Benjamin Shepherd

Benjamin Shepherd
Contributor since: 2009
Company: Investing Daily
A picture is worth a thousand words!
Changes to the monopolistic concession system is always a risk. But given the overall security situation and a number of labor market reforms being discussed, I don't see Mexico's airports as being high up on the PRI's priority list at this point. I suspect as long as the system continues to operate efficiently the Mexican government isn't likely to make too many waves here.
Assuming the global economic situation -- particularly in North America -- continues to improve, I expect PAC ADR to approach $60 over the next 12 months.
OMAB runs essentially the same model as PAC since it got the Mexican concession to run airports in the central region of the country.
While it has the advantage of serving Mexico City, I personally think PAC has much more attractive future growth opportunities, particularly if the cross-boarder facility to allow US air travelers to cross more easily into Mexico gets done.
OMAB also runs much tighter margins and is much more reliant on tariff income as compared to PAC; OMAB's non-aeronautical revenue only accounts for about 23 percent of revenues compared to PAC's almost 33 percent. The non-aeronautical side of the business is extremely important since it tends to be much higher margin -- it's basically the icing on the cake.
iShares S&P Global Healthcare ($IXJ) has always been one of my favorite health care ETFs.
While the PPACA has taken over as a major driver of sector performance here in the US, the simple fact is that increasingly health care consumption is a global trend as incomes rise and living standards improve. In countries such as China and India growth in health care spending is expected to outpace GDP growth for most of the next decade.
China is also investing heavily in expanding its social safety nets -- including access to Western-style health care -- which will be a huge demand driver.
About 60% of the ETF's assets are devoted to US names, so you're not taking on a huge amount of international risk. And the simple fact is when you buy health care names these days, a significant portion of revenue is typically sourced overseas.
But if you want to a more US-centric view of the sector, I'd suggest the Vanguard Health Care ETF ($VHT).
For more target exposures I would look at $IBB or or $XHS while avoiding such as $IHI.
I agree completely which is why I believe as investors we should broaden our horizons in the agricultural space.
Unfortunately the Argentine is extremely challenging, particular as government intervention has become increasingly unpredictable. Since YPF it's anybody's guess who will be next. That's why I rarely pay much attention to the country but I find Cresud's agricultural assets extremely attractive and worth the risk for more aggressive folks.
I checked out your link and I have to say I'm not familiar with Tim Melvin.
That said I've been following regional and community banks for some time myself and I agree that there's an embarrassment of riches available in that space, particularly as regulation on the majors continues to tighten. Since the credit crisis I've become a fan of 3-6-3 though that's obviously an oversimplification.
I agree that duration has largely driven that out-performance which is why I opt for VCIT.
Corporate profits and balance sheets have largely remained robust and healthy and the economy is on the mend -- albeit anemically -- so I'm not looking for a wave of corporate defaults.
Though the Fed has now pledged to keep the policy rate at its current level through 2014 I suspect the market will likely have its own say on the matter, particularly since I don't see where the Fed has the leeway to implement additional QE. Hence the largely psychological tools the Fed is employing to keep rates down (press conferences, more speeches, greater transparency, etc).
Given my outlook, I'm more comfortable adding a bit more credit risk than I am adding duration risk.
I appreciate the comment and don't find it confrontational at all.
I think investors would generally be best served by owning individual MLPs so that they can take advantage of the tax benefits. However, there are many folks out there who either don't feel comfortable selecting individual MLPs on their own, only invest in tax-advantaged accounts where MLPs could potentially cause complications, or for whatever reason don't want them individually. In cases such as those, funds make sense.
I agree that there are structural disadvantages to packaging MLPs in a traditional ETF, C-Corp wrapper. As you point out, just look at a chart of AMLP compared to any of the MLP exchange-traded notes (ETN). Because of that, when I've recommended MLP-focused funds in the past, I've generally preferred the ETN structure to traditional ETFs because ETNs largely sidestep those problems. In fact, I still recommend an MLP ETN in one of the newsletters to which I contribute to.
The issue that we're running into now though is that most of the ETNs are backed by banks with heavy European exposures and could run into problems in the event of a recapitalization or default. If a bank backing an ETN defaults, investors in that ETN have no recourse for recovering any of their money since ETNs are generally backed by junior debt agreements. Investors in traditionally structured ETFs do have claims on real assets however.
I don't foresee any ETNs going bust due to backer insolvency in the near term, but its the events you don't foresee that bite you. As a result, I think in the current environment it may best to give up some top line returns in order to avoid the credit risk inherent in ETNs.
I don't expect the government to pursue tax changes for MLPs. For one, the tax base is too small to justify the time, effort and expense any changes would entail. Also, changing their tax status would also stymy much needed investment in our nation's energy infrastructure by MLPs -- they're in the best position to make those investments -- which would run contrary to the Obama Administration's professed energy policy.
Sam and I spoke in the last week of April.
May have missed but still an excellent long-term holding. Largely captive customer base due to switching costs and extremely well run. On top of that, low debt and lots of cash.
Since this interview, CLA has closed a merger deal with Two Harbors Investment Corp to form a new mortgage investment REIT. The new ticker is TWO.
I agree that most of the participants approached Copenhagen with the wrong mind set which pretty much precluded any sort of a constructive dialog.
Efficiency definitely has a key role to play this is whole thing, but I think the concern there is will it produce enough of a reduction quickly enough. And on the developed/developing economy debate, as Adam says, developed nations will have to foot a big part of the bill.
In the ETF world, it's beginning to seem as though new offerings are more about promoting individuals than good ideas. I wholeheartedly agree that there's little distinguishing the two investment options, particularly as active management takes hold.