Globe Investor
 

August 2, 2021

 
A new, money-saving way for Canadians to buy big U.S. tech stocks. Plus, short sellers increase bets against the TSX
 

Frank Gunn/The Canadian Press

A new, money-saving way for Canadians to buy big U.S. tech stocks. Plus, short sellers increase bets against the TSX - A roundup of investment ideas for active investors
To start with, you can think of the Canadian depositary receipts launched this week as the little guy’s way of buying shares of Amazon.com Inc.
 
The CDR of Amazon, stock ticker AMZN-NE, is listed on the NEO Exchange and was trading near $21 Friday morning. Actual Amazon shares traded on the Nasdaq were fetching about US$3,342.
 
Owning a share of AMZN-NE is like having a small, currency-hedged slice of Amazon in your portfolio. These CDRs were launched at $20 and will rise or fall in price proportionately on an intra-day basis to what AMZN-Q is doing.
 
 
 
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“This is like buying any stock – you can put a limit order in, you can have any special instructions that you want,” said Elliot Scherer, CIBC’s managing director and head of sales in the wealth solutions group.
 
You can read about the launch of CDRs in a story by my colleague James Bradshaw.
 
Canadian Imperial Bank of Commerce, originator of CDRs, plans to add Alphabet Inc., Apple Inc., Netflix Inc. and Tesla Inc. Of course, you can always buy these stocks on Nasdaq directly through any broker or trading app. But buying the CDR version allows you to skip the expensive process of having your broker convert your Canadian dollars to U.S. currency at retail foreign exchange rates to buy shares. Instead, your Canadian dollars will be converted at a more favourable institutional rate by the managers of the CDR.
 
Amazon doesn’t pay a dividend, but Apple does. Mr. Scherer said taxation of CDR dividends will be handled the same way as dividends paid from U.S.-listed stocks. Consult this dividend investor’s tax guide for details on that.
 
The use of currency hedging in CDRs means investors get the return of the underlying U.S. stock, with no distortions caused by changes in the Canada-U.S. exchange rate. Hedging is advantageous at times, like most of the past year, where the Canadian dollar rises against its U.S. counterpart. A rising dollar erodes returns from U.S. holdings, while a weak dollar adds to returns in U.S. stocks and funds.
 
The use of hedging opens the door to tracking error, which in this case would mean AMZN-NE not delivering returns that are 100 per cent proportional to those of AMZN-Q. Mr. Scherer said the hedging particulars of the CDR will help keep the risk of tracking error at minimal levels.
 
CIBC has a list of 50 stocks it would like to provide in CDR form and will deliver new offerings in batches of 15, Mr. Scherer said. If there’s investor demand, it’s possible that CDRs for international stocks could be issued at some point.
 
-- Rob Carrick, personal finance columnist
 
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
 
Stocks to ponder
 
Tourmaline Oil Corp. (TOU-T) Despite its name, Tourmaline is one of Canada’s largest natural gas producers, and the company is known for its low-cost operations. This reputation, coupled with stronger North American natural gas prices recently, have helped Tourmaline’s shares double this year, soaring 102 per cent since the start of January – better than some names even in the hot tech sector. Tim Kiladze tells us more about this often under-the-radar star of the oil patch.
 
The Rundown
 
Here’s what you should expect to pay for a financial plan that shows if you’re on track for retirement and more
 
A most welcome shift has occurred in the financial planning business in recent years. There are more than 100 planners now working with clients on a fee-for-service basis, which means you pay a set hourly or flat fee. Most of these planners do not handle investments – they just do financial planning and, in some cases, coach clients on improving their financial health. Rob Carrick tells us what you can expect in terms of costs.
 
Canadian restaurant stocks rebound from COVID-19 pandemic, but concerns linger
 
Canadian-based restaurant stocks have largely recovered from the pummelling taken from the pandemic lockdowns as investors bet on consumers’ growing appetite for dining out. Still, there’s concern the restaurant recovery trade could fade given the growing list of pressures on the sector amid the economic reopening. Brenda Bouw reports.
 
Short sales on the TSX: what bearish investors are betting against
 
Air Canada and big-name cannabis stocks continue to draw interest from short sellers. Larry MacDonald looks at the TSX stocks with the highest short positions and, in a separate report, discusses how there’s been a jump in bearish bets against the TSX in general.
 
In Robinhood’s Wall Street debut, stock swings sharply
 
Wall Street gave Robinhood a cool reception Thursday in the online broker’s debut in the stock market that it helped reshape by bringing millions of new investors. Shares of Robinhood Markets Inc. slumped 8.4 per cent in their first day of trading on the Nasdaq from their initial price of US$38 set late Wednesday. It was a disappointing performance after the offering was already priced at the low end of its expected range. Stan Choe and Alex Veiga of The Associated Press report.
 
Also see: Cathie Woods’ ARK Invest bought Robinhood on debut day
 
Others
 
The highest-yielding stocks on the TSX, plus risk data
 
Number Cruncher: 12 top-performing Canadian stocks with upward price momentum
 
Number Cruncher: These 10 tactical balanced funds offer help for investors struggling with their portfolio asset mix
 
Friday’s analyst upgrades and downgrades
 
Thursday’s analyst upgrades and downgrades
 
Globe Advisor
 
The Financial Times: Asset managers prepare for investor shift to bespoke equity portfolios
 
Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.
 
What’s up in the days ahead
 
Ian McGugan this weekend looks at the recent turmoil in China’s stock market. Investors are exiting Chinese stocks amid a crackdown on tech companies and others in an apparent bid to deepen Beijing’s control of capital markets and the flow of information. Is it a buying opportunity?
 
Jobs, crackdowns and a fork: World market themes for the week ahead
 
Click here to see the Globe Investor earnings and economic news calendar.
 
More Globe Investor coverage
 
For more Globe Investor stories, follow us on Twitter @globeinvestor
 
You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.
 
Compiled by Globe Investor Staff
 
 
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