Data on some Banks – Canada

Disclaimer: Not recommendation just an observation and opinion

The big banks in Canada are some of my favorite equity income portfolio kernels; currently long time long, BMO, RY, & BNS.  Seeking Alpha post on the banks presented a good bundle of data to compare the banks – with a bias or narrative assuming mortgage credit issue impacting the banks’ portfolio quality.  I am a fan of these banks given the higher regulatory environment in Canada as well as (and most importantly) a long tradition of >100years successfully managing capital… a bit of differentiating DNA.

https://seekingalpha.com/article/4270368-toronto-dominion-banks-dividends-appear-secure-among-peers

Here is my comment to the author:  Thanks for putting all the data on the table. I am a long time (US citizen) holder of BMO & RY as core portfolio dividend kernels – their history speaks for itself. BNS is interesting as more aggressive in emerging markets; total portfolio position 50% less in BNS than in BMO or RY. Based on the data presented here, is there really a material (statistical?) difference between TD, BMO and RY on the ratios? – My take is not so much and probably depends on your point in time to review. Currency issue/risk is worth the predictability of dividend flows. I am also looking to increase current BNS position @~$41.00US

A climate reason behind ‘why not’

Looking at different new investments, an industrial REIT surfaced from my value screens … I am not a huge fan of economic cycle REITs at this point, but the valuation was interesting – MNR

I was primarily interested in a preferred stock MNR/PR/C. But … after looking at their financials and business model a bit closer, this graphic struck me

They have a sizable property distribution on the eastern US seaboard … if i am looking at a 10 yr investment, do i really want to purchase hard physical assets that are on the coast? NO! Climate change risk was a big factor in walking away from this investment.

Apple’s WDC from Morningstar

Morningstar was out this morning on Apple’s WDC so far … they made a point that hit me too. quote: “One of the most important announcements, in our view, was Project Catalyst, which helps developers port existing iPad apps onto the Mac, facilitated by the latest macOS, Catalina. We believe these moves in aggregate will usher Apple toward having its MacBook offerings running on its ARM-based A-series processors in lieu of Intel processors. However, we don’t believe this will meaningfully come to fruition for at least another three or four years, if not longer, given Apple’s 100 million Mac and MacBook installed base and the incumbent applications written for Intel’s x86 architecture.” (bold is mine)

Developers are the key and refreshing to see focus put back where it belongs. Devices are the delivery systems and need to be hip and fabulous, services need to be valuable and meaningful to users, but without apps …. nothing. There are two transitions that seem to be setting up – a) iPad / Mac blurring and interoperability (moving the iPad closer to Mac than iPhone which makes sense) and b) x86 to ARM in Mac … both totally make sense, but without developers paving the way for those, again … nothing. If I’m close to right, it surfaces how Apple is playing a long game.

BMO Earnings Conf Call

Disclaimer: Not recommendation just an observation and opinion

https://seekingalpha.com/article/4267058-bank-montreals-bmo-ceo-darryl-white-q2-2019-results-earnings-call-transcript

This conference call seemed better to me than the recent RY (posted earlier). The comments around expenses and differentiating between a specific business and the enterprise was refreshing. I just thought the leadership team had a better grasp of their business and strategies.

I also really appreciated this comment by CEO in opening remarks – quote: ” As I look across the bank we’re building on our strong foundation and differentiating strengths to grow our businesses and deepen customer loyalty. “

I am long BMO for ~ 10yrs but have reduced my position to core buy/hold/DRIP, and include this as a core holding in my equity income growth sub-portfolio with RY and BNS.

NXP buys MRVL connectivity portfolio

this is a complete surprise to me and will need an investigation into why (if possible). i had opinion that MRVL connectivity portfolio (especially the Bluetooth) was a solid IOT play. Quote below from https://briefing.com

NXP Semi to acquire Marvell’s (MRVL) Wireless Connectivity portfolio in an all-cash, asset transaction valued at $1.76 bln 8:31 AM ET 5/29/19 | Briefing.com

The acquisition encompasses Marvell’s WiFi Connectivity Business Unit, Bluetooth technology portfolio and related assets. The acquisition will enable NXP to deliver complete, scalable processing and connectivity solutions to its customers across its focus end markets. The acquisition includes approximately 550 people worldwide. NXP expects the acquisition to create new revenue opportunities in its target end markets. With approximately $300 million in revenue in Marvell’s fiscal 2019, NXP anticipates revenue associated with the acquired assets to double by 2022. The acquisition is expected to be accretive to NXPs non-GAAP operating profit in the first full quarter after the transaction closes

GLW – a quick review

Disclaimer: Not recommendation just an observation and opinion

GLW surfaced as an up-coming X-div stock with a solid history of paying / increasing dividends and also fits into the 5G infrastructure narrative as the demand for fiber should increase with the build out.

I took a look thru my favorite first view lens, … but at current prices it is just too expensive – somewhere <$25 would be more interesting. – NO FURTHER Reasearch but will add to my ‘sort of watch’ list.

From technical view (Investing.com)

From a fundamental view

FinBox.io DCF analysis is neutral imho

Simply Wall St DCF analysis is positive

Fast Graphs shows the expensive stock price based on forecasts (which have not been that accurate)

Tip Ranks overall score is neutral

RY Earnings Conf Call

Disclaimer: Not advice or recommenation, just observation and opinion

This was milktoast https://seekingalpha.com/article/4266134-royal-bank-canada-ry-ceo-dave-mckay-q2-2019-results-earnings-call-transcript

While I am long RY and consider it w/ BMO and BNS part of my core income-based equity holdings, this conference call was a waste of time for those who participated imho. A common practice of walking thru the financial performance slide deck with analsysts asking clarifying questions so they can adjust their predictive models.

Without the dividend and the conservative Canadian regulations, I would move my capital elsewhere. I prefer to hear strategy updates, risk clarifications with mitigations and analysts challenging the strategy.

Mary’s First Big Deal?

Mary Meeker is a long time fixture in my investment readings – as well as standard business strategy. Her approach is no longer novel but her insights are typically worth every ounce of energy spent understanding them …

In her new gig as an investor rather than an analyst, she’s made her first big bet https://www.bloomberg.com/news/articles/2019-05-20/mary-meeker-s-new-fund-chooses-australian-startup-for-debut-deal

Having used Canva and worked with creative types who love it … hard to argue against the idea at this point. Go Mary Go!

Q1 2019 Earnings Conf Call #4 – ACB

Disclaimer: Not a recommendation to buy, sell or hold … just observations.

https://seekingalpha.com/article/4264473-aurora-cannabis-inc-acb-ceo-terry-booth-q3-2019-results-earnings-call-transcript

ACB is different. First, I own very, very little (100sh) so I do not have much skin in this game. I thought the conf call telling on a couple of points: a) medical, b) beverages not a bar scene, and c) production ownership. I think they are the most interesting of the big canada weed companies, and will look to add to my position but <$8.00 somewhere on a weed cycle downer day. The company has a clear vision and strategy; what will be telling is if the demand shows up as expected (or more).

VZ offers NB IOT network

https://seekingalpha.com/pr/17511427-verizon-extends-iot-leadership-position-launching-narrowband-iot-network-nationwide-offering

This is just a beginning. One cool part of the announcement is the inclusion both IP and non-IP traffic, and even more so specific use cases. Quote:

  • Smart cities – improve citizen experience and municipal operations through parking sensors, waste management and smart lighting.
  • Smart buildings – enhance building safety and incident response times through connected smoke detectors including regular auto-test, battery check and real-time alerts to the relevant parties in case of fire.
  • Industrial – improved machinery maintenance cycles and factory safety through machinery control such as equipment status, factory control, and process and safety monitoring.
  • Environment monitoring – increase focus on environmental responsibility through status reporting of manhole covers, fire hydrants and chemical emission levels.
  • Agricultural – improve efficiency in the agricultural industry with livestock tracker, connected greenhouse, stationary tracking and monitoring of air quality, humidity, moisture, temperature, and weather conditions of air and soil.
  • Asset Tracking – improve efficiency and decrease costs by using pallet tracking and geo-fencing.
  • Utilities – improve efficiency and decrease waste by using gas and water metering, including smart meter consumption tracking and pipeline monitoring.

The more of these announcements, use cases and developer kits the more device innovation will take off!

Q1 2019 Earnings Conf Call #3 – DOC

https://seekingalpha.com/article/4258671

This is my second major Healthcare REIT (WELL, DOC and LTC-minor). WELL conference call was already covered. DOC call was nothing to write home about, imho; though not negative. Just not as complete with strategy beyond ‘leverage relationships’ – which is all good, btw, but I wanted to hear more about their industry, opportunities and how their strategy is playing out. Their call reminded me of sitting in a meeting of financial analysts – critical and necessary, but not sufficient. I am skeptical if I add more to position beyond DRIP.

SaaS primer and Microsoft, Zoom & Slack

Bespoke pointed to this article on SaaS and the comparisons between the three companies. I am not sure that I totally agree with their differentiations, but their one chart is an interseting framework to use when evaluating technology companies. A matrix between use case innovation and customer relationships.

Teams expands the use cases within Microsoft's existing userbase

Q1 2019 Earnings conf calls #2 – BEP & O

Disclaimer: these are my opinions, not recommendations

In the second batch of earnings conference calls are BEP and O. I found both conference calls valuable for different reasons. In common were both companies clear articulation of investment guardrails – what do they expect from their capital and where are the most comfortable investing that capital. It is that second vector that surfaced some interesting points. I am long both companies with BEP in IRA and O in taxable (an accident really – i would have preferred in IRA).

BEP had good comments about their investments in India and what they are facing in that environment. There were also come interesting points made about Hydro and Gas energy generation. I am long BEP and after reading the conference call am more confident that they have a solid strategy and plan that mitigates some of the risk inherent in their dividend payout ratio – as several authors have pointed out in the past. The other point made was that they are comfortable with their current working capital arrangements and do not see need for equity – if that changes, I have a different decision. At this time, I am not looking to add to my BEP position, but would if the value presented itself.

O is so many people’s favorite REIT, and for all the right reasons. Their call had two key points that really had nothing to do w/ their finances. First, they described the types of format changes they are looking at in some of their larger segments (e.g., convenience and drug stores); i found the discusssion of convenience stores telling, and their ‘wait and see’ view on drug store formats was also telling for CVS and Walgreens in particular. This will be good to keep an eye on if you are interested in those types of investments – I have resisted insurance and retail so far. Second, they talked about their recent beachhead in Europe and within that discussion one could discern that they see a bottoming of Europe retail – this is interesting on a broader pespective to move money back into Europe (i currently have VERY little – NOK and VOD within the 5G narrative). I am not looking to add to my O at these levels and have also turned off DRIP given valuations / yield.

Q1 2019 Earnings conf calls #1 – HASI, WELL, CY & INTC

Disclaimer: these are my opinions, not recommendations

I worked thru 4 of my Q1 earning conference call transcripts: HASI, WELL, CY and INTC. I find these conference calls both educational on a business strategy / communications perspective and a specific company performance level. There is also some value in learning which analysts ask good questions and which just toss a slow-pitch ‘gimme’ questions. Guess who you ignore?

The two that were terrific both in terms of company execution and depiction of strategy: HASI and WELL. My allocation to HASI is tapped out, but i will soon (Q2/3) turn back on the DRIP machine (i had turned off due to valuation). WELL is one to watch and I will both turn on DRIP and watch for opportunistic purchases to double my current holdings (in IRA).

CY was not bad, but their business is a tough one and they admitted that visibility is a bit opaque at best. This is an opportunistic purchase imho trying to get a dividend yield ~3.0% from the 2.6% today. With that said, I believe their IOT strategy is solid but will be a 2020-21 story. CY and MRVL are my favorite IOT connectivity plays (others like SWKS), but this is a longer term narrative and i strongly believe there will be lower prices ahead to take positions.

INTC was terrible on a couple of fronts – talk about new CEO birth with fire. Declining units, competitive ASPs, inventory write-down and worse a 2H hockey stick in demand because customers are working thru 2018 purchases / supply. Really? What happens if demand in cloud and enterprise does NOT pick up in 2H? I have seen this movie before and there will most like be much lower stock prices. The one ‘good’ nugget was the talk about 5G edge and infrastructure; however, that is a small portion of the overall product mix and a 2020-21 story as well (depends on 5g roll out plans across the globe)

An investment idea’s demand of your attention

Another Seeking Alpha author I often read (though do not always agree with their conclusions) as I appreciate their consistent analysis across the REIT landscape – Brad Thomas – posted an updated recommendation on Iron Mountain.

I cannot argue against Brad’s recommendation and analysis on IRM. What I found key for me (I was considering adding IRM to my IRA), was the monitoring of capital conditions required if I was become an IRM owner. Brad put it on the table, quote:
However, should a recession hit in 2020 or 2021, then Iron Mountain might have to try to refinance up to $870 million in debt at much higher interest rates. And, lest you think that interest rates falling to zero or a future QE from the Fed might keep corporate borrowing costs super low, don’t count on it.”

Given the current environment and my stated objective with this specific capital is a decent return on my capital with minimal risk TO my capital. IRM would require me to watch it carefully over the changing economic cycle given the debt refinancing requirements on the near horizon. IRM is just asking too much ‘monitoring effort’ for this IRA capital – it may fit into a trade scenario, but not a core holding for me.

Disclaimer: I am NOT long or short IRM at this point, and have no definitive plans to take a position.