Dividends and Unloved by industry and environmentalists, coal remains

If you ever read books around the times of Sherlock Holmes, the air was a character in the story because it was a mixture of fog and coal pollution. At the time of Mr. Holmes, the dominate way to heat the homes of London was coal so it was not surprising it made into the literature and songs – I received a lump of coal for Christmas. Coal replaced candles for heating and eventually making electricity which replaced coal, but coal has always had a negative aspect of pollution when it is used. One of the earlier solutions was to make the smokestacks higher so more it would be dispersed by the winds be blown away from the coal plant. Jumping to current days, coal is still on governments’ minds as seen at the recent COP27 or Conference of the Parties held in Egypt.

In an article by Eric Reguly, the issue of coal has been on the agenda for the past 27 years and likely will continue to be on the agenda. The good news is the 75 countries which represent 95% of the total coal consumption have pledged to reach net zero emissions by 2050 to 2060.

The bad news is the demand for coal will continue into the future as evidenced by the war in Ukraine delayed the closure of coal plants in Europe. China is building 100 new coal plants, as well as 100 new coal plants are being built in the rest of Asia. The reason why coal plants are being built is simple: they are relatively easy to build, coal is plentiful and equally important inexpensive, and the lifespan of a plant is 30 to 50 years. One of the reasons why coal is plentiful is companies such as Glencore have built an infrastructure system that allows it to make billions from coal mining and exports.

Linking to dividend paying stocks, similar to everyone you will have concerns as person. You want to live in a relatively clean environment and all that entails. When you are investing, you want to invest in profitable companies that can pay dividends for you to enjoy the environment. Energy companies meet demand and prices allow profits to be made, the companies may go in and out of national favorites but as an investor you concern is legally making money. When the laws change, you can change, as long as the government keeps the laws, so much the better. In the next few years, you can see how the alternatives are doing and when to change if change is needed.

There are more questions than answers, till the next time – to raising questions.

Dividends and BMO to take billion dollar charge after losing Ponzi lawsuit

We all know who Bernie Madoff is – he was the former head of the SEC and a Wall Street Investment firm that was producing consistent returns for years no matter how the markets fluctuated. In the end it was all an elaborate scheme to bring in new money to get Peter to pay Paul and it worked for 15 years. Bernie ended up in jail for 50 years.

In Minnesota, another Ponzi scheme was run almost as big as Madoff, before it collapsed in 2008. Thomas Joseph Peters was convicted of a $2 billion fraud and is in jail. Mr. Peters company declared bankruptcy and has been in the courts since.

In an article by James Bradshaw and David Milstead of the Globe and Mail, the lawsuit alleged that Milwaukee based Marshall and Ilsley Bank and a smaller bank helped facilitate a Ponzi scheme run by Mr. Peters between 1999 and 2008.

The issue is the corporate model the bank understood what Mr. Peters company did and what Mr. Peters actually did such as the bank moved tens of millions in and out of corporate and personal accounts were not measuring up to one another.

The Judge found that although the Bank of Montreal bought the Milwaukee based bank in 2011, M&I destroyed computer bankup tapes in 2010 and 2011 that likely contained documents and some tapes that contained evidence. The bank falsely told the judge all the tapes were gone.

A jury found the present owner of the bank, Bank of Montreal needs to pay a fine which amounts to $1.1 billion.

Linking to dividend paying stocks, when a company goes into bankruptcy it will take a long time before there is any type of payout. If you own such an investment you need to cut your losses and move on. In the above case, it is now almost 2023, the bankruptcy was 2008 and only cents on the dollar will be recovered. Every downturn in the economy shows there are frauds in every state and many people are just trying to make a little bit more. It is easier to buy a profitable company that has paid dividends over the years and let the company do the work legitimately. Losing money takes the compound interest of real gains and as an investor you love compound interest. Years ago, the author was helping managing my parent’s funds, my investments were in the growth side of the market, my parents were in dividend funds, who was making more money with less risk? my parents, I switched over to enjoy compound interest.

There are more questions than answers, till the next time – to raising questions.

Dividends and New Zealand escalates trade dispute

We all have our perceptions of the world’s trade and that is good. In the dairy industry, if you were thinking about a powerful dairy industry, you might think of Wisconsin and you would be correct, they have a large dairy industry. The largest dairy industry in actually in California, Wisconsin is second to California.

If you think worldwide, which country has 35% of the world trade in dairy products? If you guessed New Zealand you would be correct. Despite being closer to Australia than any other country, the country of 5.1 million people ranks about 7 or 8th in terms of milk production and accounts for 35% of the world trade in dairy products. Do you remember the ads about New Zealand and Lord of the Rings, do you remember seeing cows?

In an article by Steven Chase of the Globe and Mail, both New Zealand and the US are pressuring the trade panel to look at the rules which limits their ability to sell to the Canadian market.

Linking to dividend paying stocks, we all have perceptions of the market and that is good but sometimes facts come forth which changes your thinking. Some companies or industries are under less marketing lights for we do not see them at first glance. When you do your homework, looking for profitable companies you are not looking for the ones in the spotlight, jus the ones that can consistently make profits to pay dividends. After you own them, let others enjoy the spotlight, you can enjoy the dividends.

There are more questions than answers, till the next time – to raising questions.

Dividends and Tump-linked stocks rally on possible 2024 presidential run

Before the midterms the predictions from pollsters there was predictions of a red wave or the Republicans were going to win seats to control government. For investors, you had the ability to do something or nothing. At the same time, former Presidential Trump said he was going to make a major announcement a week after the election. If you put 2 and 2 together, you would conclude it was a candidacy for the Presidential nominee for the Republican ticket.

In an article by Shreyashi Sanyal and Anisha Sircar of Reuters, prior to the midterms, shares in Digital World Acquistions Corp the blank check company looking to take Donald Trump’s social media venture public jumped in value 24%. If you are a diehard fan of Mr. Trump and bought much earlier, your loss for the year is over 58%.

Since the midterms and no red wave for the Republican Party and many of the candidates endorsed by Mr. Tump losing, the shares of Digital World have eased off.

Linking to dividend paying stocks, it is a good idea to see which companies will benefit or should benefit from changes in political leadership. Sometimes the answer is very few, sometimes the answer is industry groups because all politicians tend to vote extra money for their favorite groups. One of the easy examples is Republicans tend to give the oil and gas industry less regulation or drill baby drill; while Democrats tend to give solar companies greater incentives. There are natural alliances between the 2 parties although in reality both will do something for each, but it will be easier to see for one party or the other. Just remember you are not looking for a bounce but long term results and saying no is a good thing.

There are more questions than answers, till the next time – to raising questions.

Dividends and Sources say fate of management at Toshiba a cause of friction for bidders and banks

All around the globe, investors look for value or hidden values that with some changes will unlock the value. One of the areas where people see value is in large conglomerates. The companies grew larger for a variety of reasons including the government ensuring one or more divisions had readily sales due to the government calling it a national security. At some point, investors begin to examine conglomerates and wonder if the company was broken up, would the parts be worth more than the existing?

In an article by Mayu Sakoda, Makiko Yamazaki, and Takaya Yamaguchi of Reuters, the company known as Toshiba is a prime example of the conglomerate to be broken up. Toshiba has over 116,000 employees involved in chip making, nuclear energy and what most of us their retail electronics. In 2015 there was a accounting scandal and ever since the company has lurched from crisis to crisis. One of the many concerns is major shareholders and management do not agree on the direction the company is taking.

A solution was devised of a potential buyout by Japan Industrial Partners (a private equity firm) and Japan Investment Corp (a state backed fund). The plan was going well until the issue of do we retain the existing management team? The private equity firm said yes, the state back fund said no and departed as a partner. The issue of retaining or letting go the existing management team is not an easy one because there are advantages and disadvantages to both sides. However, if you believe many changes must be carried out, something the Japanese banks believe, do the banks want to risk their money if many changes are not done?

Japan Industrial Partners which has previously bought out Olympus Corp’s camera business and Sony Group’s laptop business is trying to find partners to secure equity and financing commitments.

Japan Investment Corp is in talks with Bain Capital and north Asia fund MBK Partners to form a competing bid.

Linking to dividend paying stocks, companies that grow often have the government as a wonderful partner-either direct or indirectly. This partnership is the government backing the company to grow and some of what it is doing is in the national interests of the government. The national interest can be such as Toshiba chip making and nuclear energy, as a government you would not want to have competing nuclear energy firms so they back one over the other. It could be the research and development the company is involved with, there are multiple avenues where it could work. The issue is at some point the economy changes, government changes and they are not long the government’s interest. Many companies have a balancing act. If you have investments in a company which is protected by national interest of the government, how secure is it?

There are more questions than answers, till the next time – to raising questions.

Dividends and Investor backs Philip Morris’s $16 billion offer for Swedish Match

Today is Black Friday and around the shopping malls and retail stores, people are searching for values for their holiday shopping. In the corporate world, company’s strategic planning team does what individuals due.

One company that was searching for an undervalued company is Phillip Morris International (PMI) one of the largest makers of cigarettes. PMI found a company in Sweden called Swedish Match which controls half the world’s market for snus – a moist, smokefree snuff.

In an article by Reuters, PMI bid $9.73 a share which was a premium to where the shares were trading. Companies including Elliot Management Corp believed the offering should be higher. In this case, Elliot Management bought more shares and in October reached 10% holding.

PMI raised the bid to $10.58 a share because although they own 80% of the shares, they needed 90% to reach the threshold for forced redemption of the remaining minority shareholding. Once the price was raised Elliot agreed to tend and PMI will own Swedish Match. You can expect to see Snus in the tobacco section soon.

Linking to dividend paying stocks, all companies look for undervalued competitors or add on their companies or similar to individual shoppers they are looking for value. The difference is the number of 0s at the end of the cheque. In every market there is value or opportunity, if you similar to a corporation you take your time to find it and buy it at the right price for the future.

There are more questions than answers, till the next time – to raising questions.

Dividends and Glencore ordered to pay $314 million in Africa bribe case

In all industries but it is easier to see in the commodities business, brides or payments are paid to the ruling head of government or their associates. The developed countries often pretend that people do not bride in their countries, but to do business in a non developed countries is normal practice to pay brides. A number of years ago, the ruling family of Indonesia – the Suharto President was known as Mr. 10%. A country doing business in the country had to give either the President or family members 10% of their business in order for the business to operate profitably. If the country said no, then the President would use government regulations to hamper the business.

One of the biggest global commodity companies is known as Glencore with operations in London and Baar,Switzerland. The operations in London are centered around the London commodity exchanges where the price of commodities are traded everyday. In England, the West Africa desk, bought and sold crude oil from countries across Africa, paid brides of $29 million to secure preferential access to oil from Nigeria, Cameroon, South Sudan, Equitorial Guinea and the Ivory Coast.

In an article written by Geoffrey York, British Judge Peter Fraser, ruled Glencore to pay $314 million in financial penalties in its plan to bribe 5 African countries. The fine includes a massive fine, an order to confiscate profits that it obtained from bribery and legal costs – is the largest ever awarded in a corporate criminal conviction in Britain, according to the government’s Serious Fraud Office (SFO) which launched the Glencore investigation in 2019.

In the company’s financial reports, the bribes were often disguised as service fees, signing bonuses, success fees or office expenses. The SFO said its investigation of the Glencore traders found a trail of text messages, large cash withdrawls and deliberately concealed payments. The SFO is still pursuing an investigation of 2 people in the Business Ethics Officers in Glencore’s London office. Of the 17 people at Glencore, 11 are former employees.

Glencore Chairman Kalidas Madhavpeddi, said the conduct that took place was inexcusable and has no place in Glencore.

Linking to dividend paying stocks, there are ample opportunities to use bribery in the business world and many are former employees because the company lets them go for the greater good of the company. If you see a high turnover of senior employees, you have to wonder why? Are short term profits worth it? Is the lifestyle worth it? In the case of Glencore, did they make excessive profits that allows them to stretch out the court proceedings and pay a partial fine? When you purchase dividend paying stocks, you understand bribes are paid to increase profits, but you want companies that can pay profits for a long period of time.

There are more questions than answers, till the next time – to raising questions.

Dividends and Dark Commerce

For a long time in human history, there has been a system operating outside the normal legal side. Many people know about it, some use it and generally most end up within the violence of the system. For the system there is relatively easy money, but often it comes at a cost which is people do not live to old age retirement. Some people spend most of their lives in the other system, some people rarely ever venture in. It used to be that it was considered 10% of the economy and was loosely described as the underground economy.

In the last 20 years, it might have grown and the book Dark Commerce – How a new illicit economy is threatening our future by Louise I Shelley published by Princeton University Press, Princeton, NJ, 2018 is a good book to read if you wish to understand the economy. The book is very well researched.

There always has been a dark economy or the criminal element, but it seems to have grown more mainstream or main street and no one really knows.

One of the greatest companies during Victorian Times or when England essentially was the world leader was the East India Company. The company started out as a trading company which brought spices and teas to England in exchange for manufactured goods from England. Spices are the prime reason why Europeans were open to see the world and claim parts for itself. Eventually the company evolved to selling opium from India into China and causing a silver shortage in China and balance of trade payments overwhelming to England. A number of wars were fought, and Hong Kong became British territory.

In the Sherlock Holmes novels, Sherlock is addicted to cocaine, but drug use was not common throughout the population of England. They drank beer and alcohol.

The drug cartels which come from Columbia, Afghanistan, and a host of other companies have resulted in wealthy people who move their money into legitimate areas of the economy including real estate, stocks, bonds, etc.

Whether it is North Korea selling illegal cigarettes or other countries or groups destroying the environment, the growth of dark commerce leads to many issues about government policies.

The internet is wonderful to gather information, but it can also cause fraud, deception and if you are looking for a deal, it is buyer beware as counterfeit, poor quality and a host of other concerns are found in goods. In addition, there is place called the dark web where non legal actions are the norm.

Linking to dividend paying stocks, many times people looking at the dark commerce see the returns made in dark commerce. The returns can be very high, there is a reason why many people involved spend most of their money on lifestyle. It generally does not last. If you believe you want to live to retirement with a reasonably comfortable life, then the steady consistent aspect of dividend paying stocks over a long period of time is an excellent choice.

There are more questions than answers, till the next time – to raising questions.

Dividends and Saudi Arabia, UAE back OPEC production cuts at conference

Every industry in the economy has at least one conference where the leaders of the industry gather together. In most cases, there is more than one, but over the years one conference tends to come up with more decisions than others. Whatever you investments are in, all industries have magazines reporting on them and if you desire you can follow the trends.

Similar to most industries, the governments of the world play an interest and often they like to believe the interests of the government and the generally agreed interests of the industry are more or less in tune with each other.

In an article by Jon Gambrell of the Associated Press, the oil industry met at the Adu Dhabi International Petroleum Exhibition and Conference. The energy ministers of oil producing countries were there to make decisions and reward contacts to the oil industry.

All major lenders are discussing a possible recession next year, and it would be prudent, if a company was a supplier to ensure inventories do not build up too much or to cut production. The statement is from the supplier point of view, for the oil industry the government has a different point of view. The government of the US wants OPEC to pump more oil to increase supply and prices to fall.

The Energy Ministers of OPEC said no, it is prudent to consider and do cuts in production. The Saudi Energy Minister said we owe it to the the upcoming United Nations climate change conference to be held in Egypt to help save the environment.

In early October, OPEC agreed to cut its production by 2 million barrels a day beginning in November.

Amos Hochstein, the US envoy for energy affairs, said energy prices have to be priced in a way that allows for economic growth. Prices cannot be too high that will accelerate an economic downturn.

The US wanted prices to fall for gasoline prices to stop a talking point of the opposition for the midterm elections.

Linking to dividend paying stocks, all companies and all governments have interests that vary from time to time. During election season, a government has a point of view; during economic cycles companies have a point of view; they will not be the same as profits fluctuate. For your investments, do you have a reasonable grasp of the viewpoints?

There are more questions than answers, till the next time – to raising questions.