Optimism #62 - May 1, 2023

Dear clients and friends,

May is here.
I see tons of buybacks, dividend increases and insiders buying.  There are too many to report.

In April alone, Tamara and I received dividends from Power Corp, TD, TC Energy, CIBC, Scotiabank, CP Rail, Couche Tard, Cdn Natural, Rogers and Telus.  What a month!

Brian Belski, BMO’s top Economist is optimistic about investing in Canada. 
He says “There are likely many opportunities developing in Canada to implement a growth at a reasonable price strategy … “
The stocks on the GARP (growth at a reasonable price) list are [ many of the same ones we own] Rogers Communications, Quebecor, Telus Corp., Canadian Tire, BRP Inc.,
Magna International , Restaurant Brands International, Saputo Inc., Loblaws Co. Ltd., ARC Resources, Canadian Natural Resources, Cenovus Energy, Enbridge, Parex Resources,
Suncor Energy, Tourmaline Oil, TC Energy, Bank of Montreal, Brookfield Corp., CI Financial Corp., Canadian Western Bank, EQB, Manulife Financial, National Bank, Royal Bank,
Sun Life Financial, TD Bank, CAE Inc., Canadian national Railway Co., Finning International, Stantec, TFI International, Evertz Technologies, CGI Inc., Open Text Corp., B2Gold,
Equinox Gold, First Quantum Minerals [disclosure: I own a position in this one] , New Gold Inc., Nutrien Ltd., Teck Resources, Altagas Ltd., Emera Inc. and CT Reit.
For subscribers, here is the link (Word file attachment as well):
BMO chief strategist’s top picks for Canadian GARP stocks - The Globe and Mail

We have a good insurance story.
My daughter called last week and asked if our home insurance policy covers her for contents and liability at her university rental house?  She said its mandatory that she have coverage.
She shopped and the cost is $360 per year.  While thinking … yeah sure kid … I chuckled and said “… it’s highly unlikely, but I will confirm”.  Well.  I was pleasantly wrong. 
For a grand sum of 3$... yes annually, she is added and has coverage. For an extra dollar, I added my other kid for coverage on her place.

The media seems like a contest of negativity.  ‘Short sellers increased slightly on TD shares’, which means investors are betting the price will fall. 
The paper framed it as “TD Bank biggest sector short anywhere in the world with $3.7 billion on the line”.
TD likely became the most shorted because the other global, mostly US banks, were vastly reduced because they have already fallen.  Not because shorts increased dramatically.
Deeper in the article it says “The [short position] remains relatively low at 3.3% up from 2.8% a year ago.”  It’s no where near as bad as it sounds.
TD’s share price is up since the article so those investors lost money, so far at least.
TD Bank biggest sector short anywhere in the world | Financial Post

If you spent more than a certain number of days in the United States during 2022, you should explore filing an 8840 form.  I believe the deadline is the end of May.
The formally basically states that you are there for personal reasons only, not business.  If you do exceed the days and do not file, you may be deemed a resident and required to file US taxes.
Here is an explanation of who should be filing. About Form 8840, Closer Connection Exception Statement for Aliens | Internal Revenue Service (irs.gov)
I have oversimplified the formula for counting days.  Speak to your tax pro.
Here is a link to the form. https://www.irs.gov/pub/irs-pdf/f8840.pdf

I have recently seen a situation where a person invested in real estate-based development funds.  $206,000 is now worth $13,654 and it  took more than a year to access the remnants.
It’s a not-so subtle reminder on maintaining the highest of quality and being careful when reaching for higher returns.

Here is a wonderful article on how to avoid being tricked out of our money.  The link works for subscribers to the Globe and Mail.  Word article attached as well.

To maintain my RFP designation, I must continue to learn.  One session I attended was about a company in Toronto called Business Intelligence Services. 
If someone scams you and takes the money out of Canada, these people collect it.  I had no idea such services even existed.

To figure out how much tax you pay as a percentage, pull out your tax return and look at line 236.  It’s on the bottom of page 4 on mine.  Divide that by line 43500, bottom of page 7. 
It’s likely lower than you might of guessed, especially if a high percentage of your income is Canadian source dividends.

PS.  Someone is still sending out random emails that appear to be coming from me.  They don’t appear to be a virus, just some crypto marketing. My apology.  Please delete anything that seems odd. 

Have a super week.  I am here if you have questions.
Derek Moran