Friday Finance Weekly 8TH Edition (May 20, 2011)

Hi folks and a warm welcome to the 8TH Edition of Friday Finance Weekly.

The popular website LinkedIn is in the news this week as they underwent an IPO. Initial target price was around $32 – $34 per share, but the price was set at $45 a share, valuing the company at a whopping $4B. Subject IPO was the second biggest IPO for a technology company, after Google. LinkedIn always had a clear revenue stream as their focus was on building business relationships and assisting in target recruiting efforts, making it an attractive investment opportunity.  The share price this morning is already over $100 a share, more than doubling profits of the initial investors. This will be good news for the rumored IPO’s of Facebook and Groupon, expected later this year or early 2012. Analysts have mixed views on IPO activities related to social media networks and the tech bubble is still fresh in our minds. The quick demise of MySpace should be a stark reminder that the next best thing is around the corner. I’ve registered a new website named www.iwanttoshareeverymomentofmylifewiththeworld.com. On a positive note Arnold Schwarzenegger has agreed to use LinkedIn to hire his domestic staff. (Source: Mashable)

For all you folks underreporting income to CRA and having problems getting a traditional mortgage, our friends at Vancity are offering another made in the USA solution. The newest mortgage product is called the ‘Self-Employed Simplified Mortgage’ and it approves up to 90% of the purchase price based on stated income. The following is a quote from the website, “We approve your mortgage based on your strong personal credit history and your stated income, not just what’s reported on your Canada Revenue Agency Notice of Assessment.” I am not sure where to begin with this, a financial institution is actually rewarding individuals who choose to cheat on their taxes. Never fear though, CRA auditors are now staking Vancity branches in tinted SUV’s. (Source: Vancity Website)

Noverra Stanley Cup Prediction Odds
Noverra has developed a predictive model for the 2011 Stanley Cup Playoffs.  We are well into the third round with the Canucks leading the Sharks 2-0, and the Bruins leading the Lightening 2-1
Team
Wins
Odds
VAN
5345
0.9 : 1
SJ
602
15.6 : 1
BOS
3165
2.2 : 1
TB
888
10.3 : 1

We update the model every day as the odds for each team change even as other series progress.  As the series’ progress we will see changes in each team’s odds not just for their own performance but the other series as well.  This is a key week for Vancouver for the first time they fall below even money odds; they are now more likely to win the Stanley Cup than lose. (Source: Mark Harrison, Noverra Capital Partners)

Enjoy the sunshine and please don’t hesitate to forward this email. Have a great day,

Sam

Friday Finance Weekly 7TH Edition (May 13, 2011)

Hi folks and welcome to the 7TH Edition of Friday Finance Weekly. Lots of interesting technology related news this week and since I am on vacation I’ll make this short and sweet.

Last week Skype was being courted by both Google and Facebook, but this week Microsoft was the victor. The market however was very surprised by the final purchase price of $8.5B vs. the $6B Skype was expected to get. Good news for our CPP fund as they tripled their $300M investment in Skype. Harper has yet to comment on reducing CPP rates going forward. Not to be out done this week, Google is planning to revolutionize the PC market by providing hardware as a service. Starting June 15th, Google & Samsung have teamed up to provide a Netbook for a fixed price of $20 a month. This price will include subscription services to Netflix, Hulu and Google Documents. In addition to the software, the monthly service will provide lifetime hardware upgrades as they become available. The market however didn’t have a material reaction to the news as the Google stock has barely moved. Mark Zuckerberg is looking for his second movie and in true Gossip Girl fashion, hired a PR firm to create false propaganda questioning Google’s privacy. ABC is planning to cancel Grey’s Anatomy with a new show called Cyber Wars, Who Left That Fingerprint on My Screen. (Source: Techcrunch/New York Times)

The world’s largest (in terms of stores) fast food chain, McDonald’s is getting a billion dollar make over.  Iconic Golden Archers are being replaced by subtle signs and the fiber-glass inspired interior is being revamped. This upgrade should be completed by 2015. One is however baffled by comments made by McDonald executive Max Carmona: “We’re not trying to be Apple, but we can be inspired by them. When you’re inside an Apple Store, you almost feel like you’re inside an iPad — and you want to stay there. We want people to walk into McDonald’s and have the same feeling.” I can’t imagine anybody wanting to stay inside an iPad, but I can see the appeal in being stuck inside a greasy burger. Never fear though, you will soon be able to use your iPad while eating a burger as Wi-Fi is coming to McDonalds. UBS has however said that this upgrade will be a potential game changer and it may be a good idea to buy some McDonald stock for long-term appreciation. (Source: USA Today)

Noverra Stanley Cup Prediction Odds –
Noverra has developed a predictive model for the 2011 Stanley Cup Playoffs.  The third round is about to start and there are four teams left.
Team
Wins
Odds
VAN
3890
1.6 : 1
SJ
2020
4.0 : 1
BOS
2572
2.9 : 1
TB
1518
5.6 : 1

We update the model every day as the odds for each team change even as other series progress.  As the series’ progress we will see changes in each team’s odds not just for their own performance but the other series as well.  Statistically Vancouver and Bostonare the better teams.  Therefore, if Tampa Bay wins games and looks more likely to win in the East that would be a theoretically better result for whoever wins the West.  Let the games begin.
Go Canucks Go! (Source: Mark Harrison, Noverra Capital Partners)

Have a fantastic weekend and please feel free to forward this email. Many thanks,

Sam

Friday Finance Weekly 6TH Edition (May 6, 2011)

Hi folks and a warm welcome to the 6TH Edition of Friday Finance Weekly. Unless you’ve been living under a rock, it’s impossible to have missed the biggest news story of the week and probably the year, the elimination of the most wanted terrorist. Osama was crowned the world hide-and-seek champion on Sunday, but alas he won’t be able to receive the prize in person.

There is a new website called Intrade that lets you trade on world events. This service is presently in its beta stage but is quickly gaining traction. Some of the things you can bid on right now include, likeliness of a terrorist WMD attack, Putin running for president of Russia in 2012, likelihood of Gadaffi being overthrown, an attack on Iran by Israel/US or the winner of American Idol. In fact if you took a bet on if Osama would be caught within 6 months of the 10 year anniversary of September 11, you would have made a 2,500% return. Alas there isn’t enough trading volume to have made a fortune. This site is great for time wasting as you can look at broad predictions in the market. Obama for example has a 62% chance of getting re-elected in 2012. Perhaps we can post a bet on if Lindsay Lohan can stay out of jail for over a week, any takers? (Source: Intrade)

Skype is in high demand these days as rumors circulate that Facebook is making a bid. Facebook has the deep pockets and ability to purchase Skype and it will be a natural fit to their Facebook Chat service. Not to be out done, Google is also said to be interested in acquiring Skype.  As of March 31, 2011 Google had over $30B (yes that right billion) in cash on their balance sheet, and an acquisition of Skype will barely make a dent in their reserves. Analysts are however concerned that Google has lost its innovative culture and is taking the acquisition path to growth. While this is a tried and true strategy, its long term prospects remain questionable. Soon you will be able to talk, text, tweet, Facebook status update, face time and do your make up while driving. (Source: Masable / Google Finance)

This week Statistics Canada adjusted the manner in which inflation is measured but adjusted the basket of goods under consideration. Products/services such as smartphones, tablet computers, lawyer fees and funeral services have been added to the list. There is however genuine concern as to how this will work in a practical sense as technology is generally getting cheaper and better. The matter is further complicated by the fact that technology generally has a short lifespan. Never fear though, lawyers have generously agreed to increase their fees to ensure that inflation remains positive. (Source: Globe and Mail)

Hockey Mathematics:
Noverra has developed a predictive model for the 2011 Stanley Cup Playoffs.  Now that we are deep in the second round we see a clear pattern that favours the current series leaders.  This makes sense of course since each series is either 3-0, 3-1, or over.  We ran our simulation 10,000 times and the winners of the Stanley Cup were:
Team
Wins
Odds
VAN
3585
1.8 : 1
NAS
185
53.1 : 1
SJ
2033
3.9 : 1
DET
79
125.6 : 1
BOS
2468
3.1 : 1
PHL
154
63.9 : 1
TB
1496
5.7 : 1

We update the model every day as the odds for each team change even as other series progress.  Vancouver winning last night for instance raised their chances of winning the cup of course but they also lowered everyone else’s, this is because each other team is now more likely to face Vancouver in future series and as we all know Vancouver is the best team. Next week the second round will be over and we will be down to four.  Go Cancuks Go! (Source: Mark Harrision, Noverra Capital Partners)

Have a fantastic weekend and please feel free to forward this email. Many thanks,

Sam

Friday Finance Weekly 5TH Edition (Apr 29, 2011)

Greetings folks and a warm welcome to the 5TH Edition of Friday Finance Weekly.

Canada has been praised for having high mortgage underwriting standards and is regarded as the leader in this sector. Vancity however seems to have come up with a new name for sub-prime lending; the Springboard Homeownership Plan. This ‘made in America’ mortgage solution will bring home ownership to the masses by providing individuals living in low-income/non-profit housing a chance to finance a property purchase at 100% and up to a maximum of $300K. It is a 2 part loan consisting of an interest free loan payable over 10 years for 20% of the purchase price and the remaining 80% payable over 25 years. Considering that Vancouver home prices are generally over $300K, this isn’t expected to be a problem, but Obama is setting aside bailout funds just in case. (Source: Vancity Website)

Groupon probably regrets not taking the $6B offer from Google, as Facebook is launching a product that will directly compete with them. The service is called ‘Facebook Deals’. This system has the potential to integrate with your smartphone’s GPS to find deals close to you. Presently it’s being tested in Atlanta, Austin, Dallas, San Diego and San Francisco. Groupon always had first mover advantage but without a distribution partner, their business model was easy to duplicate so its long-term prospects were limited. Google is also developing their Google Places application to support deals/coupons. Retailers should be careful about constantly offering deals and coupons; GM did this to drive up sales a few years ago and can’t seem to get out of it. Their cash back deals and steep discounts are the norm which has materially impacted their margins. (Source: Facebook.com)

Chrysler is in the process of fully repaying $7.53B in loans to the Canadian and US Governments. After repaying the loans, the plan is to take Chrysler public in an IPO and merge it with Fiat out of Europe. The reduction in loan payments will eliminate $270M in interest payments. GM tried the same strategy earlier this year and while the shares are down from their IPO levels, the results have been fairly positive. One has to wonder however if the marketing department and business unit are communicating effectively at Chrysler. The advertisements for the Chrysler 200 feature the strong built in America (nation built on steel, muscle and sweat) message delivered by rapper Eminem, yet the company is to be sold to Fiat. Also on a side note, Eminem’s favorite car is the Audi R8. (Source: Business Week)

Hockey Mathematics:

Roberto Luongo is a frequent target of fan ire whenever the Vancouver Cancuks make missteps in the playoffs.  This year was no exception as the Canucks were literally life and death to pass the first round.  Is this criticism of Luongo fair or are there other Cancuks more deserving of being called out?  No and yes it turns out.

In terms of their playoff performance relative to their regular season performance the Sedin twins are much less productive come playoff time while Luongo is almost exactly the same.

Roberto Luongo 

Career Stats Regular Season Playoffs
Goal Against Average 2.53 2.47
Save Percentage .919 .918

The playoff version of Luongo is statistically indistinguishable from his regular season version.  Now what about the Sedins…

Daniel Sedin

Career Stats Regular Season Playoffs
Points 651 49
Minutes Played 12,705 1,247
Points / Minute Played 0.0512 0.0394

Henrik Sedin

Career Stats Regular Season Playoffs
Points 666 49
Minutes Played 13,608 1,304
Points / Minute Played 0.0489 0.0376

As a final note there is no difference in the amount of scoring between the regular season and playoffs league wide.  In 2010:

Regular Season (playoff teams only) Playoffs
Games Played 1,313 178
Goals Scored 3,863 532
Goals / Team / Game 2.944 2.989

The Sedin brothers are both much more productive regular season players.  If the Sedins had matched their regular season performance in the playoffs it would have resulted in some additional wins for the Canucks and likely a deeper trip into the playoffs than they otherwise were able to achieve. (Source: Mark Harrison, Noverra Capital Partners)

Have a fantastic weekend and please feel free to forward this email. Go Canucks Go!

Many thanks,

Sam

Friday Finance Weekly 4TH Edition (Apr 22, 2011)

Welcome to the 4TH edition of Friday Finance Weekly. Most of you are on vacation today, but I wanted to ensure you remained entertained on the first long weekend of 2011. But it begs the question, isn’t every Friday a Good Friday?

Apple is back in the spotlight in this edition due to some litigation it is involved with. Last year Apple spent $5.7B in buying components from Samsung and this included semiconductors and displays. In fact the much touted Apple retina display contains Samsung parts. Well, now Apple has decided to sue Samsung for allegedly copying their technology and branding it under Samsung products. Analysts are however wondering how Apple will be able to keep up production of the iPhones, iPads and other cool gizmos if there is a long-term dispute. Normally one would say ‘don’t bite the hand that feeds you’ but in this case both Apple and Samsung are power players, so the outcome will be interesting. (Source: Gizmodo)

McDonalds is hiring 50,000 people in one day in a National Hiring Day. While the media has been all over the story, especially since 13 million Americans are unemployed there are a few things to remember. Firstly summer is always busy for McDonalds as those delicious McFlurries so they always hire around 50,000 temporary employees. This time however all the hiring has been compressed into one day. Also, most of the temporary employees will be students so it won’t make a dent on American unemployment. McDonald earnings have beaten the mark and global profits have increased 11% in the first quarter of 2011. (Source: CNN & Post Bulletin)

Vancouver housing prices have been in the news this week as it is skewing Canadian housing prices. Elsewhere sales in the trendy Hamptons area were down last year. One would think that the economy would be culprit, but we would be wrong. It’s good old Mother Nature causing havoc by way of vicious winter storms, grounding folks from Manhattan. In fact Mother Nature is responsible for a 22% decline in housing prices for the first quarter of 2011. American politicians can now blame greedy Wall Street bankers and Mother Nature for their chronic debt problems. (Source: Bloomberg)

On the lighter side of things, India is facing serious economic challenges and its not from inflation or currency controls issues. The main culprit this time is ants. In the city of Lucknow (yes this is a real town and unfortunately they don’t have casinos there) ants ate through 10 million rupees (USD $222,000) despite the fact that the cash was stored in a steel cage. Police have arrested bank managers for negligence and an arrest warrant out is the ant queen. (Source: MSNBC)

Have a fantastic long weekend folks. Many thanks,

Sam

Friday Finance Weekly 3RD Edition (Apr 15, 2011)

Welcome to the 3RD edition of Friday Finance Weekly. I was a little late in putting the last one together and I apologize in advance.

Air Canada is set to launch a new discount carrier to compete in popular destinations such as Mexico, the Caribbean and Europe. Reports have indicated that the new carrier will run with a completely different cost structure and even pilots are being asked to reduce their wages. In an industry with already tight margins, another low cost competitor will be a headache for incumbent operators such as Air Transat. Given the fact that Air Canada got back in the black recently, such a capital intensive expansion is questionable. That being said, Qantas in Australia has been successful with a similar strategy and launched an airline named Jetstar. Air Canada’s ‘discount’ airline will now be charging for oxygen usage on flights, so hold your breath for as long as possible. (Source: Toronto Star / Globe And Mail)

Shaw Cable was in the process of moving into the cluttered wireless space and announcements this week indicate that they have slowed this deployment. The wireless telecom space is already cluttered and Shaw had initially planned to roll out by late 2011. Sanity has returned to the Shaw group and they have given no insight to the new launch date, simply stating that it has been ‘delayed’. In addition to the heavy competition, Shaw was to launch a 3G network which would have been obsolete as Long-Term-Evolution (LTE also known as 4G) is being launched this year. Telus is now seen as the leader in television with their state of the art Optik TV service and analysts would prefer to see Shaw focus on improving their core services. In addition to having a sophisticated PVR service, Telus gives you the ability to inform the world of your TV watching habits through Facebook.  Doctors will now be able to accurately diagnose ADD by following the frequency at which your Facebook status changes. (Source: Mobile Syrup)

Get ready for long lines at the mall as Apple is set to launch the white iPhone 4 in the next couple of weeks. This comes after a 10 month delay caused by manufacturing issues. The white iPhone 4 is identical to the existing iPhone, but the Apple faithful have been counting down the days. Apple shares received a small lift and with the iPhone 5 rumored to be coming out in September, their earnings are set to be strong. On another note RIM is facing a lot of slack for the new Playbook (competitor to the iPad) that is just being launched and co-CEO of RIM, Mike Lazaridis went loco on the media when asked about their situation in India. (Source: Bloomberg)

A study in the US has indicated that the carbon footprint of growing marijuana in the US is $5B dollars. So in an ironic twist all the hippies smoking up are in fact contribution to global warming.  At least we know that the war on drugs in the US now has a green element to it. (Source: US Department of Energy)

Have a great weekend and please drop me an email with your comments. Many thanks,

Sam

Friday Finance Weekly 2ND Edition (Apr 8, 2011)

Thanks again for the positive comments regarding the first newsletter and a warm welcome to the 2ND edition of Friday Finance Weekly.

Telus has resurrected an old brand name, Clearnet to combat the surge in cellular operators. Clearnet will only be available in BC and AB. It will feature unlimited calling plans for $45 and $55 a month. The resurrected brand will be in addition to Koodo which is also owned by Telus. Market analysts aren’t convinced that running three brands for Telus will be cost effective and this is demonstrated by its limited impact on the stock price. Other discounted brands such as Chatr Wireless, Fido, Solo and Virgin Mobile are owned by Rogers or Bell. There is speculation that new independent mobile operators such as Wind Mobile and Mobilicity may have to merge in order to compete in the long-run. (Source: National Post)

Following up on the bankruptcy of one of Canada’s largest franchise holders for Pizza Hut and its related companies, it looks like our very own Aquilini group is making bid. They presently own over 44 franchises through a related company named PH Restaurants, so acquiring more licenses will be a natural extension to their business. No word on if Canuck fans at Rogers Arena will benefit from discount pricing as a result of economies of scale. (Source: Business in Vancouver)

Blockbuster has been under bankruptcy protection the last several months, and Dish Network in the States has won in a bidding process. Total sale price is around $320M, but at the time of bankruptcy the total outstanding debt was around $1B. Blockbuster operates over 1,700 retail locations and has over 16,500 employees in the US. Over the last several months Blockbuster has been pushing into the online video-on-demand market with a service similar to Netflix. Instead of fixed monthly fees however, Blockbuster charges $3.99 to stream newly released movies. Dish Network will be the only TV provider having exclusive access to an online streaming video service and there is obvious long-term strategic benefit. (Source: Reuters)

On the lighter side of things, a company in Anaheim, CA named Adzookie is willing to pay your mortgage. There is however a catch, it will be painted in bright color and showcased as a billboard. Minimum commitment is three months and should you choose to cancel they will paint your house back to its previous color. So far there have been more than 1,000 applications and with a $100,000 initial marketing budget time is running out. (Source: CNN Money)

Have a great weekend and please drop me an email with your comments.Many thanks,

Sam

Friday Finance Weekly 1ST Edition (Apr 1, 2011)

Welcome to the inaugural issue to Sam Perera’s Friday Finance Weekly. I know you are very busy and as a result I am putting together a weekly email to keep you in the loop of interesting things in the world. Topics will include finance, economics, social commentary and world events. The occasional random topic will also be included.

Electric cars finally seem to be mainstream after President Obama announced that the federal government will gradually shift to electric cars over the next several years. No comment on if the sleek black SUV’s used by the secret service will be replaced. In addition Morgan Stanley upgraded luxury electric car maker Tesla and their shares have surged of the last couple of days.

Blackberry is facing some heat in the market as investors are worried about its long-term prospects. Tech blogs and magazines have indicated that the new Blackberry Tablet is outdated even though it hasn’t been released. Its biggest asset is Blackberry Messenger (BBM) and rumors of BBM being available on the iPhone/Android phones have officially been denied. While not being overt it does appear that Blackberry is moving to become a major service provider by getting into cloud computing and offering servers space. They already have one of the most robust email engines and offering BBM as a subscription service wouldn’t be a bad idea.

Canadians better get their KFC, Taco Bell and Pizza Hut fix quickly. Primary franchise holder (Priszm) has filed for creditor protection.  It is noted that the subject brands have been slow to react to the growing trend for healthy eating. This is illustrated by the fact that Subway is now the world’s largest fast-food provider, surpassing McDonald’s earlier this year.

Tragic events in Japan will cause a boom for Canadian business in the forestry sector. This is especially true for companies in BC and AB that a produce high quality lumber, in-line with Japanese building codes. Approximately 70,000 buildings were damaged in Japan and orders in West Coast mills have already started to increase.

Uranium prices are expected to increase after being hammered due to the nuclear power problems faced by Japan. Look for Uranium One (Ticker: UUU) to increase in the long run as there are no plans for China to curb their nuclear power projects. China is expected to spend $76B on nuclear energy projects by 2015. Other uranium companies that may profit include, Rio Tinto (RIO), Global X Uranium (URA), Paladin Energy (PDN) and Uranium Participation (T.U).

On a lighter side of things, Somali pirates are having an inventory sale. Hostages are an expensive business and individuals held for over a year are being discount at 20%-30%.

Have a great weekend and please drop me an email with your comments. Many thanks,

Sam