |
