Comments on: Switch On The Consumers’ Waterheater Tab http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/ A Vancouverite's journey to financial freedom. Wed, 10 Mar 2010 17:43:32 +0000 http://wordpress.org/?v=2.1.2 By: FourPillars http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-722 FourPillars Tue, 27 Nov 2007 02:43:01 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-722 Brilliant! I feel warmer already... Mike Brilliant! I feel warmer already…

Mike

]]> By: moneygardener http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-723 moneygardener Tue, 27 Nov 2007 04:26:03 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-723 This one got away from me on speculation that they would be acquired earlier this year or else I probably would have bought it. For now, I am not interested in adding any more trusts. Good buy! This one got away from me on speculation that they would be acquired earlier this year or else I probably would have bought it. For now, I am not interested in adding any more trusts.

Good buy!

]]> By: Financial Jungle Guy http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-724 Financial Jungle Guy Tue, 27 Nov 2007 07:19:45 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-724 MG - Many investors can blame a few insolvant income trusts for attracting bad connotation to the entire sector, but I still find this a rewarding space IF you're picky. Since we are both fundamental investors, the structure of the business isn't nearly as important as the business itself. What I'm trying to say is, we can never have too many trusts in our portfolio. :) Many trusts are dead easy to value. We have a good idea how much Consumers' Waterheater is worth, but try pinpointing Citigroup's intrinsic value. No way! MG - Many investors can blame a few insolvant income trusts for attracting bad connotation to the entire sector, but I still find this a rewarding space IF you’re picky. Since we are both fundamental investors, the structure of the business isn’t nearly as important as the business itself. What I’m trying to say is, we can never have too many trusts in our portfolio. :)

Many trusts are dead easy to value. We have a good idea how much Consumers’ Waterheater is worth, but try pinpointing Citigroup’s intrinsic value. No way!

]]> By: mg http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-725 mg Tue, 27 Nov 2007 17:44:52 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-725 I am trying to strike a good balance in my portfolio between share price growth and income. While I do realize that they are tied together sometimes, I feel that i am already weighted heavily in trusts with my exposure to YLO.UN and IPL.UN. These are great for the income but I don't expect much share price growth or growth in income in the short to mid term with these names. I am trying to strike a good balance in my portfolio between share price growth and income. While I do realize that they are tied together sometimes, I feel that i am already weighted heavily in trusts with my exposure to YLO.UN and IPL.UN. These are great for the income but I don’t expect much share price growth or growth in income in the short to mid term with these names.

]]> By: Financial Jungle Guy http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-726 Financial Jungle Guy Tue, 27 Nov 2007 19:08:43 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-726 I'm assuming you meant equity growth, not share price growth. Income = Growth by my definition. For example, the Bolerax power utility trust I purchased earlier has little upside nor downside potential, but it does distribute over 13% on my purchase price. If the unit price doesn't appreciate over time, fantastic! I can reinvest the 13% to grow my equity, thus my distribution, by 13% annually. And that will compound nicely against the 10% long-term average from the stock market. This is why I don't necessary shy away from trusts that don't grow their distributions as quickly as others, as long as the price is right. I’m assuming you meant equity growth, not share price growth.

Income = Growth by my definition.

For example, the Bolerax power utility trust I purchased earlier has little upside nor downside potential, but it does distribute over 13% on my purchase price.

If the unit price doesn’t appreciate over time, fantastic! I can reinvest the 13% to grow my equity, thus my distribution, by 13% annually. And that will compound nicely against the 10% long-term average from the stock market. This is why I don’t necessary shy away from trusts that don’t grow their distributions as quickly as others, as long as the price is right.

]]> By: mg http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-727 mg Tue, 27 Nov 2007 20:00:12 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-727 I did mean equity growth which should really translate into share price growth roughly. I gree with your assessment except for one caveat. Since income actually leaves the company it is dislocated from true growth of the business. The only way to theoretically translate $1 of income into growth is to invest 100% into a DRIP that DRIPs fractional shares. If there are any commission fees incurred on re-investment or inefficiencies like those involved in a synthetic drip then income loses out. These would all apply to my specific situation. I did mean equity growth which should really translate into share price growth roughly.

I gree with your assessment except for one caveat. Since income actually leaves the company it is dislocated from true growth of the business. The only way to theoretically translate $1 of income into growth is to invest 100% into a DRIP that DRIPs fractional shares. If there are any commission fees incurred on re-investment or inefficiencies like those involved in a synthetic drip then income loses out. These would all apply to my specific situation.

]]> By: Financial Jungle Guy http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-728 Financial Jungle Guy Tue, 27 Nov 2007 20:59:20 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-728 Bah! :) Fractional shares are overrated. Each Bolarex share is only 7 bucks. If you're 2 bucks short, go on margin if you have to, and pay it back with next month's distribution. Bah! :) Fractional shares are overrated.

Each Bolarex share is only 7 bucks. If you’re 2 bucks short, go on margin if you have to, and pay it back with next month’s distribution.

]]> By: mg http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-729 mg Tue, 27 Nov 2007 21:14:59 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-729 The dist. would always need to be a multiple of $7 or your would get cash kicked out... Also, you know I invest mainly in a non-reg = TAX! The dist. would always need to be a multiple of $7 or your would get cash kicked out…

Also, you know I invest mainly in a non-reg = TAX!

]]> By: Financial Jungle Guy http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-730 Financial Jungle Guy Tue, 27 Nov 2007 22:50:45 +0000 http://financialjungle.com/2007/11/26/investing/switch-on-the-consumers-waterheater-tab/#comment-730 Fair enough for non-registered accounts, especially for Consumers' Waterheaters as their distributions are not as tax-friendly. Good luck, mg. FJ Fair enough for non-registered accounts, especially for Consumers’ Waterheaters as their distributions are not as tax-friendly.

Good luck, mg.

FJ

]]>