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Tuesday, June 28, 2011

Yellow Media Inc. (YLO): a BUY, SELL or HOLD?

Before selling Yellow Media Inc. (YLO) on May 3, 2011 at 4.65$ per share, I was a long time shareholder of the company. Selling a long time asset is not something easy to do, but in the case of Yellow Media Inc. (YLO), it was absolutely needed. I did not lost the original investment made in the sell, but I lost about 300$ value that had been reinvested through the DRIP. At this point of my investment journey, everything is going very well. I went through the stock market crash of 2008. It’s certainly not now that I was going to lose valuable money in an investment. That’s why that on May 3, 2011, I sell all asset of YLO.

Afterward, I had received a few stocks resulting from my DRIP. I had called TD Waterhouse and they had been kind enough to sell my few stocks left at no charge. I am extremely grateful to TD Waterhouse because I no longer want any bad investments in my portfolio. I still have my stocks of Timminco (TIM) left in and that’s the only bad investment that remain in, as a tragic souvenir that even stock guru like Eric Sprott can make investment mistake. I now have myself as main guru and I never been doing so well since the time I told myself never again. No more investment tragedies. This is the kind of event you want to live once in a lifetime, not two or three times. That’s why I decided to sell, on the fatidic date of May 3, 2011, my investment in Yellow Media Inc. (YLO). No more tragedies. Eric Sprott has been my guru but he’s no more. I am now my own guru, that’s way much better, don’t you think so?

In 2007, I was mostly invested in mutual funds and I was reading Gordon Pape mutual funds reports. Fun, but there was way too much information available and the lazy girl that I am quickly turn down Gordon Pape mutual funds reports. Gordon Pape wrote about the current Yellow Media Inc. (YLO) tragedy. Because yes, what’s happening right now with Yellow Media Inc. (YLO), yes, I call it a tragedy, a disaster that some Quebec poor leaders are responsible of. And remember, I am on the stock market to win. To lose money because of Quebeckers. Never again.

So what’s the link between Yellow Pages and Gordon Pape? Well, Pape had written a chronicle appearing in my broker account at TD Waterhouse. From what catch me, it wasn’t a sell or purchase advice. It was a sell if an investor cannot support volatility and it was a buy for investors who can support risk. I absolutely hate those kinds of advices. Investors are in big need of real good advice. Not a gray zone. A Buy or Sell or Hold. Nothing in the in between. I want to know right now what I need to do for myself. Most of the time, I find the answers by myself.

In my investment journey, I had been very lucky. Lucky to have good people sending me from times to times emails, investment ideas, etc. etc. etc. Want to know what the emails are saying? Well, a few years ago, a man that I constantly refer to in my blog as the mountain lion hero aware me of Yellow Media Inc. (YLO), that it wasn’t a good investment because of Google and a lack of inside management of YLO, no long time vision for the company. That’s all I will say to keep it short. 

I am writing this because some investors, also Dividend Ninja, knew a long time back that YLO was not a winner pick. So we have here Dividend Ninja AND the mountain lion hero. So I don’t understand when Gordon Pape keeps it in a gray zone when it comes to YLO. And I hate that. That's it. I hate it.

It’s not going to get any better for YLO unless they get buy by a competitor. It’s over for YLO. It is not a value stock. YLO may be attractive for their high dividend yield, but when we’ll be facing another correction, YLO won’t be able to support it and may become, at that time, a penny stock, trading at less than 50 cents per stock. YLO high dividend yield is a trap. Remember who’s behind YLO management: Quebeckers. YLO management team do not have enough judgment to decrease their dividend. More sophisticate investors do not even invest in high dividend payer companies because they know it’s a trap. It’s irresponsible coming from YLO to pay a dividend yield exceeding the 10%. Absolutely irresponsible. 

I would like Gordon Pape to act like a financial guru and go with a BUY, SELL or HOLD when it comes to YLO but he didn’t. Back in 2007, I did not get what I wanted with Gordon Pape and in 2011, still the same thing. Who is that man anyway? Who is Gordon Pape? A Quebecker?

As for myself, on May 3, 2011, I took the best decision ever by selling Yellow Media Inc. (YLO).

Yellow Media Inc. (YLO)? SELL. Your money deserves better. Go with the dogs (TRP, CNR, etc.), not small players showing off the big yield just to impress and show it all. YLO is to be happily flush from your investment portfolio ASAP.


The Dividend Ninja said...

Sunny, thanx very much for the mention :)

I wrote about YLO back in December 2010 in this post:

And briefly in this post as well:

The Dividend Payout ratio for YLO was and still is 120%, that means all its earnigns and then some are paid out in dividends.

Many previous Income Trusts still have very high Dividend Payout Ratios. But YLO never adapted after the yellow-pages era. Be wary of stocks with high dividend payout ratios, especially if they are high yield! (I own two of those PGF and LIQ, and I will sell them at some point sooner than later)

Have a good week, and thanx again for the mention.

Dividend Ninja

Anonymous said...

Insiders are selling, not a good sign

Anonymous said...

Sunny-you are right on with your analysis (Re: YLO). The stock is a dog. These so called financial gurus know nothing-they give general advice that is applicapable to all situations. Like the Globe and Mail writer who wrote a story today(Jun 28th) about YLO. His advice was as lame as Mr. Pape's advice. Stick to your guns/investment gutts; you can't go wrong with those.


Sunny said...

Hi Dividend Ninja,

Your welcome, thanks for your informative blog.

Yes, insiders have sell. In May, their Financial Officer have sell some shares... not a too good sign.

Hi Mark,

I guess at a point I got kind of very frustrated. See, medias are giving a voice to some people who do not always give good advices. I would like from Pape to come with something clear regarding YLO.

When I use the term "dog" well, it mean something opposite to YLO. Like that TRP that I look forward to invest in is a dog. Good investment made good dogs. At least here on :0)

The Dividend Ninja said...

NO regrets now I guess :)

Sunny said...

Hi Dividend Ninja!

Hope you are having a nice summer so far!

I do not have any regret. Selling at the price I did was the best decision ever. It’s not like I have a portfolio of half of million or something like that. I cannot afford losing money. I cannot afford holding too much of troublemaker stocks. So far, my gains always exceed my capital lost. By selling YLO, I escaped a situation where I could lose big. No regret at all!

But I wonder what will happen to YLO next. I cannot fix myself on the stock, despite the fact that I had been holding it for a very long time.

Anonymous said...

What about now? YLO was at .14-.18 for a few weeks... then it started going up. Now it's at .55. Any thoughts? Third Quarter Announcements are at 2pm today.

Sunny said...

Hi there,

Following my experience with YLO, I won't recommend it as an investment. The stock is in bad shape and his now a penny stock. Don't invest in a trouble maker stock, keep it to make investments who had chances to grow on the long run.

Just take my example with CNR. I invested in the stock when it was 65$... its not exceeding the 70$...

It worth it to be patient and in those bad market condition, go with blue chips and in good quality stocks. Forget about YLO.

Frank said...

If you want to make money $$$, no risk, no glory. if you want to make money $$$ has to be with penny shares and long term, not earn money $$$ to investing in coca cola for 60$ share and selling at 70 dollars share, for make money in blue chips should be a millionaire before.

The only way to make money I mean good money $$$, must be investing in OTCBB or penny stocks in good markets like Nasdaq, TSE, AMEX, taking the opportunity of a low price of the shares. I think that YLO is an opportunity now at 0.27$, I saw opportunities in the markets at 0.17$ and 9 month later it was price 1.32$.

I see no anomalies in the management of YLO, I correct that the company announced no payments dividend, before pay the debt, but the company annunced pay a dividend of $ 0.26563 CAD in December 2011 after having paid a debt, because had cash after 1 payments expiration.


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