Boosted in Canada; Overworked in Israel

Mon, 2015/03/30 - 1:55pm | Your editor

My article about the Canadian “Ma Bell” was quoted March 20th in Investor's Digest, the Canadian version of Barron's. Since it is now public, I am publishing it here as well. Here's the ID article:

“Despite acquisitions, BCE Inc (BCE-TSX, C$54.42) expects to continue boosting earnings this year. Editor Vivian Lewis, meanwhile, has expectations of her own for Canada's largest communications company: another dividend rise.

“BCE's earnings target is C$3.28 to 3.38/sh, or growth of about 4.7% from 2014 or more (at the high end.) In the driver's seat will be revenue growth of 3% along with adjusted underlying earnings growth in the same range.

“According to Ms Lewis, that means free cash flow can climb as much as 8%--and even hit 15%. The company has stated that its 2015 financial guidance targets are a reflection of continuing 'healthy projected wireless growth' plus the privatization of Bell Alliant.

“BCE also notes that adjusted EPS and free cash flow will create a 'strong and stable foundation' for the dividend. But there's a good news/bad news story here. The bad, says Ms Lewis, is that 'this dividend share is trading at a high 16.7x earnings with modest growth.'”

I am delighted at being quoted by Investor's Digest, a 5x winner of the Washington (DC) Newsletter and Electronic Publishers' Award for World's Best Investment Advisory.


Dividend aristocrat BCE also trades on the Big Board in US$s. More for paid subscribers follows from Israel, Britain, Ireland, Switzerland, Germany, and Australia. Today's blog was delayed by Israeli news overload.

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Tables Posted

Sun, 2015/03/29 - 12:18pm | Your editor

Today the tables showing our performance were post on the website,

Everyone can view the closed positions table, this week showing a new trade from Chris Loew, our Japan correspondent, who can be trigger-happy. He is an American who pays income taxes under Japanese rules which do not distinguish between long- and short-term capital gains like ours.

The new position in Japan and other current holdings may only be viewed by our paid subscribers. They get to see all holdings of stocks, bonds, preferred shares, closed-end and exchange-traded funds. Remember to use the printer-friendly button to view the spreadsheets more easily.

More for paid subscribers follows, in part to reflect what we are learning about our reporters' proclivities. Read more »

Big Deals and Blockbuster Developments

Fri, 2015/03/27 - 1:05pm | Your editor

The Wall Street Journal took time off from its vendetta against Hillary Clinton and those who worked for her during her tenure as Secy of State (including our once and future reporter Amb. Harry Geisel) to report that Turkcell Iletisim Hizmetleri AS had finally held its first shareholder meeting in 4 years after the telco was threatened with nationalization by Turkish regulators. This forced its trio of battling owners cooperate temporarily and defer fighting to control of Turkey's leading mobile phone company.

The trio of owners are: Cukurova Holding AS, the local player; Alfa Group, run by Russian oligarch Mikhail Fridman; and TeliaSonera AB of Sweden.

They managed to approve paying retroactive dividends to shareholders totaling 3.9 bn Turkish lira (~$1.5 bn) for the 2010-4 fiscal years. This amounts to 42.5% of TKC profits during that period.

The Journal wrote: "After nearly a decade of legal battles and boardroom maneuvers that crippled decision-making at Turkcell, [the 3 leading owners] struck a rare compromise, providing a boon to investors but doing little to end their ownership struggle. If they had failed to convene the general assembly, Turkish regulators at the Capital Markets Board would have been able to seize power in the name of all shareholders, with the majority owners effectively relinquishing their authority and ability to set the dividend."

There may be a lesson here for the US Congress and those trying to undermine Foggy Bottom.


While co-generation is normally a good way to save energy, by channeling heat from creating electricity to nearby residences, Con Edison plants along the East River in Manhattan have been turned off preventively after the huge fire yesterday on Second Avenue. As a result, residents of posh Sutton Place like me, at an unimaginable distance socially from the East Village, lack heat and hot water today. I am not sure I dare use my electric heater after last weekend's Brooklyn fire.


News for paid subscribers follows from Ethiopia, Canada, Israel, Ireland, Brazil, Denmark, Spain, India, Belgium, and Finland including major deals.

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Trading Alert

Thu, 2015/03/26 - 4:09pm | Your editor


Thanks to good omens we bought and sold Japanese small caps today. The sale was of Daihatsu Motors, mini-cap maker of mini-vehicles, after Chris Loew, our Japanese correspondent turned sour on the shares of DHTMF because of poor sales. We sold at $15.24 right before the close.

More on our buy for paid subscribers only follows.

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Thu, 2015/03/26 - 11:21am | Your editor

Today's Heinz-Kraft deal recalls family lore. My unmarried German-born future mother sailed for the USA in 1937 with a full dowry of silver and dishes for a future Jewish bride: milk, meat, and neutral service for 12 in year-round and Passover versions plus a lifetime's worth of bed and table linen and nightgowns. At that time the Nazis allowed this stockpiling but would not let German Jews take out money.

The silver stash was stolen from my newly-wed parents' apartment on Nov. 9, 1938. They were upset but more so over the news from Germany after they reported their loss to the cops. It was Kristallnacht, the night of broken glass, when the Nazis began the first destruction of synagogues, and Jewish schools and community buildings, along with arrests and imprisonment in concentration camps of German-Jewish leaders.

Mom's “dot” also included bearer shares her late grandmother Dinah had received from her brother in America. I am unsure what her great-uncle's name was (she told me but I forgot.) The shares were in a coffee company called Maxwell House.

When she got to America, my mother turned them in for General Foods stock, as there had been a merger. During my childhood, shareholders (like Mom) got big boxes of General Foods products each year as a bonus dividend. Being kosher, Mom would not eat some of the goodies, so she traded with our Marchetti and Caruso neighbors.

Kraft, successor Mom's General Foods, which she sold at some point, was crafted by multiple mergers with other purveyors of branded food. So I am a co-descendent of a founding stock market craftsman, alongside the Buffett and Lemann clans.

Every time you eat some unwholesome sugar- and salt-laden all-American pseudo-food, thank my triple-great uncle, and my double-great grandma Dina. I'm glad that shareholders and deal-makers no longer get “care” packages from their companies as I want to keep Warren Buffett around longer.


Today the price of gold, oil, and other commodities rose because of the Saudi attack on the Yemini Houthis, amng many Middle East developments.


More for paid subscribers follows today from Britain, The Netherlands, Switzerland, Colombia, Hong Kong, Japan, Germany, Brazil, and Portugal, including stock advice. Read more »


Wed, 2015/03/25 - 10:59am | Your editor

Dr SF wrote:

Don't know if I am getting a touch of senility or what, but the posts on many of the G-I holdings seem ever more inscrutable to me. Terms such as shelf prospectus, banker's acceptance rate, ICE gold fixing pool, are unknown to me. If most of your subscribers understand this lingo, then fine, include it. Otherwise, could you consider explaining the news and its relevance in simpler terms? Thank you.

I replied:

Dr F, Sorry. I was in a rush. As I wrote for The Banker in London for years this terminology comes too easily to me.

I was writing about a Canadian dollar issue. Canada uses a different base rate for floating rate debentures, not the Fed funds rate but the bankers' acceptance rate. Both are indicators of the average price of money. Read more »

Swiss Banking Rules

Tue, 2015/03/24 - 11:08am | Your editor

To go to the Israeli index confab at the Harmonie Club today, I am keeping this letter short. But I cannot resist a Swiss banking story.

Conflict of laws is alive and well according to Neue Zuercher Zeitung today. A Swiss commercial court last month ruled illegal Credit Suisse's freezing the accounts of a US millionaire with the marvelous name of Millard (near the French and German for billion).

CS will have to pay computer pioneer William H. Millard back and also compensate him for blocking his access to his money from autumn 2011 to end 2014. The Millard couple lives in Grand Cayman and their account with a CS sub, Clariden Leu, was frozen in response to a US tax accord with the Northern Marianas, a former colony where the Millards had lived.

Bill Millard invented the first desktop computer (the Imsai 8080) and founded Computerland stores which he sold to become a member of the Forbes rich list. Then the Millard couple became citizens of Saipan to avoid the prohibitively high tax rates of the 1980s. But then they spearheaded an attempt to cut corruption in the Marianas by the FBI. So they got tax bills from their supposed tax haven. They left in 1990 and moved to the Cayman Islands.

In 2011 they were fighting a New York law case over a Mariana tax bill from 1994, boosted by penalties and interest to $118 mn. Bill Millard argued they had already settled the island's claim before moving out.

Under banking secrecy rules the Millards were not given much information on the Swiss banking moves in 2011. Their account was frozen despite Swiss rules allowing accounts to be frozen solely for money laundering or criminal operations, neither of which was at issue.

After the Clariden Leu Swiss bank accepted the Marianas Islands' claim the Milliards initially paid another $1.4 mn from their Swiss account. Then CS, the parent bank, billed them for another $250 mn in legal fees and froze the account.

The Zurich commercial court ruled that these legal fees were incurred by CS for its own interest in operating in the USA. After a scandal about US tax evaders, CS had agreed to cooperate with US tax authorities over Americans who had hidden accounts. The Millard account was not hidden; it was used to pay the extra $1.4 mn claim to the Marianas.

Yet the link between the parent and the sub turned out to be a key. A US Federal Court had concurred in a May 2013 case over a sub of Canadian Imperial Bank of Commerce operating in the Cayman Islands. So CS sub Clariden Leu also was not covered by the deal between CS and the Feds.


More for paid subscribers below including a possible future Japan stock idea from Chris Loew and other news from Denmark, Britain, Ireland, Japan, Chile, and Canada:

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Closed Positions Table Corrected

Mon, 2015/03/23 - 2:55pm | Your editor

There was an error in the Mar.23 closed positions table at which has now been corrected. I used the purchase price for proceeds from the sale.

Sabbath Observance Tech

Mon, 2015/03/23 - 2:04pm | Your editor

After the tragic fire in Brooklyn, a product suggestion for Israel's elite tech innovators. Find a mechanism for Orthodox Jews to keep food hot without putting their lives at risk of fire. This should be a relatively easy thing for the renowned tech whizzes of the Israeli Defense Forces to figure out, creating a start-up that might bridge the country's political gap and make money.

Sabbath observance in the Diaspora is hard because of how cold it is in the lands of exile compared to Biblical Israel. So you need a work-round of the rules to have heat, hot water, light, and hot food despite the ban on kindling fire.

Many solutions exist: the Eastern European “Shabbos goy” who came into the Jewish house silently to light the fires; a charcoal brazier with the “cholent” gently heating on the back porch; a “blech” covering an apartment's slow stove burner keeping food hot, once made of asbestos (oy!) but later of tin; the special Sabbath setting on ovens made for the Orthodox. Read more »

Tables Updated

Sun, 2015/03/22 - 11:40am | Your editor

The tables at have been updated and may be viewed on the site. Everyone can see the closed positions table but only paid subscribers get to see our current positions and advice. To view the spreadsheets more easily, use the "printer friendly" button even if you don't want to print.

The webmaster is off on a much needed spring break and I am filling in for him, so I hope there will be no tech issues coming.

The big news from the tables is that we gained much money last week mainly because of the rise of foreign currencies against the dollar. Since our portfolio is in non-US stocks and bonds (either directly or through closed-end or exchange-traded funds), everything went up unless there was a problem at a company. This is my main objection to the recent spate of exchange-traded funds combining foreign positions with short sales against the dollar. The shifts can be rapid as the FX market is about 10 times as large as the total global stock and bond markets and if you don't mind my mixed metaphor, it can turn on a dime.

That is also why we do not use stop loss orders in our foreign holdings. There can be sudden moves either over currency changes or because the US marketmaker is worried about exposure (on Fridays, for example). So using stop loss orders risks forcing a sale over a brief price move we do not need to follow.

TWe also suggest always buying in Europe during the morning, and only trading on the Pacific Rim from Sunday to Thursday. That is based on being in New York like me. If you live in Hong Kong or Australia, Brazil or Argentina, you have a different schedule.

More for paid subscribers: Read more »