investment

The “new global currency rules” idea is part of a marketing campaign by a promotional newsletter in the U.S. and an array of websites that link to it. The premise is that “on October 20th of this year, the International Monetary Fund (IMF) will announce a reserve currency alternative to the U.S. dollar, which will send hundreds of billions of dollars moving around the world, literally overnight.” What in fact might happen is that later this year the IMF may include the Chinese yuan in its official basket of reserve currencies, called special drawing rights (SDRs)....

Urbana Corporation, $2.25, symbol URB.A on Toronto (Shares outstanding: 67.5 million; Market cap: $151.9 million; www.urbanacorp.com), is an investment company with interests across the financial services industry, including banks, broker-dealers and investment managers. Caldwell Financial owns 53.5% of Urbana’s shares. The company’s investments include interests in privately owned entities like the Bombay Stock Exchange and seats on the Minneapolis Grain Exchange and Budapest Stock Exchange. It also holds shares of publicly traded companies like Citigroup, Franco-Nevada, Suncor Energy and Barrick Gold. We see a number of sources of risk with Urbana, including the fact that the company’s private business holdings and complex organizational structure make it difficult to value....

GREAT-WEST LIFECO INC. $37 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 997.5 million; Market cap: $36.9 billion; Priceto- sales ratio: 0.9; Dividend Yield: 3.5%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $1.2 trillion of assets under administration. It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 67.1% of Great-West.

The company continues to expand in Ireland. In 2013, it paid $1.75 billion for Irish Life Group, a major pension manager and life insurance provider. It will also soon complete its purchase of the Irish operations of Legal & General Group for an undisclosed sum. This business provides investment and tax-planning services to wealthy individuals.

Meanwhile, in the three months ended March 31, 2015, Great-West’s earnings rose 19.3%, to $700 million from $587 million a year earlier. Irish Life contributed $80 million, up from $52 million. Due to more shares outstanding, earnings per share rose 18.6%, to $0.70 from $0.59. Revenue rose 27.6%, to $12.7 billion from $9.9 billion.

The company will probably earn $2.82 a share in 2015, and the stock trades at a low 13.1 times that estimate. The $1.30 dividend yields 3.5%.

...

Dynavax may have a successful hepatitis drug in the works, but clinical setbacks and high costs make us view it as a high risk investment.

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $40.22 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange.

The fund’s top holdings are S.A.C.I. Falabella (retail), 10.9%; Enersis SA (electricity), 9.9%; Empresas Copec SA (conglomerate), 7.6%; Empresa Nacional de Electricidad (electricity), 7.1%; Banco Santander Chile (banking), 5.0%; Empresas CMPC (pulp and paper), 4.9%; Cencosud SA (retailer), 4.6%; Banco de Chile, 4.5%; Colbun SA (utility), 4.1%; and LATAM Airlines, 3.9%.

The fund’s industry breakdown consists of Utilities, 28.6%; Financials, 18.0%; Consumer Discretionary, 12.9%; Materials, 11.0%; Consumer Staples, 9.3%; Energy, 8.0%; Industrials, 7.0%; Telecommunications, 2.3%; and Information Technology, 2.2%.

...

ISHARES MSCI GERMANY FUND $29.74 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.

This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

The ETF’s top holdings are Bayer (diversified chemicals), 9.8%; Daimler (autos), 7.5%; BASF (chemicals), 7.1%; Siemens (engineering conglomerate), 6.9%; SAP (software), 6.1%; Allianz (insurance), 6.0%; Deutsche Telekom, 4.5%; Deutsche Bank AG, 3.5%; Volkswagen AG, 3.3%; and BMW AG, 3.1%.

...

CONAGRA FOODS INC., $43.37, New York symbol CAG, jumped 11% on Friday on news that activist investment firm Jana Partners now owns 7.2% of the company. Jana will probably push ConAgra to sell or spin off its private-label food business. In January 2013, ConAgra paid $4.75 billion for Ralcorp Holdings, the largest private-label food maker in the U.S. However, strong competition has hurt its sales and earnings. As a result, ConAgra has had to writedown this investment by $2.1 billion. To put these figures in context, ConAgra’s market cap is $17.0 billion....

Most successful investors agree that it’s a good idea to base investment decisions on facts rather than predictions. You can make mistakes with facts, of course, but predictions have a much higher failure rate. However, one little noticed obstacle to investment success is that it’s easy to mix the two up. Perhaps the best example of this is the tobacco industry. Starting a few decades ago, cigarette makers came under relentless attack from government, health authorities and lawsuits. Many investors took it for granted that the industry was doomed. Lots of smokers quit, and this hurt cigarette demand. But the obvious negatives stopped new competitors from entering the industry. Laws against cigarette advertising limited advertising expense for the industry, so profitability rose. Cigarette makers were able to pass the costs of litigation and regulation onto their customers. Meanwhile, tobacco use grew quickly in emerging markets....

Canadian Solar Inc., $33.18, symbol CSIQ on Nasdaq (Shares outstanding: 55.7 million; Market cap: $1.8 billion; www.canadiansolar.com), is an Ontario-based designer, maker and seller of solar modules, which convert sunlight into electricity. Its products are used in a range of residential, commercial and industrial power-generation systems. The company makes solar modules at plants in China, as well as two facilities in Ontario. To cut its reliance on solar modules, Canadian Solar has moved into designing and building solar power plants. It then resells these facilities to utilities, such as TransCanada Corp., or operates them itself under long-term power-purchase contracts. In 2014, this business supplied 45% of Canadian Solar’s revenue....

There are two basic approaches to investing in stocks: bottom-up and top-down. Bottom-up investing is the better of the two by far.