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apoplectic

apoplectic
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  • Long Ladders [View article]
    Say the life expectancy of an individual (or second-to-die) is 84 years... and there is no intention to leave money in a will.

    I would consider buying TIP bonds that mature at age 73 to 75. Hold to maturity if possible. When the bonds mature, use the proceeds to buy a life annuity. The annuity would life-only for a single individual, or joint for a couple.

    Inflation protection could be set at 3 or 4% on a fixed annuity ... a blunt instrument for offsetting inflation for an elder.

    The elder may nevertheless "fail" to outlive life expectancy, but effectively will have handed off management responsibility and various risks to a fairly meticulous insurance company. The risks include the risk of being scammed financially during one's declining/dementia years.
    Feb 7, 2015. 10:38 AM | 3 Likes Like |Link to Comment
  • Oil: The Biggest Hairiest Guess Out There? [View article]
    I opened a position in COSWF late in 2014 (a falling knife to add to my collection of cutlery...). I believe the CEO, Ryan Kubik, has been quoted in the press that Syncrude needs $65-70 CDN to break even on operating costs, royalties and maintenance. I would assume the COSWF dividend would be cut again unless the price of crude oil rebounds. ... thus the company would be acting like a price taker.

    I understand that Suncor and Imperial Oil are major owners in Syncrude (along with COSWF), and also they are the owners of two refineries in the Edmonton area that buy Syncrude's upgraded product. I can imagine impairment charges among the integrated energy companies, a declining rig count, losses in the oil service industry, some defaults by highly leveraged shale producers, and a coming period of abysmal pessimism/capitulation among investors in energy stocks. But I can't imagine Syncrude ceasing to mine their leases for decades to come.

    I agree that the attraction of COSWF is hydrocarbons in the ground (not to mention an established mining operation, upgrader <yielding light sweet synthetic crude>, and pipelines to two existing refineries in Alberta). The book value of reserves may need to be restated with the 12-month moving average of prices.

    COSWF might be of interest to a contrarian these days.
    Jan 27, 2015. 01:56 AM | 1 Like Like |Link to Comment
  • Swiss Jeez [View article]
    The casualties among FX brokers came to light right away. I would expect there are number of other ways to lose a significant amount of capital as a result of the revaluation of Swissie.

    I am curious about the impact on defaults on loans, not only to Swiss banks but to banks in other countries (especially Austria, Hungary and Poland) that make commercial and mortgage loans in Swiss Francs to some of their customers. I may be missing something, but for a borrower in CHF, isn't the end of the euro peg the equivalent of a 40% ballooning of the principal owed? Now, not every Tom, Dick, and Heinrich would default under these circumstances, but over the coming few quarters I would expect the defaults to go up.

    To the extent that the banks are protected from losses by credit default swaps, I would expect their counterparties to be in the glue. "Button, button? Who's got the button?"
    Jan 22, 2015. 08:01 PM | Likes Like |Link to Comment
  • Following Meltdown, Cameco Is Positioned For Long-Term Growth [View article]
    Further to the above, the latest news I have seen was in the Globe and Mail, June 4, 2014. At that time, the company management seemed to expect to prevail in Tax Court and get their tax assessment money back... a trial expected to begin in 2015.

    I am no tax lawyer, but I don't take a lot of comfort from CCJ's public comments that the tax dispute will not have a material effect.

    In 1999 they set up Cameco Europe in Switzerland with a 17-year agreement to use the Swiss-domiciled company as a middleman. The middleman would buy at 1999 prices and sell at prices negotiated by Cameco with electric utilities. Comeco's Average Realized Price has been north of $40 (without the extreme swings in the spot price 2003-2014). So, needless to say, the Swiss subsidiary has been highly profitable!

    Canada Revenue Agency's beef is that there is no business reason for that Swiss subsidiary of CCJ to exist other than to minimize taxation by booking profits in Switzerland rather than Canada.

    From time to time CCJ has publicly stated what management of the company expects the damage to be, if the company loses in court. Last I saw was April 29, 2014, reported in the Waterloo Regional Record... $650 million, if memory serves.
    Jan 20, 2015. 10:10 PM | 1 Like Like |Link to Comment
  • Following Meltdown, Cameco Is Positioned For Long-Term Growth [View article]
    As to the dispute with Canada Revenue, I believe that there would have been news reports of any resolution. So I am assuming that there is still an issue.
    Jan 20, 2015. 08:58 PM | 1 Like Like |Link to Comment
  • Buy Energy CEFs With Large Distributions And Steep Discounts To Play An Oil Rebound [View article]
    I expect prices on energy CEFs (other than IRR and BGR with their call-writing options strategies) to trend higher during January. I suspect that late in 2014 there was tax-loss selling by retail investors, which is no longer a factor in the new year. I am long PEO since late last year, for income over a holding period to 2025 or so. The major distributions from PEO at the end of December will coincide with predictable seasonal expenses.
    Jan 4, 2015. 09:07 AM | Likes Like |Link to Comment
  • BHP: The Greatest Love Of Ore [View article]
    MC,

    You and I have reached similar conclusions, mate. I initiated a position in BHP early in December at $46.58

    Perhaps I am a little skeptical about the brilliance of the management. If they pay too much for reserves through ill-timed mergers and acquisitions, big mining companies can (and sometimes do!) become insolvent. Also, there can be some question about the alignment of the economic self-interests of mining executives and shareholders. (Just saying the potential exists for mining executives to do quite well in terms of their personal incomes, without necessarily enriching the shareholders in a comparable manner... NOT implying a specific conflict of interest at BHP.)

    In my view, I would be interested in increasing my position in BHP gradually, as events play out. I would wait at least until I know what will be the split of assets between BHP and New Corp.
    Jan 4, 2015. 08:09 AM | 2 Likes Like |Link to Comment
  • $60B in Canadian projects in peril as oil investment plunge echoes 1999 [View news story]
    Royal Dutch Shell is cutting back on a Canadian oil sands project, as noted in the original article. Does anybody have a handle on the prospects for Shell's $12 billion vessel Prelude, currently under construction in Korea, to process LNG from the sea bed wells off Australia? I have never seen analysis of the breakeven on that piece of work.
    Jan 4, 2015. 07:42 AM | Likes Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    Post Script: Cascades Investment, the largest shareholder of WIW, began a series of daily purchases of WIW on December 9, and continued through December 18, purchasing approximately $14.76 million. I was not aware of this activity at the time, but noticed it today in the Yahoo Finance information on Insider Activity. My hunch is that Cascades management viewed WIW as cheap (distribution yield attractive) and therefore bought more.
    Dec 28, 2014. 02:06 PM | Likes Like |Link to Comment
  • Is It Time To Invest In Energy CEFs? [View article]
    The price at which I bought PEO (executed at $22.47) was a discount of $2.97 from the closing reported NAV of $25.44 (on CEF Connect) 12/12/14. I calculate my purchase was at a discount of -11.67%

    About a week later, on 12/18/14 the closing price was $22.90, NAV was $27.27, with a discount of -16.07% ... Assuming a 10-year holding period, was PEO "cheaper" at $22.47 or $22.90? (The discount was definitely greater at -16.07%)

    My assumption is that tax loss sellers of PEO for 2014 are done. Some may want to buy again after a minimum 30 days since they sold. I would expect that the absence of those sellers in January will result in more increases in the PEO price.

    Relative "value" may (or may not) increase. I have no opinion about that.
    Dec 26, 2014. 04:58 PM | Likes Like |Link to Comment
  • Retirement Strategy: I Am Already Retired, Now What? [View article]
    BBL and RDS-B are notably high yielding. I view this in terms of a yield premium that buyers and holders of these equities require currently in the face of pressure on these companies' margins. Billiton and Shell sell commodities which are now embroiled in international price wars. The investment thesis is these stocks are cyclical, the goal is to buy low and sell high. Worst case scenario is to buy, wait for the stock to be even more out-of favor, and then sell at a loss.

    The optimist buys a falling knife, and holds it after it goes farther down. The cycle has a bottom, but nobody knows in advance where the bottom will be. So, investing according to this thesis can produce be a significant amount of red ink on the broker statements, until the cycle turns back up. It may be a consolation to claim a fine collection of cutlery, however.

    Disclosure: Bought BBL in December 2014.
    Dec 21, 2014. 03:09 PM | 2 Likes Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    "...We see inflation-linked assets as extremely cheap currently."

    I agree. Today I bought WIW, a closed end bond fund with a portfolio of inflation-protected securities, predominantly US Treasury TIPS. I believe the $11.25 purchase price will yield 3.57% in the first year... distributions could obviously go up or down over the next several years. I do not consider WIW a guarantee of inflation protection, but I think it is likely to be profitable if actual inflation exceeds expectations.

    Based on the TIP spread as a gauge of expectations, actual inflation would need be above 1.48% over 5 years, or above 1.66% annual inflation over 10 years. These are exceptionally low expectations. Over the past 25 years I believe actual inflation has been about 2.7% annually on average.

    Meanwhile today post-CPI release, I see a headline: CPI Falls 0.3% As Sign of Deflation. My sense of the mainstream media message is that inflation is dead and deflation is looming. I believe retail investors generally agree, and so WIW has been increasingly out of favor since June.

    Nothing herein is to be construed as investment advice. I am stating personal opinion only.
    Dec 17, 2014. 05:44 PM | 4 Likes Like |Link to Comment
  • Ready For The Holiday Shopping Season - In Closed-End Funds? [View article]
    From the links in the Nov 13 comment, I note that the IRS states Exceptions to the Requirement to File Part I:
    ... A shareholder is not required to complete Part I with respect to a specific section 1291 fund if the shareholder (filing a 1040 individually) satisfies the $25,000 threshold... or if filing a joint return, satisfy a combined threshold of $50,000

    This seems to mean that if at the end of any tax year the holdings of Central Fund of Canada (Symbol CEF) were less than $50,000 (for a couple filing a joint tax return), the IRS would not require Form 8621 to be filed. If I am correct on this, then the tax issues for CEF are no more complicated than for any listed stock which pays no dividends.

    I am not an accountant. Am I missing something?
    Dec 13, 2014. 06:34 PM | Likes Like |Link to Comment
  • Advent Claymore Convertible Securities Is Good For A Swing Trade [View article]
    Thank you, GS. I agree. Fitch and others have predicted rising default rates if WTI stays below $60. Faster than you can say "Jack Robinson" the bid price on E&P petroleum company debt has declined. Good luck to all.
    Dec 12, 2014. 11:13 AM | Likes Like |Link to Comment
  • Is It Time To Invest In Energy CEFs? [View article]
    Is it time to invest? Now I would say "yes". Today, December 12, 2014, my limit buy order on PEO was executed at $22.47

    I assume that tax-loss selling by individuals is contributing to lower prices for PEO, at the same time that the NAV has been dropping due to bearish investor sentiment. I intend to hold the fund for approximately 10 years, and I expect to receive increasing annual distributions, beginning in 2015 at a rate of 6%.

    Nothing herein is to be construed as investment advice; this comment is only my personal opinion on this topic.
    Dec 12, 2014. 10:45 AM | Likes Like |Link to Comment
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