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Friday, June 17, 2011

Attention margin investor: TD Waterhouse had reviewed its margin lending values

The TSX closed today session at 12 853.13 points, -118.90 points. On my way to work, I call TD Waterhouse. I wanted to find out if they were able to see in real time the money left on the margin account. Unfortunately, that information is not available in real time, even from their end. It’s a data that update itself once every day in the evening, usually pass 9pm from what I had been able to observe so far. Not that was that stressed, but I was curious to find out. I don’t want to fall below 20 000$. And guess what, I closed today session at 20 001.88$...

Here’s today data:

Portion of the margin account that been used: 40 677.24$
Non-registered portfolio value: 109 615$
Money left available of the margin account: 20 001.88$

For me, the 20 000$ is something quite strategic, in the sense that if the money fail below the 20k, I feel danger.

Just like it was planned, I will be able to make a 1 000$ deposit on my margin account tomorrow morning. This will help to increase my margin value. I won’t be able to make any other deposit coming from my own money for the month of June. And for the month of July, it could be more difficult, since I will be away for 2 weeks. I would like to be able to sell HZD before I leave, to keep peace of mind. We’ll see what happen.

I went through the reading of an interesting note. On June 16, 2011, TD Waterhouse has review its margin lending values. A PDF document had been produced, in which the chances appear. Some of my current holdings appear in the list of securities whose lending values have changed.

Here they are:

Rogers Sugar Inc. (RSI): 50%
Sprott Inc. (SII): 50%
Methanex Corporation (MX): 50%
Canfor Pulp Products Inc. (CFX): 50%
First Majestic Silver Corp (FR): 50%
WesternOne Equity Income Fund (WEQ.UN): 25%
Corby Distilleries Limited (CDL.A): 25%
K-Bro Linen Inc. (KBL): 25%
Data Group Income Fund (DGI.UN): 25%
Exchange Income Corporation (EIF): 25%
Horizons Gold Yield Fund (HGY.UN): 25%
Premium Brands Holdings Corporation (PBH): 25%

It’s been a good surprised to see Rogers Sugar Inc. (RSI), Sprott Inc. (SII), Methanex Corporation (MX), Canfor Pulp Products Inc. (CFX) and First Majestic Silver Corp (FR) at 50%. For my understanding, that means that TD Waterhouse will bring in to the margin value half of any investments hold in RSI, SII, MX and CFX. I am surprise to see RSI and SII at 50%. Not because that they are not good investment, but because I had been holding them for quite some time, I know how much RSI and SII can be volatile. However, it’s good news because I massively hold SII in my portfolio right now. All the rest of the list is at 25%, with WesternOne Equity Income Fund (WEQ.UN), Corby Distilleries Limited (CDL.A), K-Bro Linen Inc. (KBL), Data Group Income Fund (DGI.UN), Exchange Income Corporation (EIF), Horizons Gold Yield Fund (HGY.UN) and Premium Brands Holdings Corporation (PBH) included in the listing.

Interesting, but this new listing show the difficulty of margin. This meaning that at any time, TD Waterhouse can modify the percentage giving to each company eligible for margin investment. That would be actually another con of margin investment. I knew a certain percentage was giving by TD, but seeing some changes being applied in the middle of a stock market crash is quite scary. But I am confident I will be able to go through this without too much trouble. The trouble change on a daily basis depending of the stock market directions. Selling HZD will brought in something like 4 000$ in cash and trust me, once the sell completed, the money will stay and remain on the margin account. At least for a little while.

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