What's on your Smith Manoeuvre buy list?

23932 Views 67 Replies 29 Participants Last post by Eclectic12, Nov 10, 2010

kassam

Discussion Starter · Apr 3, 2009

I just noticed a lot of people were saying that they were starting up a SM portfolio or we're looking to buy before this little run.

I started my SM portfolio right before things crashed in Oct 08 with an initial investment of 15k and have invested up to 22k. I keep a watch on stocks I would like to add as I build up funds and keep a 'buy list' of stocks I'd like to add.

Current Holdings
Royal Bank of Canada (RY)
Arc Energy Trust (AET.UN)
Avenir Difersified Income Trust (AVF.UN)
Riocan Real Estate Trust (REI.UN)
Encana (ECA)

I've noticed a lot of volatility with income trusts and I don't really want anymore exposure to them. I've doubled up on REI.UN in one of my other portfolios but I've built up enough funds to start looking at picking up another holding. The ones I find most interesting are:

TD Bank - the banks are paying great dividends right now and have such a great history of not decreasing them. RY is more a business bank and I think TD would give me another bank that is concentrated more on personal banking.

Enbridge (ENB) - solid, reliable, through thick and thin. Hasn't looked this attractive in awhile.

Fortis (FTS) - I don't really know their business well but they are in utilities and they should have a steady stream of income in bad and good times to keep the dividend payments coming.

I believe all three are Dividend Aristocrats so I just have to make a decision.

What do you guys think?

What's on YOUR buy list?

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wx_junkie

· #2 · Apr 3, 2009

HOW are you holding income trusts in your SM portfolio?!?!

That must be an absolute nightmare for tax-deductabilty tracking...

For my SM Leveraged Portfolio, Canadian (to maximize the dividend tax credit), Dividend (to accelerate mortgage paydown) paying equities are my prerequisites, and I'm trying to buy at a yield of between 4% and 7%.

Staying away from income trusts for the tax deductabilty implications.

Oh, Fortis and Enbridge are both on my short-list of first-purchases.

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wx_junkie

· #26 · Apr 14, 2009

SM related question:

How long after I borrow from the HELOC, must an investment purchase be made in order to not get CRA cranky. Surely, I can't pull from a HELOC, start claiming interest paid right away, and have the money just sit there in a cash account *waiting* for an investment opportunity forever? What's a reasonable amount of time to have it sit around, or, if I want to stage in cash, which should I have the last of it consumed by?

1) The transfer from my BMO HELOC to BMO acct = instant.
2) Write a cheque to myself, and deposit it into CIBC cash account - takes 7 days to clear (guess).
3) Tranfer from CIBC cash to Investors Edge Acct = 1 day.

I want to have the cash in my Investors Edge acct now, so I can buy on weakness. I don't want to have to wait 8 days, otherwise the weakness will surely be gone.

Thanks.

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wx_junkie

· #28 · Apr 18, 2009

wx_junkie said:
SM related question:

How long after I borrow from the HELOC, must an investment purchase be made in order to not get CRA cranky. Surely, I can't pull from a HELOC, start claiming interest paid right away, and have the money just sit there in a cash account *waiting* for an investment opportunity forever? What's a reasonable amount of time to have it sit around, or, if I want to stage in cash, which should I have the last of it consumed by?

1) The transfer from my BMO HELOC to BMO acct = instant.
2) Write a cheque to myself, and deposit it into CIBC cash account - takes 7 days to clear (guess).
3) Tranfer from CIBC cash to Investors Edge Acct = 1 day.

I want to have the cash in my Investors Edge acct now, so I can buy on weakness. I don't want to have to wait 8 days, otherwise the weakness will surely be gone.

Thanks.

As it turns out, all of this is Moot.

I write a cheque directly from my HELOC and deposit to my CIBC cash acct, and right away I have access up to $10,000 to xfer to Investors Edge account, without having to wait 5 days for the cheque to clear. I can make an investment about 2 hours after I deposit cheque. All is well.

Crisis averted.

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wx_junkie

· #30 · Apr 18, 2009

Rickson9 said:
This is interesting. I actually place barriers to prevent buying fast. I have many steps I need to complete to get cash into my trading accounts. This forces me to have a cooling off period to think about things.

Excellent tactic. I 100% agree with you that this is a very good idea. For my monthly SM investment, I'm only looking at about $750 at a time, so it's not like I'm blindly dumping a whack of money into a company on a whim. Just dumping a little bit of money into a company on a whim.

Kidding aside, I appreciate your strategy. I'm actually determining about a week in advance the 4 or 5 companies I want to buy that time around, then whatever one showing some weakness that day or week, I'll buy.

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wx_junkie

· #32 · May 2, 2009

Here's my "own" list as of current. There are 2 that don't pay dividends (Timminco and Paladin), but I'm hoping someday they'll be payers. Ironically, those are my biggest gainers of the whole lot thus far. My average dividend right now is 4.96%.

Leveraged Holdings for SM:
Fortis Inc
Enbridge
TransCanada Corp.
TransAlta
Russel Metals
BCE Inc
AGF Management
EnCana
Brookfield Properties
Bank of Montreal
Toronto Dominion Bank
CIBC
AECON
Husky Energy
Leons
Sunlife Financial
IGM Financial
Timminco Ltd (no dividend currently)
Manatoba Telecom
Rogers Communications
Canadian National Rail
Onex Corp
Manulife Financial
Telus
National Bank of Canada
Power Corp of Canada
Paladin (no dividend currently)
Loblaws
Shaw Communications
Bank of Nova Scotia
Great West Lifeco
Shawcor
Biovail

Next to buy (watch) list:
Some more of what I have already purchased, plus
Royal Bank
Canadian Western Bank
Power Financial Corp
Suncor
Talisman
Imperial Oil
Canadian Natural Resources
Nexen
Bombardier
Toromont
SNC-Lavalin
Shoppers Drug Mart
Canadian Tire
Reitmans
Agrium
Claymore Global AG
Potash
RIM (not a dividend payer currently)
Sandvine (not a dividend payer currently)
Teck Resources (not a dividend payer currently)
Emera

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wx_junkie

· #34 · May 4, 2009

whitegoodman said:
I am surprised nobody has interpipeline IPL.UN on their list .... it's payout has been consistant and has traded in a $7-$9 range for quite sometime. New project completions that are coming on-line should allow for share price appreciation and they appear to be set up for the coming govt. regs.

This is one of my largest positions.

wg

I, as well as many many others I believe, stay away from income trusts in a leveraged portfolio. The tax-deductability for interest becomes a nightmare I've heard. I'm "keeping it simple stupid" so that I don't have some fancy-dancy nightmareish calculations or spreadsheets to do at tax time. I claim 100% of my interest, and that's it.

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wx_junkie

· #55 · Nov 5, 2010

Eclectic12 said:
A couple of other tips/reminders:

a) Make sure you don't include the brokerage commission in your
HELOC cheque as it is not tax deductible. (It is an expense in
the capital gains calculation, so it is already excluded from the
capital gains taxes.)

Whoa... didn't think of this. I'll have to "un-do" this one...

I'd better make an equivalent cash deposit from my pocket equal to all the commissions I've paid since implementing the SM in May 2009 ($28.95 x 11) into my account and add it toward my next stock purchase. And.. fix it going forward.

Thanks Eclectic!!

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