CRTC Strikes Down BCE-Astral Deal

 

In a move that nobody saw coming, the Canadian Radio-television Telecommunications Commission rejected BCE's bid for Astral media, stating that BCE would be too large and control to much of the market. What does this mean for shareholders of either company (I happen to have shares in both companies)?

Bell is obligated to pay a $150 million break fee if the deal falls through; which will happen unless BCE tries to appeal the decision. This comes out to about $3 per share is Astral.

Astral media will probably take a hit in market price since BCE may not be buying all the shares for $50 a pop anymore. However, it is believed that Astral will continue to look for a suitor because it's speculated that Ian Greenberg, the CEO plans to retire and he has no known successor. Since everybody still thinks that Astral intends to sell, that may keep the market price afloat. The only issue here is that the list of potential buyers is significantly shorter; larger companies like Rogers would run into the same competition issues as BCE did. Cogeco has been the name that I've seen thrown around as a potential suitor. If worse comes to worse and there's no buyers, then it is believed that Astral will just sell off its assets piece by piece.

So what does this mean or me personally? Back when the deal was announced, my profits jumped. I decided to hold on to the shares until the deal was sealed so that I could get the premium. When the deal was showing signs of faltering I decided to keep holding Astral stock because I honestly thought that the worst thing that could have happened was that the CRTC approved the deal but with changes; not outright kill it.

As of writing, Astral just took a 15% nosedive. This triggered my stop limit and I sold out for a mere 3% gain (not including dividends accumulated for holding the stock for well over a year). Astral still has solid fundamentals but with a takeover looking slim, I think the price will sink for the time being. When it gets even more depressed, I would not hesitate to jump back in at a lower price point.

- the Paperboy

Recent Market Plays October 2012

Hey guys, remember back in April when I said that I would be using some money to "play the market" as opposed to sticking to the tried and true dividend approach? Well Kinross soared for a couple days in early October so I took the chance to finally get out of that. It took me 6 months but I netted a 6.67% (including two dividend distributions) return so it didn't turn out too badly for me. I'm going to continue on with the experiment and maybe try and jump back into Kinross later because it seems to be dropping again. Or I could go into something else such as Silver Wheaton; we'll see how cheap the precious metals can get. Due to me closing my position with Kinross, expect my overall dividend yield to increase since Kinross paid a pittance in terms of dividends, however, the expected dividends received will be lowered as well.

To offset that, I grabbed some more shares of Reitmans. The clothing company is having a bit of trouble right now but the majority of retailers are having problems getting stuff off the shelves. The company is sitting on a lot of cash so it'll be able to pay off upcoming debt and hopefully be able survive to see better days in the economy. Awhile back, it teamed up with Toys 'R Us to have the toy store carry its clothes for expecting mothers. This shows that the company is trying to get an edge wherever it can. While the price is a little depressed, I'm able to get a higher yield and get more shares via my DRIP. This also gets me closer to that goal of $2200 in expected dividends.

October far from over and I recently stumbled onto some funds. Hopefully I'll be able to grab some more stocks and continue to build my portfolio. If not, I'll throw everything into my bond ETF and wait until the prices are acceptable. All part of the plan right?

-the Paperboy

Recent Market Plays September 2012

Today I finally made a move and purchased more shares of LIF.UN.TO. This allowed me to average down and bring my overall yield up. I still have my eye on RET.TO and some other stocks because I still have a little bit of cash left so maybe I'll be able to get that done before the end of the month.

-the Paperboy

Recent Market Plays August 2012

Not much has happened in terms of building my portfolio. I've managed to squirrel away some funds but none of the stocks that I have my eyes on are at an attractive price in my opinion. I've been sitting on this cash for a couple weeks now and I feel that I'm losing out because I'm waiting. Because of this, I dumped it all into CLF which is an ETF for Canadian government bonds. The money will earn me more interest there than it would sitting in a savings account.

When the right prices come along all I have to do is sell some units of CLF in order to fund the purchase of the new position. There are disadvantages to this, the obvious one being the commission fees involved with the plan. However, if the ETF is held long enough, the extra interest earned will negate the commission fees and I'll come out on top. The issue with this is that I don't know exactly how long I'll be holding the money in CLF. Quite the dilemma but I may have found the solution to it.

Recent Market Plays July 2012

In the month of July, I managed to increase my position in the Canadian Oil Sands. As you may know, the company has recently increased it's dividends distribution so getting more on the cheap is nice. The purchase resulted in a position large enough for my synthetic DRIP to kick in so I'll start seeing some commission-free shares headed my way soon. Somehow I managed to scrounge up enough cash to be able to buy some more shares but I haven't found the right price on anything yet. I'm looking to increase another one of my positions so that I can get another DRIP going but I'm probably going to be doing it in August seeing as there's only 2 trading days left.

I have my eye on a couple of them but if nothing becomes attractive then I'll follow my plan and let the money sit in a bond ETF until I find a deal. The higher yield should offset the commission fees if held in the ETF for long enough. Of course I could always enroll in a Pre-Authorized Cash Contribution so that I automatically add cash to the ETF without having to pay commission. I plan to look into that when I have the time because I think that it will help me execute my plan more efficiently.

-the Paperboy

Recent Market Plays: June 2012

Not much happened in June because if you recall, I'm out of gas. I did however sell some units of a bond ETF to finance an increase in my CIBC position in my TFSA account. That worked out according to plan and I intend to keep putting all the money I have into bond ETFs until stock prices become attractive. That way I can collect a higher interest rate than if the money was parked in a high interest saving account while still being flexible enough to be able to jump into stocks when I feel the price is right. Sure, I have to pay a commission fee for the transaction but if I have to sit on cash for a long time because everything is too expensive, then I could be missing out on the extra income that a bond could provide. Also I'm thinking about using Claymore's service of allowing unitholders to buy shares via their PACC (Pre-Authorized Cash Contribution) which would allow me to get shares without paying the commission fee.

I plan to use it to transfer money into a bond ETF and when it's a sizable amount or when prices are attractive, I can sell some units to buy shares. This also puts me in a position where I have to dedicate an amount of my income to investing and will hopefully prevent me from blowing all my money away (if you've been following my journey into budgeting, you'll know that I need all the help I can get). I'm still looking to unload some ETFs and I seem to have amassed enough to make another purchase so look for those two things in July.

-the Paperboy

Recent Market Plays: May 2012

The last week was horrible for the stock market and people point to the fear of Greece exiting the Eurozone. This resulted in stocks getting slaughtered... which was great news! I jumped on an opportunity to get in on Rogers earlier in the month and last week I made a couple more moves.

I increased my position in Weston and added another member of the Big Five to my portfolio; The Bank of Montreal. As I mentioned before, I ran out of cash with the Rogers move, so to fund the plays I had to sell an ETF (which I was planning to eventually do). The ETF didn't pay any dividends so as a result my yield should be higher for the next dividend progress report. The downside was that I had to sell it at a loss, but I considered the opportunity cost of sitting on an ETF that generated nothing when I could have BMO giving me 5% annually so I took the hit. I can also use the loss to offset future gains so it's not all bad.

Now I'm really strapped in terms of cash. I'll have to find more money somehow because I feel that some bargains may be headed our way if the economic outlook becomes bleak again. Worse comes to worse I can keep selling my ETFs at a loss to get better positions.

-the Paperboy

Rogers Communication Position

Today I picked up some shares of Rogers Communications. During the first quarter, the company announced the acquisition of Saskatchewan Communications Network (subject to CRTC approval) and an increase of 11% in dividends. However, Rogers has been effected by a highly competitive environment where it not only competes with the other "Big Three" telecoms, Telus and BCE, but new entrants like Wind are offering consumers lower prices. The industry is also "maturing" meaning that growth will be hard to find and will slow down dramatically.  

Fully Contributed

Today I finally did something I was meaning to do since January 1st 2012. I recently transferred my position in CIBC over to my TFSA account and now it's collecting me dividends tax-free. With that transfer and all the other transfers I already made, I had leftover contribution room of $459.96 - not quite enough to buy another holding.

I didn't want that room to go to waste (although it would be carried over to the next year) so I just topped off the rest in a TFSA savings account. It took me 4 months but I've finally fully contributed to my TFSA. Now all I have to do it set up my DRIPs because the amount of money that would accumulate in the account would not be enough for me to buy shares manually and I'd rather have my money reinvested as soon as possible than to have it sit there for a year until I can pump in another $5000.

Next goal for my TFSA? Eventually I would like to get all of my positions in the TFSA DRIPing so that I can set them on autopilot and while they collect more shares for me, I can focus on the non-registered account. When it gets to the point where what I'm getting back in dividends is substantial, I'll turn the DRIP off and consciously decide when and where to put the funds (I like to call it "manual DRIPing"). No strict deadline for this one because of the annual $5000 contribution limit, but I can speed things up by increasing my positions in companies I already own rather than transferring stock over from my non-registered account. The only issue with that is I need to find some cash so I guess we'll see how much of that I have when December rolls around.

Slowly but surely, I'm putting the pieces of the money-generating puzzle together, and I'm positive that in the long run this dividend approach will reward me.

-the Paperboy

Recent Market Plays: April 2012

Awhile back I decided to use a small portion of my funds to "trade" as oppose to invest. The logic was that by using a fraction of my portfolio to satisfy the need to "do something," I would leave the majority of my portfolio alone so that it can carry out my long term financial plan of using shares of solid dividend paying companies to build wealth.

So a few weeks ago, I bought gold in the form of Kinross Gold. As Warren Buffett put it in his annual Chairman's Letter to shareholders,

[I]f you own one ounce of gold for an eternity, you will still have one ounce at its end.

I believe this view that gold doesn't produce anything so it won't be able to generate any value. However, I wanted to do some trading and the volatility of precious metals make them great for "playing the market."

I don't know what will happen with this little experiment of jumping in and out of stocks rather than investing for the long haul; I may make some extra profit for a little bit or I may get burnt. Most likely though, I won't get demolished but I'll probably under-perform the benchmark and my dividend paying strategy. I'm interested to see how it goes. As of writing, Kinross is in a bit of a nosedive but Kinross pays a tiny dividend so I don't feel too bad about doing this.

TFSA Position Transfer

Since the new year started, I haven't made any moves in terms of investing. However, I transferred my positions in CLF and SLF into my TFSA. My SLF is currently on a DRIP so I'll be receiving shares every quarter instead of cash. This is great because since it's in my TFSA, it would take too long to amass enough funds to purchase more shares on my own because there is a limit to the amount of cash I can add to the portfolio. I plan to eventually get CLF to DRIP as well, continuing with the line of thinking that I have with SLF. Right now the interest (interest because CLF is a government bond ETF, not the stock of a public company) received from CLF will just sit there and collect dust (not what I want to be collecting) instead of helping me with the power of compounding. This is the opportunity cost that I have to pay (at least until I can get more funds into the account and have more money to work with).

Transferring my position resulted in a negligible amount of capital gains in CLF but a substantial amount of capital loss in SLF which I can't use to deduct capital gains taxes. I could have simply sold my shares and moved the funds over to the TFSA to repurchase, resulting in the the capital loss becoming deductible, but then I would have to wait 30 days before repurchasing the shares or it would be considered a superficial loss and would not be eligible. Who knows where the stock could be in a month? Besides, I'm already sitting on the sidelines with some funds; I don't need more money collecting a pittance in a savings account.

-the Paperboy

Reitmans Position

Reitmans was founded in Montreal in 1926. The company operates 968 stores across Canada under 7 names: Reitmans, Smart Set, RW & Co, Thyme Maternity, Penningtons, Addition-Elle and Cassis (although I read somewhere that the company plans to close down the 22 Cassis stores and reopen them under the other names). Reitmans also recently launched an online store and has a quick ratio of 3.32 (MRQ) which is more than enough to cover its debt. The high payout ratio of 93.19% (TTM) is a concern but the company has been very consistent with dividends distributions. I opened a position in Reitmans today after it fell almost 7%. My entry point gives me a 5.55% yield which isn't too shabby. Retail stocks have been taking a beating lately but I'm always happy to pick things up cheap. I'm currently overweight in the financial sector so having more exposure to the service sector is nice. Besides, I shop at RW & Co so I might as well get some of that money back right?

-the Paperboy

Canfor Pulp Products Position

Canfor Pulp  Products is the largest North American and 3rd largest global producer of NBSK pulp and is currently running three mills in Prince George, British Columbia. Today it went below the 52 week low so I took the opportunity to increase my position in it. The company seems to have its debt under control so hopefully this play works out for me.

-the Paperboy

Corus Entertainment Position

On Monday I grabbed some more shares of Corus Entertainment. Growing up, everybody I knew watched television. At school the next day, we would talk about shows we saw the previous night. Every kid I knew would watch YTV. Even now, 10 years later, my little sister watches it religiously. Not only does Corus own YTV, but it owns Treehouse, a 50% stake in Teletoon and Teletoon Retro, a handful of other channels, 37 radio stations and Nelvana which creates some of the shows on these television channels. I'm trying to increase my position in Corus to get my synthetic DRIP going but I have to invest a lot more because of the monthly distributions instead of the quarterly distributions so this means I need to get more dividends in order to cover the price of one share. However, once it gets started then I'll be receiving one share every month!

-the Paperboy

Canadian Oil Sands Position: Part II

Remember a couple weeks back when I sold my position in COS.TO by accident? Well the following day, the stock continued to rise and I was a bit disappointed that I was missing out. However, earlier this week, the stock took a dive and was actually lower than my previous entry point. Needless to say I happily picked up some shares for less than the first time around.

To be clear here - I got lucky; there was no way that I would have known what would have happened to the price in such a short period of time. I wasn't planning this move in any way shape or form. I still believe that buying strong companies with solid dividends and holding them to take part in their growth is a great plan which I intend to stick to. Flipping stocks is risky business and you may not even come out ahead of a solid dividend or index approach.

That being said... I'll take luck wherever I can get it (especially when it helps cover up my mistakes)!

-the Paperboy

Waste Management Position

Some of you may have seen a truck like this rolling around in your city. Progressive Waste Solution owns BFI Canada (which provides services in 6 provinces), IESI (which provides services in 10 states in the U.S.) and Waste Service Inc. which was acquired just last year. Progressive Waste Solution (BIN.TO) is the third largest non-hazardous solid waste management company in North America, serving commercial, residential, and industrial customers.

I picked up some shares earlier this week when BIN got caught up in the free fall that almost every stock took when the Euro crisis resurfaced. BIN seems to be a solid company and I'm happy to add it to my portfolio. Besides, everybody needs to put their garbage somewhere right?

Remember, one man's trash is another man's treasure...or in this case another man's reason to own a waste management company.

-the Paperboy

Canadian Oil Sands Position

Sigh. I made a mistake on Wednesday. I sold my position in Canadian Oil Sands (COS.TO) for an 11% return (plus one dividend distribution). That may sound like good news to some of you, but I didn't intend to sell! The company still seems like a good play to me; I actually wanted to set a stop-loss to protect the profit but I wasn't paying attention and instead I sold the stock. Goes to show you that when it comes to investing, it's best to be vigilant. Hopefully this doesn't come back to haunt me!

-the Paperboy

Sun Life Financial Position

On Monday Sun Life Financial (TSX: SLF), one of the largest insurance companies in the country announced their estimates for their third quarter. They expect to report a loss of $621 million dollars. For me, that's great news. I took the opportunity to increase my position after the stock tumbled 9%. I now have enough shares to generate one share with the dividends that are distributed every quarter, which sets everything up for a synthetic DRIP. This is especially attractive because Sun Life Financial offers a 2% discount with their DRIP. Now all I have to do is have a little chat with my broker and the compounding machine will be ready to go.

-the Paperboy