Sino Forest Corp Reports 3rd Quarter Results

12-Nov-2009 | kate | Asia International Investing Investment Ideas New Announcements Stocks The Wise Investor

Today, a current top Retire First Top Pick, Sino Forest Corp has reported a sharp increase in their 3rd Quarter profits, driven by a 25% increase in profits.

The company, whop specializes in commercial plantation, has been cultivating and harvesting tree, in China since 1994. Sino Forest Corp has been capitalizing on China’s status as the world’s largest consumer of wood products, which has helped them achieve profitable growth over the company’s life time. In fact since 2005, the company has achieved compound average annual growth rate of 38% in revenue, 31% in diluted earning per share and 47% in Cash Flow from operating activities.

As the leading commercial forest plantation in China, Sino Forest Corp managed close to 350,000 hectare, which are developed to preserve the local ecological environment. Additional, the company participates in the wood fibre operations (wood logs, imported wood products) , nursery and greenery services as well as manufacturing and processing of engineered wood flooring and oriented strand board.

This morning, the company reported their third quarter profits, with higher sales volumes and price increase, driving the numbers up 41% from the previous year. The company reported net income of $105.6 million, up from $75.2 million, along with an increase in quarterly revenue of $73.3 million to $367 million, falling in the middle of analyst expectation.

Driving the revenue increase was higher revenue in the sale of plantation fibre (up 21%) and imported logs (up 85%).  The company also added that they have been experiencing the positive effects of China’s economic expansion.

Sino Forest Corp trades on the TSX under TRE. TRE is currently trading up 1.82% at $17.87 (Nov 12th, 9:04 AM )

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

No Comments

Closed Until Open funds

05-Nov-2009 | kate | Funds

As our daily readers can tell, a lot of my blog articles result from conversation with my clients, and today is no exception. I had a late meeting early this week, where a potential client came in to discuss her investments held at another institution. Similar to most people who invest at their bank, she had a mine field of mutual funds and wanted to someone else to attempt to explain what all the terms meant. Through out our conversation, one mutual fund that stuck out to me, was the closed until opened fund.

A closed until open mutual fund, works pretty much like the name implies.  The fund starts out as a closed-end fund for a few years, and then converts into mutual fund (open-ended) down the road.

Back to the meeting; my potential client was confused by this statement since she assumed a closed end fund, was a mutual fund. She was beginning to get lost. So it was time to get back to the basics.

A closed end fund is a pool of capital that is sold to the public through the formal issuance process, and closed to all new investments after that. The only way that you can buy or sell the fund, is through the stock exchange. Basically there are a finite amount of units to purchase, and for every seller their must be a buyer on the other side. Trading on the stock exchange allows the buyer of the fund to get real time prices, instead of waiting for the NAV at the end of the day. Closed end funds are advantageous to the fund manager since their don’t have to worry about redemptions, thereby allowing them to take a longer term view so they can buy less liquid investments like infrastructure and real estate.

Historically, closed end funds tend to have lower ongoing management fees that other products but cost more to initially invest in due to the cost of bringing the fund to the market.  One site suggested that on average for every one dollar spent to buy the fund, only 93 cent is invested.

Traditionally, closed end funds were marketed as specialized investment tools designed to target specific niches. Today, however some funds are being marketed and misunderstood as front end mutual funds containing trailer fees, redemption features and eventually being opened to new investors.

Today, closed until open funds are appearing to be launching pads for mutual funds and ETF’s, starting as a closed end fund to allows the costs of the fund to be passed on to the initial unit holder- a great option for the fund company, not so great for the original investors.

While some other advisors might say that the market conversion feature is a great tool, it actually limits market return for the initial purchaser of the IPO. The buyer of a closed end fund will have to have some compelling reason to why they believe this fund will perform 7% (the initial investment lost to listing fees) better than any other tool out there, to make a case for buying into a new closed end fund, over another investment.

Of course, this is just the tip of the ice berg why closed-until-opened funds may not be the best investment out there for you, but it does highlight one of the major issues. Remember that when you’re investing it is important to understand what you are getting yourself into, so it is important to ask lots of question and research the company through sites like Retire First Top Picks and the Retire First Blog for information on investment tools and products.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

No Comments

PPN’s: What Does a Guaranteed Principal Actually Cost You?

02-Nov-2009 | kate | Investment Ideas Investment Tools Market Strategies The Wise Investor

I really enjoy meeting new clients and helping them navigate through the world of finance, which is why I thoroughly enjoy meeting new clients. Each client brings with them interesting questions and last week, I met with a couple that was particularly interested in principal protected notes (PPN).The client had been hearing about them from another advisor in town who they have been working with, and was wondering about our opinion  here at Retire First.

The selling point of PPN is that they are guaranteed to return your principal investment after a certain number of years, additionally there is also the possibility that you can make a better return through their exposure to the market. PPN investing philosophy is complex, using options and derivatives that are lost on the average investor. So why would investors want to participate in something they don’t understand? Its hard to say no to the idea of no risk, all the reward that PPN are built on.

It may sound too good to be true, and it is. First of all when PPN guarantees are paid back after the note matures years down the road, the principal is actually worth less, since the PPN guarantee does not adjust for inflation, eroding the principal purchasing power. Additionally, there are fees involved. Big fees. Typically, PPN fee’s fall into the range of 3-5%! These fees require equate to large account gains that are necessary to even recoup before they broke even, significantly limiting your upside potential.

Worse yet, your friends who were flaunting their PPN, during the market down turn last year got another surprise, when their PPN went into protection mode. As many PPN holders found out, protection mode meant that investors will get their principal back, and nothing more, when the notes mature years from now, even if their notes follow the market rebound. That principal of course, will have less buying power because of inflation. That 1year 1.35% GIC rate is sounding pretty good right now, isn’t it?

So what does the investor who likes the sounds of the PPN, still wants market upside but hates the high fees, to do? You can build your own PPN, by following the simple concept below, illustrating how to build a PPN with fictional portfolio of $1000.

One: Find a government strip bond that is maturing at the same time as the PPN that you are currently looking at. Strip bonds pay no interest; instead they sell at a discount to their face value, which the investor receives at maturity. For simplicity sakes, let’s assume that the strip bond can be bought for $900, and will maturity in 10 year at $1000.

Two: After buying the bond we have a $100, remaining from our $1000 we planned to invest. Take the one hundred dollars and invest it in the market in an ETF or an Index fund.

You have now created your own PPN, whose worst case scenario is that every single company in your ETF goes bankrupt and you lose your one hundred dollars, but you will still get $1000 back from your government strip bond. That is of course, assuming that the government will not default.  Instead, you could be collecting dividends from your ETF and market gains over the next 10 years, and paying fewer fees than your PPN buddies.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

No Comments