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Monty Spivak

 
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  • Canadian REITs To Buy For 8%-Plus Yields [View article]
    Hi 11146471 / BR,

    Thanks for your question. The answer is a little complicated.

    I do not own BTB REIT - I have other REITs which have similar investments (I hold Dundee Industrial, Retrocomm, and Partners REITs), so view it as an overlap - but I believe that BTB is an attractive investment and yield.

    Caveats: You have an appetite for a REIT with a $120M market cap. High beta, and trading around 10% below high, and 15% above low - I prefer to get in at a lower relative price, but this is still a good entry point

    Positives: Profitable, growth-oriented, Canadian real estate (Ottawa and suburban Montreal), mixed use properties and portfolio, and a very-high yield (although none of the REITs with a high yield are growing theirs, with the recent exception of Northwest International Healthcare). Not a lot of institutional ownership (4%) or analyst coverage, due to the micro-cap, but I view this as an opportunity to invest in up-and-coming securities.

    I hope that this helps! Cheers, Monty
    Mar 4 08:53 AM | Likes Like |Link to Comment
  • A Contrarian Strategy: Buy Canadian REITs For High Yield [View article]
    Hi,

    Thanks for your comments and readership!

    My apologies for the late response, but I am very busy with work, and have not had time for investments. When things get back to normal, I will update the REITs information.

    Cheers, Monty
    Feb 16 11:55 AM | Likes Like |Link to Comment
  • Which Of Brazil's Electric Utilities Should You Buy? [View article]
    Hi Jigs616,

    Thanks for your readership and comment!

    I am also tempted by the current price levels of CIG, but I cannot bring myself to commit without seeing Brazil start to turn the economic corner, and knowing the outcome of the hydro court case. I take lots of risks (in small amounts), but this one court decision appears to be a long-term price (and dividend yield) maker-or-breaker for CEMIG. The under $8 USD for CIG seems so inexpensive for such a substantial utility, which has regulated returns. Of course, the current regulation is reducing the price of electricity (i.e., revenue and profit), and the court case is an attack on CEMIG's balance sheet and future income.

    I like the VALE-CIG JV - Vale gets to remove non-core assets from its balance sheet, and CIG gets to build-out more hydro business. My guess is that VALE will eventually sell out the JV to CIG, when VALE needs the money. Various global mining companies have sold power assets - for example, TransAlta bought Fortescue's in 2012.

    My AESAY position is trading at 50% of my purchase price, and I am a little ahead on EBR.B, so I remain cautious. That said, you may end up with a huge win, if CIG wins the court case - the current price may be an historic low. The old saying "Fortune favours the bold" would apply!

    Happy Holidays and all the best for 2014!

    Cheers, Monty
    Dec 26 11:07 AM | Likes Like |Link to Comment
  • Canadian REITs To Buy For 8%-Plus Yields [View article]
    Hi Velocity Wave,

    I also like Retrocom. Under $300M cap, but almost 10% yield.

    They are largely in Ontario (mostly outside of Toronto), and Saskatchewan, so their malls will be less-exposed to the over-heated Toronto market. The risk is that one of their major tenants, Zellers - a Canadian retailer - is closing. They recently added 2 locations anchored by Wal-Mart, but the risk is that they do not find tenants for the Zellers vacancies.

    During the 2009 financial crisis, they continued their distributions while their stock price bottomed. I was fortunate to buy at that time, and recently added to my position. I would not "bet the farm" on it, but believe that a small position makes sense (at least for my portfolio). I hope that this helps.

    Cheers, Monty
    Dec 19 07:34 PM | 1 Like Like |Link to Comment
  • Canadian REITs To Buy For 8%-Plus Yields [View article]
    Hi galicianova,

    Yes, there are trade-off between REIT funds. The differing diversification models will create different risk/distribution/return profiles. Probably both ZRE and XRE are excellent investment vehicles, but I only use funds to attain certain investment objectives that I cannot easily create by buying the underlying securities. I have seen that you do a lot of investment research, and my guess is that you can do the same or better than the funds (almost certainly on an after-tax basis, given the tax-preference status of REITs).

    I like Riocan (and own a small position), but the distribution yield is under 6%, rather than over 8%, so it did not qualify for this article. It is a premier retail REIT, and has a much lower risk profile than the REITs mentioned in this article. That said, it is also down +15% from its 2013 high, so there was not a lot of safety in the market-cap and quality.

    Cheers, Monty
    Dec 18 06:19 PM | Likes Like |Link to Comment
  • Canadian REITs To Buy For 8%-Plus Yields [View article]
    Hi,

    Thanks, again, for your readership and supportive comments.

    sunworshipper: My apologies, but I do not know of a site which assembles REIT information in Canada, so cannot easily develop a table of additional financial information for these REITs. For a previous article, I spent days going to various sites to create tables of (now dated) data. If someone knows of a source for this, please share it with all of us.

    will_da_man: I share your pain on the 3 Dundee REITs. If it makes you feel any better, I am doing even worse on my Resources holdings...

    galicianova: There are many people who endorse holding real estate funds instead of the underlying securities. There are trade-offs. The funds will provide diversification, but incur management fees, and do not permit you to choose which securities to buy. For example, XRE is mostly the large-cap REITs, but I prefer the small-to-mid-cap REITs (for the growth potential and higher yields). Although some real estate funds distributions are "return of capital" (which are not taxed as dividends), most ETFs do not. If you own individual REITs, the distributions are not taxed until sold (they reduce your capital cost), so they behave as a tax-deferred investment. My preference is to buy smaller amounts of many REITs, which behaves like a fund. Moreover, I can limit and/or exclude sub-industry holdings - for example, I do not have to include hospitality REITs, if I choose so. There is probably room for both strategies, but I only own 2 funds to achieve certain investment goals, and these are not real estate funds (they are gold-miners and a broadly-based fund).

    Thanks, again, for your interest! Happy holidays and Merry Xmas!

    Cheers, Monty
    Dec 17 06:05 PM | Likes Like |Link to Comment
  • Canadian REITs To Buy For 8%-Plus Yields [View article]
    Hi,

    Thanks for your comments and readership!

    Akaralph: Thanks! Merry Xmas to you and your family, as well! All the best for 2014.

    Alschroed: You are correct - one should trade on the home exchange instead of Over-the-Counter, when possible. I am Canadian, and trade these REITs on the TSX. That said, Seeking Alpha only links U.S. tickers to the articles, so I am unable to use Canadian tickers. In the (referenced) series of articles of Canadian REITs, I provided the Canadian tickers, as well. This is an example article (which includes Dundee REIT): http://seekingalpha.co...
    I also own a few securities which trade on the ASX, NZX, LSE, SGX, and some other global exchanges (many purchased via Interactive Brokers). If I would choose to author articles about these, I would need to use their OTC tickers, as well. Thanks, again, for your interest and readership.

    Mike Arnold: Thanks! I hope that we are both correct. Happy holidays! I wish you a prosperous 2014 (a little self serving, as we are both buying the same securities)!

    Cheers, Monty
    Dec 16 05:52 PM | 2 Likes Like |Link to Comment
  • Which Of Brazil's Electric Utilities Should You Buy? [View article]
    Hi Harry,

    Thanks for your question. I had taken a small position in NYSE.EBR.B (VincentCh info above), but am following my own advice and waiting. The terrible results of CTEEP (top of my Brazilian watch list), this month - certain key metrics down 50% - and the continued negative direction of almost all of the Brazilian utilities, is the reason.

    Frankly, the CIG court decision is so impacting on the future of CEMIG, that I would not invest until I see the outcome. If it is negative, I believe that it will plummet another 50%+; if positive, I am still not fully comfortable with the state of the Brazilian economy/currency, or the potential of future major interventions. At this point, CIG appears to be more of a gamble on the courts, than an expectation of management to deliver results. Additionally, I prefer a large, private-sector player over the CIG, publicly-controlled company. That said, if I perceive a value imbalance, I would buy CIG.

    From a dividend perspective, my view of Brazilian utilities has changed a little. I now believe that one needs "at least" 10%+ gross dividend yield on a Brazilian investment to break-even - compensate for the 15% tax, 7% inflation rate, and declining currency. To contrast, Canadian utilities (I am Canadian), with their 5% - 6.5% yields, 2% inflation, 15% withholding tax, but low political risk, are attracting my personal investment dollars.

    I consider my current positions (AESAY.PK and EBR.B) a "Hold" and continuing to wait. Perhaps December tax-selling season may create an entry point for CIG (if the court case is resolved) and other Brazilian utilities?

    Cheers, Monty
    Nov 17 08:37 AM | Likes Like |Link to Comment
  • A Contrarian Strategy: Buy Canadian REITs For High Yield [View article]
    Hi, Matthew and Not Working, Thanks for the additional information!
    Hi Howard, Thanks for the ticker/info! Cheers, Monty
    Sep 14 09:40 AM | Likes Like |Link to Comment
  • A Contrarian Strategy: Buy Canadian REITs For High Yield [View article]
    Hi Matthew,

    Thanks for your question.

    I had looked at the Choice IPO, and decided that I preferred the similar holding that I already had in Crombie REIT (CRR.UN in Canada; CROMF.PK in the U.S.). Crombie is the equivalent of the "Choice REIT", but for Sobey's (the Irving Family) retail properties, so more heavily weighted in Eastern Canada. I also liked Crombie's higher yield, although Choice has a larger market cap.

    Your 12% comment caught me by surprise - I thought that I had missed something! The yield is actually around 6.5%, as the 1st payment was for a 2-month period. I checked this out at Loblaw's site (http://bit.ly/1cQLpfH).

    I believe that Canadian REITs are substantially under-valued, so you probably cannot go wrong with you "choice" of Choice REIT.

    Cheers, Monty
    Sep 6 09:21 PM | 2 Likes Like |Link to Comment
  • Rogue Banks, Not Rogue Regulators [View article]
    Hi Tom,

    Thanks for this great article! Although I enjoyed your perspective, I respectfully disagree.

    I have authored 2 articles on banks and their ethics:
    1. "Op-Ed: Sell these major banks involved in corruption and scandals" (http://bit.ly/17vIUQC)
    2. "Op-Ed: Global banks are rate rigging in Singapore" (http://bit.ly/17vIWI5)

    In both, I identify which banks are systematically corrupt, and conclude that regulators and government agencies have levied inconsequential fines. I have assembled facts and statistics in both articles to propose that certain banks have "flexible ethics" and that regulators are not effectively curbing inappropriate lending, management, and financial transactions. These are not empirical studies, but they document deliberate bank frauds, and ineffective regulator responses.

    Our global banks are financing terrorists and laundering money for drug dealers. A few hundred million USD - of a total of billions of profit - is not an effective deterrent. If you and I would enable terrorists and drug dealers, I would assume that the consequence would be more than a small fine. In other words, our regulators are "rogue" if the consequences do not provide for future deterrence.

    Iceland jailed its most senior bankers for making reckless loans before the financial crisis. This is extreme "regulation", but there is no question that the "regulators" (their judiciary) are "not rogue". The consequences aligned with the legal violation.

    Earlier this year, Singapore identified 20 banks that allowed 133 traders to manipulate interest rates and foreign exchange benchmarks during a four-year period. What was the financial consequence to the perpetrators? About $7 million for each of the 3 biggest perpetrators. The Royal Bank of Scotland has a market capitalization of about $27 billion USD, so the $7 million penalty is a pittance for rigging a country's interest rates for 4 years. So... My opinion is that this is a "rogue regulator".

    There appear to be only marginal consequences for illegal and corrupt activities globally - and most of these financial institutions are based in the U.S. and Europe. Although American regulators have exacted small penalties - they are certainly leading the pack - they are equally accountable for failing to protect the public and investors. This - from my definition - includes them as "rogue regulators".

    I am not sure if we need more laws and regulation; perhaps, we just need the current ones enforced. Without effective regulation and real consequences (jail time and/or enormous personal and corporate financial penalties for the perpetrators), the regulators are effectively encouraging banks to be rogue.

    Cheers, Monty
    Aug 31 09:21 AM | 1 Like Like |Link to Comment
  • A Contrarian Strategy: Buy Canadian REITs For High Yield [View article]
    Hi dhunter,

    I really do not have a good response for which of the Dundee REITs would perform best, over the next 5 years. If Europe recovers, that security could do the best. If Canadian real estate crashes, then the Dundee Commercial would also decline. That is why I diversify, and buy small positions in many REITs. In the end, I hope to earn my high yield, and break-even on the overall gains/losses.

    REIT earnings are disguised by the huge non-cash expense of depreciation, so funds from operations is probably a better measure in this industry. That said, one of the reasons for higher yields is higher company and market risks...

    Cheers, Monty
    Aug 30 09:13 AM | Likes Like |Link to Comment
  • A Contrarian Strategy: Buy Canadian REITs For High Yield [View article]
    Hi,

    Thanks for your comments and encouragement!

    "Not Working" is correct, but I will add to his response.

    Dundee REIT (DRETF.PK) is a commercial office building trust, with many of its original properties in Western Canada. It has been growing through acquisitions of Canadian real estate and REITs into Eastern Canada. Market cap is around $3B and a yield of 7.7%.

    Dundee Industrial REIT (I cannot find a U.S. ticker) is an industrial property REIT. Dundee REIT spun it off as a separate REIT near the end of 2012. It has a market cap of $450M and a current yield of 8.5%.

    Dundee International Real Estate Investment Trust (DUNDF.PK) was also formed by Dundee REIT. This REIT invests in properties outside of Canada, which at this point has been a couple of significant purchases in Germany. It has a market cap of $1B, and a 9% yield.

    I like the Dundee REIT management - and they permeate all 3 of these REITs - as they are growth oriented. For disclosure purposes, I am long all 3 of them.

    There are other securities in Canada with the name of "Dundee". They are a well-known financial services company, with various TSX listings. To my knowledge, they are all unrelated to the REITs.

    Cheers, Monty
    Aug 28 01:09 PM | 1 Like Like |Link to Comment
  • Which Of Brazil's Electric Utilities Should You Buy? [View article]
    Hi,

    Thanks for your readership and comment. I am inclined to agree with VincentCh that it is unlikely that there would be a direct and significant effect on water and power utilities.

    Now that I have said this, there may be a beneficial, indirect linkage. This article (http://bit.ly/16Pjf2h) suggests that the electric utilities, and other industries will benefit.

    As these sporting events will generate a lot of infrastructure development, jobs, and demand for the Brazilian Real, there may be overall economic benefits, with a positive impact on the water and electric industries.

    I hope that you are right - I recently bought a small preferred share position in Electrobras (please refer to VincentCh's comment for the reason), and am closely watching Sabesp. By the time that the hedge funds finish dumping the Brazilian positions - likely in the next few months - we may have an excellent opportunity to add to our positions!

    Cheers, Monty
    Aug 27 10:04 PM | Likes Like |Link to Comment
  • Analyzing Canadian REITs, Part V: Retail [View article]
    Hi,

    I have starting adding to my Canadian REIT positions, on dips.

    The yields are now very-high (even large REITs yielding 6%), and the risk is that the Canadian Prime rate will start to rise (from the current 1%).

    I will try to publish a more complete assessment of this in the next couple of weeks.

    Cheers, Monty
    Aug 15 08:50 AM | Likes Like |Link to Comment
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