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  • H&R Team With KingSett Capital For Primaris Assets

    On February 5th, two competing bidders for Canada's Primaris Retail Estate Investment Trust have teamed up with an offer to acquire the shopping center operator for C$2.75 billion ($2.76 billion) in cash and stock.

    H&R Real Estate Investment Trust commit to buy Primaris' operating platform and 25 retail locations, with a consortium led by KingSett Capital to buy 18 properties. Under the deal, RioCan, Canada's largest REIT, will buy two malls in the greater Toronto area for C$362 million.

    In return Primaris holders are entitled to either cash or H&R shares valued at about C$27.98 per Primaris share.

    The compromise bid follows a contentious battle for control of Primaris. KingSett made a hostile C$26 cash bid in December for the REIT, which was followed by a Jan. 16 friendly merger agreement between Primaris and H&R that was valued at about C$27.05 per share.

    In addition to the higher price, the revised agreement increases the amount of cash available to Primaris investors. The deal includes a C$100 million breakup fee payable to H&R and KingSett under few conditions, including any unsolicited rival bids that Primaris deems superior.

    H&R will still add valuable retail assets to its portfolio that will make the company the largest diversified REIT in Canada.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: HRUFF, REIT
    Feb 13 5:41 PM | Link | Comment!
  • The Launch : All-In Bet For The BlackBerry 10

    Blackberry (Nasdaq: BBRY/TSX: BB)

    Formerly Research in Motion (Nasdaq: RIMM/TSX: RIM)

    The Launch

    The BlackBerry 10 was launched on January 29th, after a long-awaited period. The new BlackBerry 10 smartphones come in two different models: with a touch screen (Z10) offering an alternative to Apple (NASDAQ: AAPL) and Google's (NASDAQ: GOOG) Android based smartphones or with a physical keyboard (Q10) for their BB enthusiasts, both running on the new QNX-based operating system.

    Source : RIM Z10 BlackBerry

    For the past few weeks, the share price was subject to speculations reaching more than 17$ a share. As a matter of fact, after the launch, the shares slumped 12% suggesting investors to speculate on the stock. Although at 13$ a share, the price is still appealing for investors.

    Despite some innovative features, I remain skeptical about the possibility to regain the market share loss to Apple iPhone and other devices powered by Google's Android operating system. BlackBerry should retain its specialized market base with the Q10 smartphone, giving estimate sales around 28 million units worldwide with $11 billion in revenue by end of fiscal 2014. The devices are now available in the UK and will be available in Canada on February 5th, but the Z10 will not be released in the U.S. until March and the Q10 until April. Quite disappointing for American enthusiasts.

    To make the launch of the new BlackBerry 10, the company changed the application store to "BlackBerry World", dumping the "App" word from the name. The new app store will count 70,000 apps, rather small compared to its rivals. Benefiting from the launch exposure, Research In Motion announced that its name will be changed to BlackBerry. Effective today, the stock tickers are in the U.S. and (TSX: BB) in Canada.

    Releasing the BlackBerry 10 and its new operating system has proven to be costly. Revenue for the third quarter of fiscal 2013 was $2.7 billion, down 5% from $2.9 billion in the previous quarter and down 47% from $5.2 billion in the same quarter of fiscal 2012. Profit was $9 million but dropped drastically from $265 million the previous year. The firm has not given much insight on the retail price of the new BlackBerry 10. It should be a little higher than the iPhone 5 according to Bloomberg analysts, depending on the carrier and the package offered.

    Will the new features of the Blackberry 10 attract smartphone users to switch? The operating system looks astonishing at first, packed with new features. BlackBerry Balance feature allows a clear distinction between personal and corporate content as well as a super-fast browser and should be valued by most users. The BlackBerry Hub feature integrates many types of social communication into a single place and users can reply within the hub and without actually opening the application. Useful for any Facebook (NASDAQ: FB) addict. On the downside, omissions like Netflix (NASDAQ: NFLX) app is difficult to pass by. Adding behavioral inefficiencies, expert users will soon get tired of the operating system environment.

    Renewing with past success

    Only time will tell. In my opinion, BlackBerry lost much ground to its competitors. The BlackBerry became wildly successful in early 2000s gaining almost 20% in the smartphone market share. Despite early success, companies like Apple and Samsung have flown past the company in the smartphone race. As we speak, the company controls a mere 2% market share in the North American smartphone market.

    RIMM Book Value Per Share Chart

    Undervalued at this time according to Recognia's Value Analyzer, the equity's return rate could go up to 120% by looking at the chart below.

    On value alone, the equity's price is appealing. Unfortunately, the risk goes with it. The sales of the BlackBerry 10 should stabilize after the initial launch generating around 28 million units by the end of the fiscal year 2014 and should rise between 30 to 32 million units by the end of 2014. You should expect a decrease in sales around 10% per year until 2017.

    Bottom Line

    Will the launch of the new BlackBerry 10 be too little too late? The answer lies on customer's reaction. Once dominant on the handset market, I think this was a high stake move for Blackberry. In my opinion, the company's future should not have relied only on the new operating system.

    RIMM Gross Profit Margin Quarterly Chart

    In the short term, investors should profit from the coming sales, translating in a more valued stock price. The share price could rise at $20 a share before the end of 2013. I estimate that the gross profit margin should get back around 40% as well. These benefits should be sustained unless major issues emerge from the new device. I recommend selling the stock before the beginning of 2015 unless the sales are up to expectations.

    BBRY 16.02$ at opening on February 6th


    Source : Seeking Alpha

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 06 11:34 AM | Link | Comment!
  • Transcanada Corporation (TRP) : Future Looks Bright

    If you're looking for an energy boring company, look elsewhere. Transcanada Corp. (TSX/NYSE : TRP) is all but that with many projects on the table. Among them, there is the Gulf Coast Pipeline Project.

    The Gulf Coast Project is an approximate 485-mile crude oil pipeline beginning in Cushing, Oklahoma and extending south to Nederland, Texas to serve the Gulf Coast marketplace. The 47-mile Houston Lateral Project is an additional project under development to transport oil to refineries in the Houston area. The construction of the pipeline started August 2012 to eventually be in service before the end of 2013. This pipeline is very important for the region because it will be able to address the limited access capacity for moving the crude oil to the refining terminals along the Gulf Coast. Needless to say, the U.S economy will benefit strongly from this.

    The Gulf Coast Pipeline should have the capacity to move from 700,000 barrels of crude oil per day to a maximum of 800,000 barrels per day.

    Another Pipeline, The Keystone, is a 2,150 miles pipeline that moves crude oil from Hardisty, Alberta to markets in the American Midwest at Wood River and Patoka in Illinois, and at Cushing, Oklahoma. The Canadian portion of the pipeline runs from Hardisty, Alberta east into Manitoba where it turns south and crosses the border into North Dakota. From North Dakota, the pipeline runs south through South Dakota and Nebraska. At Steele City, Nebraska, one arm of the pipeline runs east through Missouri for deliveries into Wood River and Patoka, Illinois; another arm runs south through Oklahoma for deliveries into Cushing, Oklahoma.

    TransCanada is trying to add another project to its existing Keystone Pipeline with the construction of the 1,179-mile Keystone XL Pipeline from Hardisty, Alberta to Steele City, Nebraska. TransCanada received approval from the Governor of Nebraska after a re-route of the initial route proposed. The concerns were about crossing an environmental sensitive region, the Sand Hills, where a major spill would be devastating for the environment. The re-route avoid this sensitive area and the only thing needed to begin construction is the Presidential approval, which would be done in April 2013. For further information on this project, see my article on the Keystone XL project.

    I believe both projects will bring a lot of new incentives on the table for investors. The company has a strong balance sheet and has enough earnings stream coming from its pipelines network and natural gas storage to sustain the dividend yield for years to come. Equity's appreciation will go up even if the U.S economy experience some bumps down the road. This stock is a great pick to brings some stability in any portfolio struggling with volatility.

    Several other projects are in motion at Transcanada Corp. as I write these lines but I will talk about them later in further articles.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 31 12:18 PM | Link | Comment!
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