Mark McQueen co-hosts BNN
February 10th, 2012
For those of you who missed it yesterday at 3pm, Mark McQueen was back as a regular guest co-host on the Business News Network’s “Business Day” with Andrew Bell. They talked to Robert Deluce, CEO, Porter Airlines, about the changing Canadian airline industry landscape. Also on yesterday’s show was Mary Simon, National Inuit Leader, President of ITK and her discussion regarding the Inuit wanting to ensure that development happens on their terms. The first segment can be found here.
LFC
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Economy looking up as Banks add $3.3B of commercial loans in December
February 7th, 2012
Things continue to improve in the domestic economy, if you take this stat to mean something. As we try to do each month, here are the updated figures on corporate drawdowns. The category is “Business loans to Canadian residents for business purposes”:
December 2008: $191.563 billion
January 2009: $185.679 billion
February: $183.759 billion
March: $184.089 billion
April: $181.811 billion
May: $178.691 billion
June: $176.365 billion
July: $174.664 billion
August: $173.818 billion
September: $171.152 billion
October: $171.091 billion
November: $168.425 billion
December: $169.430 billion
January 2010: $167.892 billion
February: $168.104 billion
March: $169.495 billion
April: $169.163 billion
May: $166.378 billion
June: $165.369 billion
July: $166.988 billion
August: $164.774 billion
September: $163.976 billion
October: $168.401 billion
November: $168.892 billion
December: $169.170 billion
January 2011: $170.42 billion
February: $171.800 billion
March: $174.028 billion
April: $175.198 billion
May: $173.974 billion
June: $176.527 billion
July: $177.574 billion
August: $177.654 billion
September: $176.856 billion
October: $178.214 billion
November: $176.705 billion
December: $180.526 billion
Last November, RBC CEO Gord Nixon voiced concern about a lack of demand for new loans within the corporate and commercial borrower universe. For the prior five months, he was right. There was a long flat patch that started in June. But $3.3 billion of new net lending in December takes the overall outstanding chartered bank loan book back to levels not seen since April 2009. Unless, of course, IFRS is at work again (see prior post “Did the banks just find $10.4B of new earnings? part 2” Jan 9-12).
If Mr. Nixon were a farmer, he’d be delighted if it were as simple as talking about the lack of rain that brought about a quick end to a drought.
MRM
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$100M CSU block doesn’t feed the ducks
February 6th, 2012
Love it when a plan comes together. Sort of.
The ownership transition has finally begun at Constellation Software (CSU:TSX), with a $100 million block trade deftly completed by TD Securities last Friday. My market buddies believe the 1.1729 million CSU shares came solely from Birch Hill Private Equity Partners, which manages a 20% CSU ownership stake position on behalf of TD Bank’s former Private Equity division. It wasn’t the fee party that would have resulted from the potential $600 million bought deal that I yakked about last month (see prior post “Make your 2012 fee budget — bid CSU” Jan 17-12). A simple block trade won’t “feed the ducks” (as Ross used to say) who have been loyally publishing on the name for years, but it sure reduces the friction cost. Despite the fact that TD’s 19.7% ownership stake had all the appearances of a control block, it seems that you can sell “just” 1.17 million shares of a 3.44 million position and avoid the need for a full prospectus. My memory is faint on this, but perhaps being below 20% gives you lots of wiggle room, even if you’ve got two board seats. That’s why the top securities lawyers earn what they do.
As an investment, CSU has been such a winner for everyone concerned. Private equity investors, management, the buyers of its $17/share $80 million IPO in 2006; the entire lot of them. Proof that you can invest in a Canadian technology company, take it public, grow the beast, leak shares at $84 and make a mint.
Why don’t more folks, from investors to i-bankers to entrepreneurs, try to emulate this type of success? If only Mark Leonard could be cloned!
MRM
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Mark McQueen co-hosts BNN
February 2nd, 2012
For those of you who missed it today at 2pm, Mark McQueen was back as a regular guest co-host on the Business News Network’s “Business Day” with Andrew Bell and Kim Parlee. On today’s show, Jamie Purves, director, WaterStreet Family Offices discussed tax strategies that put more money in your pocket. Also, Tom O’Gorman Director of Fixed Income, Bissett Investment Management discussed interest rates and the economy. The first segment can be found here.
LFC
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Toronto’s $7 billion Gardiner/DVP windfall
February 2nd, 2012
Fixing Toronto Part 14
For the life of me I can’t understand what the apparent resistance to toll roads is, when Canadian taxpayers are prepared to pay user fees for so many other elements of their daily life. This isn’t the first time I’ve brought this up (see prior post “Bring on the toll roads” Sept 10-07), but there’s never been a better time to tackle the topic.
An extra garbage bag this week? There’s a user fee once you’ve blown through your annual allotment of two freebie tags. Park on the street in front of your house overnight if your 1890s era Annex home doesn’t have a parking spot? You need to buy a permit every 6 months. Ride the subway two stops? $3.00 please. Renovate your home? Permits will cost you. These are things we take as being part of the cost of city life.
I commend Mayor Ford’s advisor Gordon Chong for recognizing that toll roads are an obvious answer to partially finance the huge capital expenditure needs of the City of Toronto over the next five years. Here’s the thing. The opportunity is bigger than it has ever been, in that the current ultra-low interest rate environment makes the DVP and Gardiner more valuable than ever before.
If the City of Toronto would only grab the opportunity, selling Canadian pension funds a 75 year concession on the DVP/Gardiner would generate an immediate $5 billion payment for the local treasury. During the next 75 years, these pension funds would be responsible for all operational and maintenance costs of the DVP / Gardiner, which would save the City an estimated $1.2 billion to $2.2 billion (present value) over the life of the concession. And the profit on those tolls? They would help fund Canadian pensions; a virtuous circle.
What would the City do with a $5 billion cheque? Whatever it wants:
- Pay off the City’s debt.
- Build new subways.
- Reduce property taxes.
- Upgrade City roads that are currently part of the $400 million “State of Good Repair Backlog” outlined in the 2011 City of Toronto Transportation Services Recommended Operating Budget.
- Reduce TTC fares and/or upgrade rolling stock.
- Rebate some or all of the toll road fees paid by users of the DVP/Gardiner who also happen to be City of Toronto taxpayers.
- Rebuild a portion of Toronto’s decaying underground infrastructure.
- Build new affordable housing.
- etc., etc.
The annual savings that would flow to the City budget by not having to maintain these highways each year amounts to tens of millions of dollars. That frees up real dollars for new programs, lower taxes, or both. I’m all for fixing the structural deficit and general waste at City Hall, and I voted for it, but let’s not do so with a blind eye to the obvious fix to our capital expenditure budgetary challenges. At a time when low interest rates have boosted the value of our asset by more than a billion dollars.
When I bounce the idea off elected people around town, the nay-sayers usually throw up the standard line that John Tory used with me during his Mayoral run: “I’m against asking taxpayers to pay for things twice.” Some sitting council members agree with that sentiment. But, if we extend that concept to the TCC, why do I pay a fare every time I ride the Yonge Street line? The taxpayers of the 1950s and 1960s paid to install that subway, after all. Just as previous generations of Toronto taxpayers paid to build the Gardiner.
Sure, there’s a cost to operate the TCC buses and subways. But there’s also a $50-100 million annual cost to operate, clean and maintain the DVP/Gardiner (depending on how much capex is done each year).
The difference is that half of the Gardiner’s daily car traffic involves folks who live outside the City…and don’t contribute a dime to the upkeep of Toronto’s key road artery system. An Oakville resident who relies on the Go Train pays to ride the Rocket from Union Station to his/her workplace, but the car commuter get a free pass. Because our City won’t charge them. Go figure.
The first two massive Canadian institutional investors I bounced this idea off of said they would pay the number. That means there’s a $5 billion cheque sitting on my desk (figuratively speaking). All we taxpayers need is the will to cash it.
MRM
(disclosure: this blog, as always, reflects a personal view and is not meant to represent the views of the TPA, its Board/Staff or the federal government)
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