# YLO.UN - Yellow Pages Income Fund



## daveking (Apr 3, 2009)

Can somebody tell me reasons why NOT to buy Yellow Pages?

It is currently dividend yielding over 20%. Dividend paid monthly and they haven't missed a beat.

Good PE ratio.

It also has online presence so google will never replace them.

Small business rely on yellow page for business.


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## ethos1 (Apr 4, 2009)

none at the present time Dave

I bought in February at $5.04 and still holding.

YLO-UN.TO is my wild card


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## takingprofits (Apr 13, 2009)

I like YLO.UN and always have. I think the the online bit is an asset but brokers and analysts don't. All they see is that that advertisers pay less to advertise online than in the actual yellow pages and they fear that will erode the bottom line.


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## CanadianCapitalist (Mar 31, 2009)

I've owned YLO for a long time... first purchased after the 2006 Halloween Income Trust tax announcement. I think YLO is weighed down by concerns surrounding comparable companies in the US. I still like it but don't plan on adding to my position (I'm mostly putting new money into XIU).


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## FinancialJungle (Apr 22, 2009)

My post got deleted somehow. Anyway, here's the shorter version:

I hold the preferred (YPG.PR.B) because of the better after-tax return and its 2017 retraction date. The time frame is perfect, since Yellow Pages has a decent short to medium term outlook so 2017 is about the year to redeploy the cash somewhere else.

Preferreds also have a higher claim on assets than their income trust counterparts. My understanding is that if Yellow Pages plan to conserve cash, they'd have to eliminate their trust distributions first before touching their preferreds.


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## FrugalTrader (Oct 13, 2008)

FinancialJungle said:


> My post got deleted somehow. Anyway, here's the shorter version:
> 
> I hold the preferred (YPG.PR.B) because of the better after-tax return and its 2017 retraction date. The time frame is perfect, since Yellow Pages has a decent short to medium term outlook so 2017 is about the year to redeploy the cash somewhere else.
> 
> Preferreds also have a higher claim on assets than their income trust counterparts.


Hey FJ, 

Sorry, your post got moved to a new thread, check it out:
http://canadianmoneyforum.com/showthread.php?t=250


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## moneygardener (Apr 3, 2009)

There is no shortage of investors that could tell you why to sell Yellow Pages Income Fund. Judging by the thread length at the Financial Webring Forum, this company tends to attract a lot of discussion. 

I own the units and my thoughts are here:
http://themoneygardener.com/2007/07/yellow-pages-income-fund.html
&
http://themoneygardener.com/2007/10/added-value.html

I understand both sides of the argument, however I obviously think Yellow Pages units are a good investment going forward. Until organic growth in their directories business becomes negative the sell side doesn't really make sense. In the meantime, they are growing online and cropping up more and more when one performs searches on google, google maps, etc. Add this to Canada 411 and auto trader and I think there is a good online story there. Regarding the phonebooks, I believe they are still relevant, and I think it is easier to imagine a business owner upgrading to the ylo directory+web package instead of pulling away from yellow pages all together.


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## Financial Highway (Apr 3, 2009)

My fiance owns it in her RRSP account, I have been keeping a close eye on them I dnt see any huge problems with it. but as CC pointed out the main concern is what happend to some similar US companies. But yellow pages has some online presence including 411.ca


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## confusion (Apr 17, 2009)

This is a stock that I jump in and out of on a regular basis. I can see the logic in holding it long term (nice yield, low-risk type of business) but it's also a day-trader-friendly stock as the ups and downs are very predictable each month (starts heading down right after ex-div date, then starts picking up a week or two before record date).


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## canehdianman (Apr 7, 2009)

I thought about getting into YLO.UN a few weeks ago, and then I realized that I haven't used a phone book (or its online counterpart) in at least 3 years. Every year in my apartment complex, the stack of phone books that get delivered sits there 90% full for months, until the LL gets rid of them. 

It might be a little too Peter Lynch-like, but I passed on it for that very reason. I can't see it continuing its dividend once it's customers realize that it's outdated and useless.


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## takingprofits (Apr 13, 2009)

I was just thinking about jumping back in for the yield and noticed that 

> Yellow Pages Tgt Cut To C$5 From C$6 By T Weisel >YLO.UN.T

So I guess I will pass...


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## confusion (Apr 17, 2009)

takingprofits said:


> I was just thinking about jumping back in for the yield and noticed that
> 
> > Yellow Pages Tgt Cut To C$5 From C$6 By T Weisel >YLO.UN.T
> 
> So I guess I will pass...


What? You pass on a stock just because of some random analyst?


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## ethos1 (Apr 4, 2009)

takingprofits said:


> I was just thinking about jumping back in for the yield and noticed that
> 
> > Yellow Pages Tgt Cut To C$5 From C$6 By T Weisel >YLO.UN.T
> 
> So I guess I will pass...


At $5 the yearly yield is over 22% with $0.0975/ share per month, so how is that a bad deal?

After one year your average cost is around $3.80


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## takingprofits (Apr 13, 2009)

A drop to $5.00 means that the yield for a year would only be around 7% after the draw down. When you also include the uncertainty of what happens when conversion to a corp occurs - for me there is better value elsewhere.

When BFC, another formerly popular business trust, converted to a corp last year it meant an overnight drop in the stock price of 25% (and an eventual loss of 60% of its pre corp value by the fall) and an announced distribution cut in the 75% range.

Why would I want to take on unnecessary risk? There are better opportunities - for yield, Artis Reit (ax.un) is paying 17%, has analyst support and not analyst derision like YLO.un, - and does not have to go through conversion.


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## splitmind (Apr 11, 2009)

Don't they also control the auto trader, and other used goods for sale publications. Seems that in a recession their listings will increase, although craigslist will take a bite out of their bottom line.


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## tojo (Apr 20, 2009)

Note that price of YLO.UN (trust units)has been dropping of late. Interestingly, YPG.PR.B (pref) is rising. Investors may be anticipating a dividend cut to the trust units. Back-of-the-envelope calculation of YPG.PR.B says that yield to retraction is in the area of 15% - which is still excellent. If you look up YPG.PR.A, you’ll notice that the price of this pref is almost $8/share higher than the B shares. "A" has an earlier retraction (about 3 years vs 8 ). I guess the feeling is that investors think Yellow Pages will survive 3 years from now to pay you for A but not 8 year to pay for B ?!? 

Disclosure: own both trust units and pref B – which are going in opposite directions. Suppose the net effect is emotional cancellation…


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## joes_k (Apr 29, 2009)

Some analysts are wary of YLO.un because the balance sheet is more levered than they would like. So there is refinancing risk as well as concern over the stability of the distribution due to debt servicing requirements.

BTW a good place to get a professional manager's opinion is at Stockchase.com.
It summarizes managers opinion given on Market Call tv show on BNN.

Link: http://www.stockchase.com/


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## MoneyEnergy (Apr 5, 2009)

I've got YLO.... I'm not worried about the "disappearing yellow pages" thesis. They still use them in hotels and other places - besides, they've got other online businesses too. The stock has been somewhat volatile, but I'm holding. I might still add some more in the future. Confusion (above) brings up an interesting point about day trading with it, but I'm never a trader. Too stressful, not worth it!


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## tojo (Apr 20, 2009)

Despite a fairly good quarter, YLO decided to cut its distribution:
http://business.theglobeandmail.com.../?page=rss&id=RTGAM.20090507.wyellowpages0507

Never trust a 20% yield!


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## takingprofits (Apr 13, 2009)

YLO announced it intends to cut its annual cash distribution to 80 cents a unit from $1.17 in June.


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## FrugalTrader (Oct 13, 2008)

tojo said:


> Despite a fairly good quarter, YLO decided to cut its distribution:
> http://business.theglobeandmail.com.../?page=rss&id=RTGAM.20090507.wyellowpages0507
> 
> Never trust a 20% yield!


Any word if the preferred offering distribution was affected?


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## CanadianCapitalist (Mar 31, 2009)

FrugalTrader said:


> Any word if the preferred offering distribution was affected?


Not to my knowledge.


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## tojo (Apr 20, 2009)

FrugalTrader said:


> Any word if the preferred offering distribution was affected?


The prefs won't be affected. Infact, looks like investors are now selling the trust units and buying pref B. YPG.PR.B is up 3% today. Since the pref sits in their balance sheet as debt, Yellow Pages will have to go belly-up before the prefs are cut...

Disclosure: Exited small position YLO.UN @ $5.71 on news of the cut. Still holding pref B.


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## shepherd (Apr 4, 2009)

would prefer the debt, pays a good interest rate, or div (preferred) over the trust unit. they have a high amount of debt in a declining industry...high risk trust units, that have not performed well for years.

sometimes people lose a great deal of money chasing after yield.ie. oil/gas trusts, Royal trust (that was long time ago)

thanks
shepherd


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## ethos1 (Apr 4, 2009)

tojo said:


> The prefs won't be affected. Infact, looks like investors are now selling the trust units and buying pref B. YPG.PR.B is up 3% today. Since the pref sits in their balance sheet as debt, Yellow Pages will have to go belly-up before the prefs are cut...
> 
> Disclosure: Exited small position YLO.UN @ $5.71 on news of the cut. Still holding pref B.


exited YLO.UN 5000 shares on Friday May 8 at $6.05 that were purchased in February at $5.04

I have had a total of three distributions that includes the one which I will get on May 15

I am looking at moving the money into CWI.UN. Is anyone in CWI or familiar with them or have any comment about them good or bad?




shepherd said:


> sometimes people lose a great deal of money chasing after yield.ie. oil/gas trusts, Royal trust (that was long time ago)


all too true, as do the buy & hold's that believe they have a winner on their hands.

Hindsight is 20/20, just like the lows in the first two weeks of March when everyone should have been buying instead of selling.

Is it possible the current blip will take another turn downwards


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## tojo (Apr 20, 2009)

shepherd said:


> would prefer the debt, pays a good interest rate, or div (preferred) over the trust unit.


Totally agree with you. In today's uncertain times, debt is much more secure than equity. I've sold large positions in both MFC and SLF after their last report - especially Manulife, with two straight billion dollar loss quarters . Instead, I switched to their reset prefs at 6.0%+ yield. I'll go back to their common shares when they get their act together, but for now there is no trust from me in the commons for both these companies. 

For anyone thinking of a swap from YLO.UN to YPG.PR.B, better do it soon - looks like a lot of investors are thinking the same way as the yield for the B pref is dropping fast.

Disclosure: Own YPG.PR.B, MFC.PR.D and new SLF series 6R resets.


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## tojo (Apr 20, 2009)

ethos1 said:


> exited YLO.UN 5000 shares on Friday May 8 at $6.05 that were purchased in February at $5.04


Well done ! 5000 shares of YLO ?


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## ethos1 (Apr 4, 2009)

tojo said:


> Own YPG.PR.B, MFC.PR.D and new SLF series 6R resets.



whats the symbol for the SLF preferred you are holding & the current price?


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## tojo (Apr 20, 2009)

ethos1 said:


> whats the symbol for the SLF preferred you are holding & the current price?


Don't know what it is...it's a new offering that was posted last Friday. It was only open for 30 minutes or so on my discount broker new offering listing Friday afternoon- snapped up like hotcakes. Was approved myself for 400 shares. I believe the issue officially closes May 20. Can always wait to pick it up on the secondary market, but my guess is that it will start trading above par ($25.00) - likely in the $25.50 range, based on the current market conditions and security of the issue - investment grade pfd-1 low (many investors are treating these resets like high yielding GICs with the added tax advantage). Linky to the prospectus:
https://tdwaterhouse.sungardems.com/data/ni/prospectus/prospectus.20090508080024031A.EN.pdf


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## ethos1 (Apr 4, 2009)

tojo said:


> Don't know what it is...it's a new offering that was posted last Friday.
> https://tdwaterhouse.sungardems.com/data/ni/prospectus/prospectus.20090508080024031A.EN.pdf


thats why I asked the question since I couldn't find it & see the current issues are up to series 1-5 class A- E average paying 4.85% on the issue price of $25

Why would someone not consider the short haul (time to expiry) series 1 & 2 currently in and at $18 paying $1.20 ($0.30/qtr) with the series A expiring in 03/2010?

Would the series 1 issue 'A' not be a good yield or am I missing something?


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## tojo (Apr 20, 2009)

ethos1 said:


> Why would someone not consider the short haul (time to expiry) series 1 & 2 currently in and at $18 paying $1.20 ($0.30/qtr) with the series A expiring in 03/2010?
> Would the series 1 issue 'A' not be a good yield or am I missing something?


You are referring to the Sun Life Financial Class 'A' Pr Series 1, which trades under the symbol SLF.PR.A. This is perpetual offering with no provisions to reset in five years to the new interest rate environment. Perpetuals act much like 30 year bonds, and will get hammered in times of rising interest rates. The 03/2010 date you refer to is not a retraction or reset date, but a redemption date set by Sunlife to allow the company to call the shares at $25.00/share, but at THEIR discretion, not yours.

Realistically, if interest rates are rising, in five years time when the resets are up for review they will likely call the shares rather than pay you the yield on the 5 year Canada Bond plus 3.79% as the annual reset dividend rate. Investors need to understand that if they are to invest in these thing.

Should disclose I do own SLF.PR.A, SLF.PR.C and been approved for the new SLF.PR resets.


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## ethos1 (Apr 4, 2009)

tojo said:


> You are referring to the Sun Life Financial Class 'A' Pr Series 1, which trades under the symbol SLF.PR.A. This is perpetual offering with no provisions to reset in five years to the new interest rate environment. Perpetuals act much like 30 year bonds, and will get hammered in times of rising interest rates. The 03/2010 date you refer to is not a retraction or reset date, but a redemption date set by Sunlife to allow the company to call the shares at $25.00/share, but at THEIR discretion, not yours.
> 
> Should disclose I do own SLF.PR.A, SLF.PR.C and been approved for the new SLF.PR resets.


whats your average bought price on the SLF A & C and why did you buy them?


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## tojo (Apr 20, 2009)

ethos1 said:


> whats your average bought price on the SLF A & C and why did you buy them?


I bought A around 16.5 and C about 15.5 - around a 7% and change yield. It was a bet that interest rates will remain low for a while, and that as the credit crisis eases, things will return to (somewhat) normal. If I'm right, these shares should rise to near par at some point in the near future. I could be wrong and that's why you need to diversify.


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