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Who is a Whistleblower?

May 28, 2018May 28, 2018

Whistleblowing is the act of drawing the public’s attention to corruption or any other lawlessness that took place, usually within a company. The term is referred to colloquially as ‘informa’ but the standard name for them is known as a whistleblower.

Publicly shunning a whistleblower is a cultural practice that seems to continue for generations, where the backlash that follows is sometimes more severe than the crime. This is not a good practice as oftentimes, it is to the demise of a person’s life and property.

This is evident in the recent scandal surrounding Facebook, where user information was passed on to data research firm Cambridge Analytics and misused to lobby persons to vote for Donald Trump. The whistleblower that revealed this information, had the public’s interest at heart, wanting others to be aware and cautious when using or providing information on this social media platform. As a result, shares in Facebook have plummeted, reflecting that investors have lost confidence in the company. Whether temporary or not, Facebook Inc has taken a hit.

In 2012 a Protection Act was implemented in Jamaica to encourage a culture of whistleblowing. This would allow employees to disclose information about their employers or colleagues, if they have any reason to believe that misconduct occurred or will occur. Here, the identity of the person will be withheld, and the process sped up to allow for quick turnaround time. This therefore shows that the company must have efficient systems that allow for this culture to be adopted and staff members that are able to keep information among those who should know.

Jamaica has even implemented an anonymous tip hotline, Crime Stop, that secures the user’s phone number, to disclose any information about anyone they have suspected or know has conducted illegal activities.

Companies can discuss adding incentives for those persons who have spoken out about wrong doings and caused action to be taken, as a way of encouragement.

Stop the informa culture! Let us get in the habit of speaking up for the betterment of our people, companies and country!

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Under Armour’s CEO Has Got To Go

January 25, 2018May 8, 2018

Under Armour’s [NYSE: UAA] stocks performed poorly in 2017 and to be honest 2018 is not looking any better.

And guess what?

Investors know this. Market sentiment about the apparel company is so low that it is practically non-existent.

Under Armour’s shares have declined over 45% in 2017 while competitors such as Nike [NYSE: NKE] have increased. The company’s underperformance and rising debt levels remained a concern.

The overvalued company has consistently revised its estimates down for 2017 and yet still managed to miss these estimates time and time again.

In a press release, management announced plans to restructure the company with the hope of having a better year, but I wonder does that include giving their CEO Kevin Plank the boot?

Kevin Plank, a PR nightmare, does more harm than good to the company’s bottom line. Between his comments regarding U.S President Donald Trump and his involvement in Plank Industries, I am starting to wonder if Plank is serving UAA’s best interest.

Assuming the new U.S. corporate tax reform benefits the company, it will be futile without a drastic change in leadership.

Don’t get me wrong, Kevin Plank’s vision stands to benefit shareholders long-term. However, the lack of aggressive growth and crumbling balance sheet makes investors itch to dump the stock.

Under Armour’s current focus on endorsements, acquiring fitness apps and restructuring leaves the entity unable to challenge both the rising Adidas and the dominant Nike.

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Ciboney, It Is Time To Say Goodbye to JSE

January 25, 2018May 8, 2018

It seems so long ago that the investor of hotel properties, Ciboney was a household name in Jamaica. The out-of-business company has yet to recover from falling into debt despite selling off the majority of its assets to fulfil its debt obligations.

Ciboney’s primary asset, a 6.56 hectares of beachfront property in Westmoreland valued at approximately J$250 million, was recently sold to Green Forest Limited for J$249 million.

FINSAC, who owns 72%, has held on to the Culloden property in the hopes that the company or property will catch the eye of no doubt aggressive investors, despite the rising debt levels.

According to the Group’s August 2017 statements, the company’s net current liabilities have increased by 9.44%, while assets have declined by 7.4% when compared to the same period last year, respectively.

While it remains unclear what Green Forest Limited plans to do with the property, my bet is on villas, the question remains.

Should we be expecting a delisting from the Jamaica Stock Exchange in 2018?

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The Future Of Oil

January 25, 2018May 8, 2018

The oil market has never looked more stable in years as it does now.
Oil prices are set to end the year with a bang and everyone is looking at 2018 with wonder.

What to look out for in 2018?

U.S. shale growth

U.S. shale output will continue to rise but by how much is uncertain. There have been numerous red flags that raise a lot of questions about the health of the shale industry. As operation costs increased, drilling companies are reporting losses which illustrate that the industry’s break-even price has been grossly miscalculated. The IEA reports suggest that shale will rebalance next year.

OPEC playing nice

OPEC production declined in November for the fourth consecutive month. The group’s compliance rate with the production cuts is at 115%, the highest number yet, this is a positive sign heading into 2018. It is expected that OPEC will extend the production cut agreement into the second quarter of 2018.

Inventories

OPEC’s strategy will primarily come down to what happens to global inventories. The stock surplus is now at about 100 million barrels more than the five-year average, down two-thirds from the start of 2017. It’s likely that the excess will be erased at some point in 2018.

Unexpected outages

All of these forecasts and predictions will become void if supply disruptions occur. Forties, the largest oil field in the North Sea, shut down recently due to cracked pipelines and could be closed for weeks. This incident highlights the type of event that can catch the oil market by surprise, leading to sharp and sudden price increases even if all seems well elsewhere in the world.

Venezuela remains a concern as the oil producing company production declined by 42,000 bpd. Current output is at a 30-year low and is anticipated to get worse before it gets better. Other countries like Nigeria, Iran and Libya can have serious implication for the oil market if a conflict arises. It only takes one significant disruption to upend the most carefully crafted oil forecast.

That said we remain optimistic and estimate that Brent will hit the $60-$65 per barrel mark next year.

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DOW rose 5,000 points in 1 year

January 25, 2018May 8, 2018

The Dow Jones industrial average just did something it has never done in its 121-year history.

The 30-stock average is now up more than 5,000 points in a year, marking its biggest annual-points gain ever.

The Dow also notched a record close for the 70th time this year, which is another milestone. To put that into perspective, it means that about one of every four trading sessions this year has been a record close for the index.

The Dow, along with the S&P 500 and the Nasdaq composite, has had a banner year, rising 25.5 percent. The S&P 500 and Nasdaq are up 20.2 percent and 29.9 percent, respectively.

To be sure, most of the big point moves are in recent years for an apparent reason: The Dow is much bigger than it was decades ago. So investors should keep this point move in perspective.

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FosRich Listing Ceremony

January 25, 2018May 8, 2018

FosRich Company Ltd executed a successful initial public offering, closing one minute after the offer opened on December 4, 2017.

FosRich, incorporated in 1993 by Cecil and Marion Foster, is Jamaica’s premier distributor of lighting, electrical and solar energy products.

The listing ceremony was held on Tuesday, December 19, 2017, at the Jamaica Stock Exchange.

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The Fed says, “One More.”

January 25, 2018May 8, 2018

As predicted, the U.S. Federal Reserve Fed voted on December 13, 2017, to raise the interest rate from 1.25% to 1.50%. The committee believes the labour market has continued to strengthen and that the gradual increase in rates will stimulate economic activity.

This is the fifth time the Fed increased rates since the financial crisis of 2008.

The outgoing Fed chair, Janet Yellen, will say goodbye to the committee on February 3, 2018, and all eyes are now on the incoming Trump-nominated chair, Jerome Powell.

The year 2017 has been an unprecedented one. On the one hand, inflation is low and stagnant suggesting the Fed should delay raising rates. On the other hand, economic growth and declining unemployment indicate increase rates. The policymakers are charged with playing “Goldilocks“, keeping rates not too high, not too low, but just right!

I do expect at least two rate hikes in 2018, as the Fed strive to stimulate economic growth of 2.5%, a revision from 2.1% previously forecast.

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2018 Quarter 1 Outlook

January 25, 2018May 8, 2018

There has been some debate about the outlook of the economic cycle. Some will argue that we are at the peak of the bull market, we wholeheartedly disagree.

The U.S. economy is now in what we economist like to call the late-cycle. Growth peaks and accelerated inflation are two characteristics of the late-cyle, demanding attentiveness from investors.

We believe the economy is supportive of further upside for asset markets.

During the year 2017, investors witness the most coordinated above-average global growth performance in a decade. Market indicators suggest this pattern will continue in the first half of 2018, but it is undoubtedly not without risk.

Outlook & things to watch for 2018:

Oil supply
Unemployment rate
Federal Reserve
Brexit
Trump Administration

The focus for most central banks globally is maintaining stability while simultaneously avoiding asset bubbles.

What does this mean for asset allocations?

We believe the current cycle reinforces our recommendation to diversify across asset classes, sectors and geography.
Historically, stocks outperform other assets during this period and we see no reason for this to change.

We expect the Fed, regardless of leadership, to raise rates modestly. That being said, a balanced portfolio of stocks and bonds will provide the best outcome for investors in our opinion.

The most significant risk for investors in navigating this cycle is exiting too soon. The late-cycle equity returns are often substantial, and the opportunity cost of missing out can more than offset a drawdown that might be subsequently avoided.

Investors should pay keen attention to policies, market sentiments as well as be vigilant in this market.

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Disney Takes Over Fox

January 25, 2018May 8, 2018

Move over AT&T-TimeWarner!
It’s official, Walt Disney has inked a US$52.4 billion deal to acquire 21st Century Fox.

News broke this morning that Disney has acquired Fox studios which now brings the top six studios to five. Therefore, Disney has maintained its lead obtaining 39.6% of the box office market share. The deal is subjected to antitrust regulation, similar to AT&T-TimeWarner, which will take two years to be approved.

Why a merger?

According to the official statement released, the consolidation will help Disney-Fox create movies that dominate the box office, as they share intellectual property.

What do I think?

Disney’s target audience has always been family-friendly while Fox has the leg up on reality TV which viewers gravitate to.

This merger also means job cuts and other cost-cutting measures as Disney feels the pressure of declining viewerships. Tech companies like Netflix and Amazon.com who offer online-streaming services have forever shifted the traditional TV viewership. Furthermore, sports enthusiasts will be impacted as well since Disney now has the monopoly and can now force higher fees for ESPN which will trickle down to its customer base.

Should you buy?
Despite this news, Disney is NOT a buy for me.

In Q4 of 2017, Disney reported lower-than-expected results and the company’s operating income is down by 11% year over year.

The stock is currently overvalued at 18.1x P/E compared to the industry P/E of 13.02x.

Need I say more …?

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SnapChat, A Waste Of Money

January 20, 2018May 8, 2018

We all can remember Snapchat and their grand entrance on the stock market when they launched their IPO in March of this year. They had the biggest IPO since Alibaba Group Limited, raising a whopping US$3.4 billion. The IPO price of US$17 quickly rose to US$24 on the stock exchange market just 24 hours after being listed. However short-lived, the stock price fell below the IPO price three months later, and it has been a roller coaster ride ever since.

Snapchat has been competing with social media giants Facebook, Instagram and Twitter but it is crystal clear who is winning. Facebook recorded 1.34 billion daily users while snap only recorded 134 million for their entire third quarter.

Snapchat has plans to redesign some features of the app and introduce a live feature similar to that of Facebook and Instagram. Despite the discovery feature, where companies place ads, Snapchat is a long way from competing with Facebook and Instagram in the ads market.

Snapchat’s revenue year to date has increased from US$404 million to US$705 million. However, the company’s net income is US$-3265 million, an alarming -463.2% deficit.

With a -102.8% in return on equity and a -92.2% return on assets, I remain concerned about the management team. It came as no surprise when critical executives of Snapchat Inc. resigned.

Currently, NYSE: SNAP is trading at US$14.75, a little above its fair value of US$14.00.

No need to get excited.

Given Snap’s significantly lower user base, the firm is more vulnerable than Facebook. A decline in digital ads would hurt Snap’s revenue growth more than that of its competitors and could delay or change the firm’s path toward profitability.

While buying any security has risk, SnapChat, in my opinion, is an unnecessary one not when there are better performing competitors like Facebook and Google.

Do you agree?

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Facebook signs deal with Universal Music

January 20, 2018May 8, 2018

Facebook has taken its first step in competing with other music rivals such as YouTube by today signing a multimillion deal with Universal Music Group (UMG). The deal allows Facebook users the opportunity to share and listen music without breaching copyright laws. The deal was also extended to Messenger, Instagram and Oculus Rift. While the deal was initially signed to prevent copyright infringement, it may possibly allow users to also gain access to a compilation of music across different genres in the future.

Facebook’s plan is to create a unique social feature for music once users upload them from Universal Music, creating personalized experiences through interaction with musicians. This deal seeks to create a dynamic relationship between the music industry and social media platforms while also advancing the interest of artists, entertainers and songwriters.

Before this deal, Facebook was forced on multiple occasions by Universal Music to remove various posts including covers of popular songs. Chairman and CEO of Universal Music Group, Lucian Grainge, sees this described the deal as flexible as it offers a balance between how music is offered to the public and how artists are compensated.

This is just another step by the social media giant to revamp and improve its services to its users. I am positive this will be well received by users and could possibly increase the stock price for Facebook in the coming months. The company is currently trading at $177.45.

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GraceKennedy to provide more Jobs

January 20, 2018May 8, 2018

GraceKennedy (GK) is looking to provide an estimated 90 jobs for Jamaicans as the company plans to open a new manufacturing space by mid-2018. The company has leased 60,000 square feet of space from the Factories Corporation of Jamaica in order to increase production of canned and frozen vegetables. The manufacturing space located in Denbigh, Clarendon, is expected to be in operation by August 2018.

With plans to add products such as cassava, breadfruit, green plantains and ripe plantains to the production line, GraceKennedy hopes to create multiple jobs for locals. Not only will jobs be provided in the manufacturing aspect of production, but also externally. Produce will be purchased from local farmers on a contract basis with quantities predicted to be increased over time. This will be a great opportunity for the local Agricultural Sector to capitalize on.

The facility leased is already being used to store production equipment but will be ready for mass production of canned and frozen foods once upgrades are completed next year. These items will be marketed and sold both locally and internationally under the GraceKennedy brand.

GraceKennedy’s performance on the market has not been very exceptional for 2017 as the company recorded a loss of 19% in profit in its second quarter compared to its 2016 performance. However, for the quarter ending September, GK experienced a 1.4% increase in net profit to move from $3.7 billion in 2016 to $3.75 billion. It’s safe to say GK has been relatively volatile throughout 2017 making investors uneasy and quite cautious but if you are an aggressive investor why not take the risk? It is a bit risky but nonetheless a solid stock to consider investing in or holding on your portfolio. GraceKennedy currently trades at $43.

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Tis the most wonderful time….to buy stocks

January 20, 2018May 8, 2018

It’s the most wonderful time of the year to purchase certain stocks. With increases in holiday shopping and spending, the Christmas season is said to be one of the most profitable holidays throughout the year for retailers especially. There are increases in sales whether online or in stores. Smart investors capitalize on this by investing in certain stocks before the holiday, not after. Here is a list of 4 stocks you may want to consider buying before the holiday has passed.

Amazon – The Company’s performance last year in terms of sales for the Christmas season was the best of all retailers online and is predicted to be even better this year. Amazon is said to capitalize on increased toy sales as their competitor, Toys R Us, filed bankruptcy recently. The online retail giant recorded a whopping $4 million in toy sales for 2016, with more than a third of that sale for December only. Additionally, Amazon accounted for up to 50% of online sales during Black Friday recently. Therefore, it is not surprising that the e-commerce giant is a recommended stock for this Christmas.
Apple – Apple is expected to profit from the recent acquisition of Shazam, the popular music recognition app in the coming weeks. Furthermore, with the increased sales for the IPhone X from 68% last quarter to 72% in September, Apple is predicted to be consistent in sales for the season.
NVIDIA – For this visual computing company, the stock price more than doubled this year. It is currently trading at $197. The stock is predicted to continue rising in price at least for the next year.
FedEx Corp – The package delivery company is on target for another record holiday-shipping season. Today, it reported an increase of 1.4% and is currently trading at $242.54. Compared to a year ago, the stock price has increased by 30%. This is due to the increase in online shopping for the holiday.

Investing in these stocks is worth taking advantage of for Christmas. So instead of painting or probably changing furniture for the holiday, why not consider investing in your future.

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NCBFG acquires Guardian but prices are going up

January 20, 2018May 8, 2018

It has been an excellent year for the regional powerhouse National Commercial Bank Financial Group NCBFG shareholders as they enjoyed the growth in price from March 16, 2017, at J$63.00 to November 13, 2017, at J$107.74.

It was certainly not surprising when NCBFG made a takeover bid for Guardian Holdings Limited after acquiring 29.99% in May 2016.

In anticipation of the takeover news, the price of NCBFG declined by 16.74%, typical for any firm acquiring another entity. In fact, sounds like a great buying opportunity for investors.

On Monday, December 11, 2017, the price of the stock went the opposite direction hitting the J$100.00, contradicting the typical market behaviour when these transactions occur.

The acquiring company’s stock will experience short-term decline of their stock price while the targeted company’s stock will rise.

So why is NCBFG going the opposite direction?

The answer is simple.

You.

Investors.

Investors are bullish on the conglomerate as they reported a net profit of J$ 19.1 billion as of September 30, 2017, a 32% increase over same period last year.

Investors have been enjoying over 100% increase in capital growth, and they don’t want it to stop. With this acquisition of Guardian and Clarien Group, it is obvious NCBFG has big plans for 2018.

Are you ready …?

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Lasco discontinues some Unilever products

January 20, 2018May 8, 2018

Lasco Distributors Limited (LASD) has discontinued its distribution of Unilevers dry food and cold storage brands today. This means Lasco will not be distributing brands such as Red Rose Tea, Lipton, Breyers Ice Cream, Flora, among other products. However, the company will continue to distribute Unilevers Home and Personal Care brands such as Breeze, Dove, St. Ives and Axe to name a few. The decision was made in an effort to reduce operational costs and to improve logistics and the efficiency of Lasco’s service.

Unilever Food Portfolio represents 28% of its business but for Lasco Distributors, the distribution of Unilever brands adds up to an estimated 1% of the business.

Lasco has been revamping and improving efficiency right across the board recently in an effort to increase the company’s profitability. Lasco spent $725 million to expand their warehouse in White Marl by 100,000 square foot recently. Compounded by several upgrades which were made to Lasco’s IT system, the company’s expenses have been increased significantly. Furthermore, LASD performance has been affected by expenses it incurred for legal fees paid in relation to the Pfizer case. Lasco was optimistic that the court would rule in its favour US$490.1 million plus interest in damages, after a 7 year injunction from Pfizer preventing LASD from marketing certain pharmaceuticals. The company however received only JA$273 million; a huge setback for Lasco.

Even though LASD experienced a $1.25 billion revenue increase in the financial year ending March 31st 2017, the company’s net profit fell by 14.9% to a total of $609.7 million when compared to 2016. LASD has also been underperforming on the Jamaica Stock Exchange market. The stock price fell by 33.9% between November to December 2017 and is currently trading at $3.99. We are still looking to see how Lasco Distributors Limited performs for 2018 as the company continues to cut costs and improve service delivery.

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Jetcon eyes the Caribbean Market

January 20, 2018May 8, 2018

Pre-owned car dealer, Jetcon Corporation, is well on its way to becoming the first car dealership in Jamaica to engage in the trading of pre-owned cars outside of the country. Jetcon is looking to explore distribution within the Caribbean region. Not only are they looking to sell cars to individuals but also to other dealers. This will be possible as the company has partnered with suppliers in Japan to export large shipments of cars to the island. This shipment will be facilitated by a lease agreement signed between Jetcon and Kingston Wharves Limited (KWL). The lease will provide storage space for the imported vehicles at KWL Tinson Pen complex. Additionally, Jetcon is capitalizing on the opportunity provided in the agreement to bypass import permits and duties.

Jetcon sells up to 100 cars per month locally but is seeking to sell up to 400 cars per month. The lot leased however, can hold up to 800 cars. The company recently increased its inventory to accommodate a wider variety of cars, which paid off financially as Jetcon recorded double digit growth in sales for the September quarter. Net profit grew from $9 million to $35 million as sales doubled from $143 million to $267 million. This is an exceptional growth for the company that was listed on the Jamaica Stock Exchange in March 2016. Jetcon was listed at $2.25 but grew to almost $17 in just four months before experiencing a stock split. Jetcon now trades at $4.70; a positive outlook for the company.

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GraceKennedy’s New Management Team

January 20, 2018May 8, 2018

GraceKennedy’s made changes recently to its management team across all sectors of business, in an effort to bounce back from a weak market performance in the second quarter of this year. The company recorded a loss of 19% in profits from the previous year which was attributed to business expansions. Despite this, CEO, Don Wehby, reported that the company is still on track to improving its operating performance for the rest of the year.

GraceKennedy’s poor performance may be redressed through recent changes to the business’ management team.

Andrea Coy has been appointed Chief Executive Officer of GK Foods International Business. Coy is to manage the manufacturing and distribution of GraceKennedy in the United States of America, United Kingdom, Canada, Latin America, the Caribbean, West Africa and Europe. Wehby lauded her success in locally managing and growing different companies within the group and is confident that she will continue to successfully transform and grow the company internationally.

Ryan Mack, who previously held the position of CEO of GK Foods International, was appointed CEO of GraceKennedy’s Local Business. This includes management of HiLo Stores, Grace Foods and Services, World Brand Services and the Consumer Brands Limited.

Derrick Reckford, who joined the company as a management trainee in 1987, was promoted to Acting President and CEO of Grace Foods (USA). Also, Steve Whittingham, who is currently the Chief Investment Officer of GK Group and managing director of GK Capital Management and Investment, has been appointed to the executive committee of the company. Finally, Margaret Campbell, who previously held the position of Chief Financial Officer for GraceKennedy Money Services the Western Union agent in Jamaica, is now the country manager for that subsidiary.

The company is currently trading at $43 on the Jamaica Stock Exchange and is looking forward to a strong finish in performance for 2017. Time will tell.

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Carreras Named Best Performing Company 2016

January 20, 2018May 8, 2018

Carreras Limited has been awarded the Best Performing Company for 2016 at the Jamaica Stock Exchange (JSE) Best Practices Awards ceremony recently. The Best Performing Company award recognizes outstanding performance by a company through enhanced shareholder value in areas such as profitability, capital efficiency and direct return on shareholdings.

The company has won 8 awards from this area over the past few years from a field of 50 companies listed on the JSE. They also obtained the 2nd runner up placement for Best Website Award for the third time.

This is impeccable for the cigarette distributor despite the challenges it faced whether it was regulatory and economically. In March of last year, the government imposed a tax on cigarettes increasing the excise duty by $3. This decreased sales for Carreras as consumers were more inclined to purchase cheaper cigarettes from bootleggers selling counterfeit cigarettes. Even wholesalers were cashing in on the illegal cigarettes as they were more readily available.

The company has overcome these challenges by revamping its marketing campaigns, expanding the brands it distributes and working externally with control agents to rid the market of smugglers.

The company made an increase in net profit from $3 billion to $3.8 billion for the period ending March of this year and we look forward to seeing the continued success of Carreras on the Jamaica Stock Exchange Market.

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Shazaming with Apple

January 20, 2018May 8, 2018

Music has always been a vital ingredient to the success and growth of Apple. Followed by the acquisition of Beats and the launch of Apple Music in 2014 and 2015 respectively.

Therefore, it came as no surprise when Apple, last Monday, announced that it had bought Shazam.
Shazam, the favourite UK based music app, is one of the first apps to utilise the microphones on smartphones to recognise songs, movies, TV shows and commercials.

Shazam has a considerable user base. The app recorded a whopping 20 million users across the U.S. for November of this year and 4 million in the U.K. Having been downloaded more than a billion times since its inception, Shazam now has over 120 million users worldwide.

Shazam generates its revenue through paid advertisements. They have come up with an innovative way to display ads while users are searching for songs without full-screen interference. Additionally, Shazam makes money through referring users to various music providers, which will apparently be an advantage for Apple.

What does this mean for Apple Inc.?

Buying Shazam means Apple has acquired all the intellectual properties of Shazam which includes the 200 patents the song recognition app was granted.

Currently, Apple [NASDAQ: AAPL] trades at $176.42 on the U.S. market. Apple Inc. was estimated to have brought Shazam for $400 million; the stock price may decline in the coming weeks making it an excellent time for investors to buy.

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