Thursday, March 28, 2024
ADVT 
National

Calgary 20-Something Engineers Revive Investment Club Concept To Talk Stocks

The Canadian Press, 09 Nov, 2017 11:21 AM
    Some see it as a throwback to another era, but a group of 20-something Calgary engineers say they heartily recommend membership in an investment club after running one for three years.
     
    A well-worn copy of a Canadian Investment Institute book called "How to Start and Run an Investment Club for Fun and Learning," spotted in a second-hand bookstore four years ago, gave founder Taylor Merritt, 29, the idea to create The Hillary Club.
     
    The $6 book sparked an online invitation to his friends to ask if they were interested.
     
    A group of four soon started meeting weekly over breakfast for "stock talk" sessions.
     
    About a year later, the decision was made to take the plunge and start investing real money. A partnership agreement was drafted and registered with provincial securities authorities. The members voted to donate five per cent of net income to charity.
     
    "A lot of that first year was just feeling out everyone's risk tolerance and their appetite for some of these different kinds of investments," said Craig Merritt, 30, Taylor's older brother and a founding member.
     
    "When you mix money and friends, you have to be very careful because you could lose both," chimed in Taylor.
     
    Two more members, also unmarried male engineers who work in downtown Calgary, joined later. The group got together once a week to pick investments but also met for non-investing activities like hiking in the mountains.
     
    It's difficult to get a handle on how many investment clubs operate in Canada. They are regulated by provincial securities authorities but neither the Alberta Securities Commission nor the Ontario Securities Commission keeps track of how many there are.
     
    Spokeswoman Nima Ranawana said the OSC recommends that members seek legal advice while setting up such clubs because they must comply with rules regarding prospectus, dealer registration and fund manager exemptions.
     
    Tom Graham, the ASC director of corporate finance, said his organization gets a handful of inquiries about clubs every year but they mostly operate "under the radar;" in other words, he said, there have been no complaints filed.
     
    He said there's a long list of prohibitions designed to ensure the clubs aren't fronts for investment businesses. There can't be more than 50 members, the clubs can't borrow money from non-members, no member can be paid for his services and there are no preferred shares —proceeds must be distributed based on the amounts contributed.
     
    Tax expert Kim Moody of Moodys Gartner Tax Law said he recommends investment clubs structure themselves as partnerships.
     
    "If it's considered to be a partnership, any gains or losses would be pro rata (paid out based on contribution share). That's typical," he said.
     
    He said each partnership must file annually with Canada Revenue Agency but the capital gains and losses are claimed by individual members.
     
    An investment club can also be organized as a corporation but that gets more complicated, Moody said, as it would have to pay corporate taxes if there are profits and distribute funds through dividends to investors.
     
    The Hillary Club was dissolved by mutual agreement at the end of the second quarter this year.
     
    Craig Merritt said he learned a great deal about investing that he can use in his personal saving strategy going forward but the time involved in researching investments for the club grew too onerous.
     
    Taylor said he's interested in starting another club but hasn't done so yet.
     
    He said The Hillary Club accumulated about $165,000 from its members and at one time was worth about $220,000. But it wound up just about breaking even, a record he considers a win given that it tended to invest in oil and gas securities because that's what its members know best.
     
    "Our first (investment) was not a short but it should have been," quipped Craig, recalling that benchmark oil prices were over US$100 a barrel when the club launched and are now at about half as much.
     
    One of the club's most fruitful investments was in Altura Energy Inc. (TSXV-ATU), a junior oil and gas producer.
     
    One of the biggest losses came when it shorted options in Dream Office REIT (D.UN-TSX), betting incorrectly that Calgary's slumping office real estate market would show up in its stock price.
     
    "I remember all the bad ones, like when we made long calls last year ... We swung for the fences, struck out," said member Matt Hogg, 31.
     
    "The last three years were not the best time to have an energy fund."

    MORE National ARTICLES

    Hit The Road: Alberta Landlord Wins Battle To Boot Squatter From Property

    Hit The Road: Alberta Landlord Wins Battle To Boot Squatter From Property
    CARDSTON, Alta. — A southern Alberta landlord has won his battle to remove a squatter living in a small shack sitting on a trailer on the man's rental property.

    Hit The Road: Alberta Landlord Wins Battle To Boot Squatter From Property

    Shame, Guilt And Disgust: Victims Of Ex-Ski Coach Bertrand Charest Give Emotional Impact Statements

    Shame, Guilt And Disgust: Victims Of Ex-Ski Coach Bertrand Charest Give Emotional Impact Statements
    SAINT-JEROME, Que. — Sex-assault victims of ex-ski coach Bertrand Charest delivered emotional impact statements Tuesday, with one telling the court he had robbed her of her childhood and acted like a predator.

    Shame, Guilt And Disgust: Victims Of Ex-Ski Coach Bertrand Charest Give Emotional Impact Statements

    English F-Word Acceptable For French Broadcasts, Regulator Says

    English F-Word Acceptable For French Broadcasts, Regulator Says
    Canada's broadcast standards regulator has ruled that a swear word that's off-limits on English-language broadcasts is acceptable in French programming.

    English F-Word Acceptable For French Broadcasts, Regulator Says

    Alberta Mounties Say Kidnapping Charges Pending After 5 Naked Suspects Arrested

    Alberta Mounties Say Kidnapping Charges Pending After 5 Naked Suspects Arrested
    NISKU, Alta. — Mounties say kidnapping charges are pending in a bizarre case just south of Edmonton involving a two-vehicle collision and suspects who were not wearing any clothes.

    Alberta Mounties Say Kidnapping Charges Pending After 5 Naked Suspects Arrested

    Ex-Tory Leader Rona Ambrose Says 'Western Alienation' Is Very Real And Dangerous

    Ex-Tory Leader Rona Ambrose Says 'Western Alienation' Is Very Real And Dangerous
    MONTREAL — The concept of "western alienation" is real and dangerous, and people in the region feel as though their aspirations aren't in line with those in the rest of Canada, Rona Ambrose said Tuesday.

    Ex-Tory Leader Rona Ambrose Says 'Western Alienation' Is Very Real And Dangerous

    Body Cameras On Chicken Catchers Not Reasonable: B.C. Privacy Commissioner

    Body Cameras On Chicken Catchers Not Reasonable: B.C. Privacy Commissioner
    VICTORIA — British Columbia's privacy commissioner says a chicken-catching company was not authorized to use video surveillance on staff in response to an animal cruelty investigation.

    Body Cameras On Chicken Catchers Not Reasonable: B.C. Privacy Commissioner