The Canadian Investor - Episode 6 - Balance Sheet, GameStop and Investing a Significant Amount of Money

Episode Date: January 6, 2020

This week on The Canadian Investor Simon and Braden answer a question from a listener and talk about balance sheet ratios with examples such as GameStop. We finish the episode with a quick Tip of the D’eh! Tickers of companies mentioned : APPL, MSFT, ENGH.TO, GME, ENB.TO, FB--- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. Live from the great white north, this is the Canadian investor where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. Welcome back, guys. We're back with another episode of The Canadian Investor.

Today, I'm really excited because one of our listeners, Lydia, left a question on GetStockMarket.com for Simon and I to dissect. Hey, Simon, how's it going? Hey, I'm good, Braden. Yeah, we're really excited to answer that question. So yeah, we'll start off with that today. Okay, perfect. I'll go ahead and read it.

And also, happy 2020, everyone. Hope everyone had a good New Year's, good holidays. So here's the question. She says that she's really enjoying the show. Thank you very much, Lydia. She says, I'm waiting for a pullback in the market and I'm struggling with what approach would be the best. I'm 33 looking for long-term growth with a significant amount of money. I've pulled everything out of mutual funds and opened an account with Questrade. I really like the idea of being diversified with ETFs, however I worry that there could be a bubble growing with passive investing. My other strategy

is buying blue chippers, hopefully at a discount and holding them forever. I know that there is no right or wrong answer to this, but maybe one of these strategies could be better to my specific situation. Thanks in advance and keep up the good work. Well, thank you very much, Lydia. This is a very good question. It's a kind of a couple questions in one, and I'm going to let Simon give his first take on this one. Okay, yeah. Thanks, Lydia, for the question.

Okay, yeah, thanks, Lydia, for the question. The first thing that comes out to me, well, first of all, congratulations on getting rid of those mutual funds and those high fees. I think it'll make a really big difference for you in the long run. In terms of the market being overvalued and then wanting to invest in index funds versus specific blue-chip companies, in index funds versus specific blue chip companies. Yeah, it's a good question whether people think that markets are overvalued or not. I think a good approach, whichever you want to pick, is to dollar cost average. So whatever sum you're investing, you could maybe divide it into 10 installments that you're doing every month or so at a regular interval. So that way, if the market is overvalued, goes down or vice versa, it goes up.

You kind of edge your bets a little bit by doing that. In terms of selecting ETFs versus selecting individual stocks, that's really to me whether you're willing to put the time in investing in blue chip or investing in stocks and keeping an eye on those companies at least once a year i would say when they do their annual reports so just see if they're still on track if your premise is still still good and so on and really nothing's preventing you to invest a portion of it in index funds and then a portion of it in 5 to 10 stocks, for example. I personally have about 50% of my investment in index funds versus about 30% in individual companies.

And I do keep about a 15-20% of cash balance right now. My reasoning behind that is if there are some really good opportunities, I'd like to have some ammunition in terms of cash to be able to pounce on them. So at first glance, that would be my advice for you. There's a lot of things you'll have to ask yourself. And because you're in your mid-30s, you probably have at least 20-25 years to invest, if not more. I'll let Brayden give his two cents as well. I probably have some more to add on that a bit later too. Yeah, that's pretty well put. So I'm going to take an approach here of dissecting your question in a couple of different parts because there's a couple of different moving pieces here. So first off, you said that you're waiting for a pullback in the market. So I am a strong believer

that there's no such thing as timing the market. Warren Buffett is famously quoted saying, time in the market is better than timing the market. And really, that means a lot because what you should really be doing here is dollar cost averaging, as Simon mentioned, which is not putting all of your capital in at one trading day, maybe over the next year, even next two years, if you can be patient enough, in at one trading day, maybe over the next year, even next two years if you can be patient enough to avoid that kind of the pricing of the market right now or even next month when you add more. This is the best strategy and it's probably going to boost your returns unless you get really lucky.

So that's the idea there. So congratulations on pulling out of mutual funds and opening up with Questrade. That's a good idea. And with your question around a potential bubble in passive investments, there's been lots of buzz around the internet on this topic. If everyone's dumping money into Vanguard ETFs, then is there a bubble forming in the market? And although I believe that does have some merit and there's been some studies that they could be possible, the amount of capital that's actually going into ETFs versus regularly individual trading companies and big institutional funds is fractional compared to

what's into ETFs. So I really don't think that's going to be moving the market in any really, really significant way. So that's my short answer to that. As for investing in individual stocks versus ETFs, I think Simon hit the nail on the head there with you can do both. I do both because I think being able to get international exposure to markets all around the world with broad-based ETFs, index funds, is really, really advantageous because there's no way you're going to be able to do a ton of research on the Chinese market,

the Brazilian market, the Japanese market, the European market, you're just one person and now you're managing your own portfolio. So you have to be realistic with that. The advantage of pulling out those mutual funds is that you are now not paying high fees. However, you are now managing your own account. So you have to be realistic with how you're going to be able to get that kind of global exposure or international exposure while researching all those companies on your own, which is just not realistic. So what you can do is pick up those blue chip companies that you think may be at a discount doing your own research and then combining it with an ETF indexing strategy. I think that's the best way to do it, to get good diversification, good exposure to different sectors, and then also be able to pick up these dividend companies that you're talking about that you're very comfortable with. And I think that's the most important part,

because if a market pullback does happen in those 10 stocks that you did select, if you're not fully comfortable owning them, then you're going to panic and that's not going to make for a good investing strategy. So knowing what you own, famously quoted by Peter Lynch, is incredibly important here while you make this big step. But congratulations as well. That's awesome. Do you have anything to add to that?

Yeah. So there's a couple of things. So I definitely agree with pretty much everything Brayden said. In terms of the passive investing that she was referring to, a lot of people also forget, yes, there's a lot of money going in, but there's also a generation that's very getting older. My parents are part of it, the baby boomers. So they have to take money out of those investments as well.

So there's a balance still kind of going on. But I do know like there's a lot of chatter of it on the Internet. In terms of like some investment ideas, I know Brayden had mentioned some broad base index funds in one of our previous episodes. index funds in one of our previous episodes. Some of the sectors that I am looking on, whether you want to look at those sectors and pick some individual companies and do your research or just index funds that follow them. So I know small caps have not performed as well overall as the broad-based markets. So whether you're looking at medium, large caps, they haven't performed all that well. Some examples of ETFs that are pretty low fees, there's the iShares Small Cap Index ETF, SCX.TO. There's the Vanguard Small Cap ETF. This one is a US one. The ticker is VB. And then there's the iShares Russell 2000 Growth ETF, IWO.

That's U.S. traded as well. There's also the REIT sector that has performed well in the past year, but not as well recently as the broad markets. So in terms of REITs, the ones that I have a good eye on is retail REITs and data storage REITs. Retail REITs, I would say, do your due diligence. You do have to do a lot of research in those because they mostly are US. There are some in Canada. A lot of them are not doing well, but there are some solid ones in there. And the sector as a whole is very, the feeling is a bit pessimistic towards them. And I think they're throwing some good companies out with a bathwater, whatever the expression is. And data storage REITs, I love. They're

mostly in the US. I think there's some Canadian companies that have exposure to them. So data storage are just companies that will have data centers and they'll lease that to, for example, Amazon Web Services, Microsoft, their cloud, Google, and so on. So there's a big tailwind for them going forward and a lot of them are reasonably priced right now. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees.

They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly.

Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends,

and there's other stuff like learning Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you, go on there and follow me. Search me up.

Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Yeah, that's a really good point where you bring up a good point with the retail reads as well. Definitely a pessimistic attitude

towards them. Some of them are, however, quite quality. You have to do a lot of research on the quality of the tenants that they actually house in their spaces. So with retail REITs, you're actually doing like, you have to do a lot of work because now you're looking at, now you're researching, you know, all the potentially publicly traded companies that are inside of the, the malls that they own. So yeah, that's, it's a lot of work anyways. Um, today we wanted to talk about the balance sheet in particular and the types of things that you basically need to, for me anyways, need to check off as like a bit of a checklist. Like, oh, it needs to meet these kinds of criteria in terms of safety on the balance sheet before I will actually enter a position.

I can lead right into some of the things that we're looking at. And there's a million different ratios you can kind of take from the balance sheet and put this over that and add this and then divide it by that. There's a million ways. But I'm going to kick off with one that I think is very, very important. And right when I started investing, a good friend of mine, Andrew Sater, who runs the Investing for Beginners podcast, he always talked about the debt to equity. Investing for Beginners podcast, he always talked about the debt to equity. He actually wrote a book about all the bankruptcies in the US, the 30 last bankruptcies, and how they all wrote a similar tune about debt to equity. So this is total debt to equity, by the way. It says total liabilities divided by total equity. So basically, what do you owe versus what is the everything you owe

versus everything you own? Very, very simple. You can relate this to back to your own life and really is an understanding of the total health of what you owe versus what you own. And there has been lots of correlation between this total debt to equity starting to balloon with certain companies and it ending very badly for them. Okay. Yeah. So for me, in terms of whenever I think about ratios, whether we're looking at the balance sheet, the income statement, the cash flow statement,

the main thing I kind of think about when I look at a specific ratio is how does it compare to the company itself in the past? And also, how does it compare currently to its peers? So if you don't put it in context, it won't make sense. You can't start comparing a company like just Enbridge, for example, that has a lot of debt, but they also have a lot of stable cash flows to a company like Facebook, for example, who will have a lot less debt and a lot of cash flow as well, but they have totally two different type of businesses. So one of the things that's really important whenever you look at ratios to think about the context of it. For me, I do like to look at total assets to total debt, not quite debt to equity, but when I do my

total asset, I will usually subtract any type of goodwill just to give me a good idea of what the actual assets are. Goodwill usually will be the premium that a company will pay to acquire another company. Also, the premium, they're oftentimes related to brand and the power of those brands. So if you guys want to do a bit of research, you can actually look online and see what happens with Kraft Heinz, a company that Warren Buffett actually invested in. What happens when a company has a lot of goodwill and they realize that their brands are not worth as much as they are? They actually have to write off that goodwill and it's a one-time charge in their earnings. Yeah, you brought up a lot of good points there, especially with the real-life example of Kraft Heinz.

there, especially with the real life example of Kraft Heinz. But I want to touch on that point again about comparing it to the business itself historically. What is their capital structure trending like? I think that's really important. And then also comparing it business to business. This is quite sector specific. And I am one of the investors that kind of distances myself from that methodology of saying, oh, well, you have to compare growth in different companies. I say, well, in different industries, sorry. And I say, well, why would I do that? I want the companies that are the best regardless of their industry. are the best regardless of their industry. However, the balance sheet is kind of different because there are different types of cash flow predictabilities.

We brought up the point of Enbridge or lots of regulated energy companies like that have very predictable cash flows. So they can take on more debt versus someone who has some uncertainty in revenue and cash flow in general. So the next ratio that is very important is looking at the current ratio, which is just current assets divided by current liabilities. So this is short-term safety of their financial health, of their capital structure. So let's break this down. It's current assets divided by current liabilities. So what are current this down. It's current assets divided by current liabilities. So what are current assets? It's things on their balance sheet like cash,

accounts receivable, so things that people are paying them, inventory, and other assets that expected to be liquidated into cash in less than one year. So that's important. So basically anything that can be considered basically cash within one year. Current liabilities include accounts payable, so what they owe in this year, wages, what they're paying their employees, taxes, and a current portion of their long-term debt. So that makes a lot of sense on what is their capital structure and their financial health look like within the next year. Yeah, exactly. That's a good ratio. One other thing, so I'll probably look at different lines of it just to make a bit more sense. So one of the things I do look at when I look at companies that will tend to have inventories, so retail companies, for example, if you're looking to invest in, one of the things that's really important bit of a warning sign, especially if you have an industry that's very

fashion driven or things will go out of style quickly. If those inventories level go up, what's going to happen is that they'll actually have to do sales and reduce their margins to get rid of the products. So that's something that I will look at for not all companies, but if there's companies that do have to have a good portion inventory on hand, that's something that I will look at for not all companies, but if there's companies that do have to have a good portion inventory on hand, that's something I will look at. is when you're looking at the balance sheet, you're asking yourself a lot of, well, why is this like this? Why is this like that? And then making comparisons to the actual business itself, what they do, what they sell, how they create value. And you'll make a lot, you'll draw a lot of those comparisons when you're looking at the balance sheet. And if you can't answer those questions very clearly, then I don't think you've arrived at

your thesis yet. So that's just something I want to bring up that I think this is a fun exercise. Yeah, exactly. Did you have anything, any other ratios you use a lot, Brayden? Those are kind of the ones you talked about are the ones I use the most frequently. There are some that I use that go a bit more with earnings when you combine them with a balance sheet. And we can do that probably another time when we look at earnings as well. Yeah. Those are the ones I guarantee that I look at. Another one that's quite common is the quick ratio. And which is, which is basically very, it's very similar to the current ratio and the fact that it's

It's very similar to the current ratio in the fact that it's cash and cash equivalents and accounts receivable, so very similar to current assets. But it also includes marketable securities, which are securities that can be traded in for cash very quickly. So companies that are holding short-term bonds and even different stocks, this would be included on the marketable securities. And then, sorry, that's divided by current liability. So this is one of those ones where it could be helpful to look at as well. You might be missing something with that marketable securities piece. But yeah, just another tool in terms of ratios that you might want to look at yeah the last thing I just talked about just not just kind of realize is I think sometimes you'll find in the balance sheet the numbers number of share outstanding so that's something I do look at as well so I don't want to

see too much dilution unless there's a good reason for it. IPO is dilution in itself, secondary public offering, usually it's after the IPO when they offer more shares. So whenever a company offers more share means that you own a smaller portion of the company. There could be real good reasons if they have a good plan for growth, and they're investing that and they're creating value, then that's fine. But especially new tech companies that are losing a lot of money, you'll see that share crown. It's not unusual to see it double within a few years. Same thing with a lot of the marijuana companies.

You'll see those share counts actually go way, way up. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call

or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage

account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you, go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics

tools. So go ahead, Blossom Social in the App Store and I'll see you there. Yeah, exactly. You can look on the cash flow statement right at the bottom there and you'll see you there yeah exactly and you can you can look on the cash flow statement right at the bottom there and you see net issuance of common stock to see what's happening there if the company's buying back a ton of stock i think last episode we talked about apple's absurd amounts of buying back stock i think in 2017 they spent like 80 billion on buying back stock or something outrageous or in that wheelhouse of numbers.

So you can see on the cash flow statement there, you can also see it on the balance sheet. All of these things are connected and it's kind of like a lot of aha moments when you see them kind of all working together. Yeah. And just one quick comment on that. I'd be really careful if a company is buying back a lot of stock but also issuing a lot of stock. So what that tends to mean is there'll be stock options.

So they're issuing stock for insiders at a low price and then buying back stock on the market at a higher price, which is not good for shareholders. So that's something that, yeah, people should definitely, if they see that in a cash flow statement, you should definitely see some of the footnotes uh in the annual and the reports because oftentimes they'll be talking about it there won't be super upfront about it you'll find the information uh but that is something else i'll look at very good points so simon's simon's your man when it comes to the uh the balance sheet this guy knows what he's talking about. That is a quick little thing that I actually never really thought about. Something that I knew is not good for shareholders, but that's an easy way to find it. So let's talk about a company. We're joking about this.

My favorite company. No, I make fun of this company all the time. It's GameStop. And we're going to specifically talk about their balance sheet. It's GameStop, and we're going to specifically talk about their balance sheet. I think we've talked about the thesis on this one very briefly on a previous episode. Basically, they're not in a good spot in terms of their performance. The stock has gone down a lot.

Their revenue has been flat. And there's some funny things happening on their balance sheet, which brings us back to how we talked about companies that have predictable cash flow and are growing can afford to make you know to take on more debt to grow the business however this company is not growing and it actually is shrinking so you can see how that kind of starts to fit together so do you want to take your first take on GameStop's balance sheet here, Simon? Yeah, so looking at it, so the two things at first glance that I noticed is the, I'll just look at the total assets. So total assets for them, I can see that they're, yeah, it's going down overall. And you'll see one of the big reasons that there has been a big drop in assets. It was 2018 to 2019. It's because they wrote off some goodwill, it seems like. I don't have their

income statement right in front of me, but I would assume that's what happened. So their goodwill, which I was talking about earlier, went from $1.6 billion, I think, to $3633 million so there's been a big write-off there but what that does it tells me that their total assets is actually trending down that's not great and their total liabilities is actually going up so those are two trends that I don't like seeing and then if you combine that with the fact that their sales and profits are going down those are two things that I'm very concerned about. And I know, having read and listened a bit on some analysis about GameStop, is their footprint in terms of store is just crazy.

They have thousands of stores, if I remember correctly. And they're not getting good, not reoccurring revenue, but increase in same-store sales. So they will have to be closing some stores as well going forward. But those are just that first glance for me for GameStop. Yeah, so what's happening with GameStop is this is Amazon effect to the extreme. Basically, brick and mortar selling video games, selling video game consoles. And then all of a sudden, the actual platforms themselves, the PS4s and the Xboxes of the world,

just allowed users to download the game right on the console and not even need to leave the couch when you want to pick up that new game. So you can see how that extreme convenience uh instant gratification not even like the amazon effect of like okay i'll i'll buy it now and get it in a day or two um this is i'll download it right now and i'll be able to start playing it and when it's finished downloading in you know the next 30 minutes so that's what's happened with with gamestop it's it's not in a good spot in terms of brick and mortar. There's lots of brick and mortar retail that's doing very well. A little lemon,

for example. However, no, sorry. Yes, three. Okay, so their current ratio is still over one, which is good. When you're looking at that, you're thinking, okay, in the short term, they're not going bankrupt in the very short term. But over the long term, with their decreasing amount of top line and bottom line on their income statement, and the increase of long term debt, you question yourself what the final future is of this. And a lot of investors are questioning what the future of it is. And that's why the stock price has gone down so much. If you want to take the floor for a second,

I'll tell you how GameStop has performed. Yeah, so yeah, definitely agree with Brayden on that. So they're probably not going to go bankrupt like in the next year or so, but it's not trending well. And one of the other things, if I switch to the cashflow statement, I know we said we would only talk about the balance sheet, but it's not trending well and one of the other things if I switch to the cash flow statement I know we said we would only talk about the balance sheet but they have things that have affected

their balance sheets there so they've have issued in the past five years they have issued more debt than they've actually repaid so you can see that in the cash flow statement the cash flow from financing operations and they've also made some stock repurchases for decent amounts, especially they've reduced them now, which I guess is good. But they were repurchasing shares at a high price in 2015, 2016, 2017, a lot less in 2018. But it makes you wonder if management was allocating capital right when they probably should have been modernizing either their store or closing some footprint and seeing what's coming ahead, which to me is one of the big issues with this company. dating back to January 2015, the stock has fallen 82% and 87% from their high at the end of 2015. So yeah, it just tells you kind of what happens when a declining business and a

worsening balance sheet get this kind of compounding effect where the company can kind of spiral out of control um so we joked around this earlier do you think that gamestop is sitting in deep value territory or would you stay far far away uh to me it's uh it's a falling knife for sure you're trying to catch a falling knife it's's a value trap, if you ask me, just because of their footprint. It's so high. I'm not sure if they have a clear plan of what's going to go, like what's going to be happening the next five years. They've made terrible decisions. You said they've gone down 80-something percent in the past five years. Well, five years ago, they were repurchasing stock to the tune of $330 million that year.

So that kind of gives you an idea of not smart capital allocation. That's their market cap right now. Exactly. So for some people, they might think it's a value play. I mean, I could be proving wrong, but I'd rather take a less risky approach and take a business that's actually trending in the right direction. Yeah, I totally agree with you, man. I know that there's a lot of deep value investors that really say that it's the best way to manage capital.

Why would you not buy businesses trading at extreme deep discounts? However, you're entering into a world of generally potential value traps and companies that are just not even increasing that top line. So that's like a check for me. Is the company growing its top line? You want to invest long-term in businesses that are at least generating more in sales than they were the previous years, at the bare minimum. And that just does not get checked off here for GameStop for me. So, yeah, I think we've talked about this one. We've covered it, yeah.

And one company that's in stark contrast of them would be Microsoft. Another one that people can think about is Apple, if they want to see really what a good balance sheet looks like. So if you look at Microsoft, the current ratio, it's more than two to one. So that's really good. If you look at some of the other metrics, yes, they have a lot of debt, but in proportion, it's not a lot. I mean, their long-term debt, I think, is less than two times're actually free cash flow for a given year. So I think that could be repaid fairly quickly. And if you look at them, I know they're big numbers,

but they just produce a whole lot of money. So for them, when you put it in perspective, I think Microsoft is just an awesome company without going into their income statement or cash flow statement. I do know they're increasing sales every year and earnings as well. Yeah, that's a good point. Another one I'd like to bring up is a company that I've talked a lot about to my subscribers, Stratosphere Investing. It's a software acquirer out of Markham called EngHouse. And they acquire software companies in the SaaS business, so subscription revenue. And their balance sheet is clean as a whistle. Their current assets are $265 million compared to $118 million current liabilities. So they're very covered there over two and a half. Their total assets are 500 million compared to 145 million in total liabilities. So

yeah, almost like four times the assets over liabilities for a company that uses debt to acquire businesses and grow. They're poised to be able to make some really strong acquisitions over the next couple of years. And they just announced they bought a $55 million software company on Monday. So yeah, they're going to be growing a lot. So these are the kinds of companies that I really like. Yeah, so those are just kind of two contrasts. Obviously, we just did an overview of their balance sheets.

To contrast, obviously, we just did an overview of their balance sheets. So for a closing note, we were discussing about just providing a quick tip, investing tip as we close out. So just call it maybe our tip of the day, day D apostrophe E-H, right? Keeping it Canadian. That's right. And that shout out to my girlfriend. She's the one that gave me that suggestion. You're just scoring points on the podcast right now.

You're a smart man. Yeah, I don't think she'll be listening. That's true. But aside from that, so we were talking. A quick tip for everyone is when you invest money, whether you're investing in an ETF or a specific company, try to keep your cost at less than 2% of your investment for the transaction. The reason for that will impact if you purchase a company for you buy $200 worth of share and you pay a $10 cost. Well, that's a 5% of your actual investment right there. So as a quick tip, I know

not everyone has the same amounts of money, but try to add in some money so you can just invest without costing more than 2% for the purchasing fee. One other option is if you're doing index ETFs, a lot of trading platform, including Questrade, but I know there's other ones that do free ETF purchasing. So that's really great if you want to get into the market and you have, say, just $100 a month, for example. At least you're not paying any fees on that. Yeah, that's a good point. The free ETF buys is really handy. If I'm buying individual stock that I'm paying a $5 commission, I typically don't enter a position with less than $500 because of that exact thing.

If we're trying to get away from management fees, in your example, paying 10% to the commission right off the bat, that is not an improvement in your fee structure. So that's a really good tip of the day. Yeah, exactly. Tip of the day. So I think that'll be it for us today. Thanks a lot for the listener question. If you guys have more questions, go to GetStockMarket.com. The Canadian investor is not to be taken as investment advice. Braden or Simone may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions. Thanks for listening to this episode of the Canadian Investor.

To get a list of the top Canadian dividend stocks right now and other valuable investing resources, go to GetStockMarket.com.