19 11/21 19/11/2021

Weekly Newsletter Week 46

Newsletter week 46

 

 

 


WEEK 46 | NOVEMBER
WEEKLY NEWSLETTER

 

OVERVIEW

  • Financial Markets & EconomiesRetail Sales
  • Good to knowInfrastructure Bill Signed
  • Your portfolio highlights Solar Resources Fund, Dundee Corp, Brookfield Asset Management
  • In other news: Royal Dutch Shell will no longer be a Dutch company, Berkshire Hathaway's reinsurance unit sets up Mideast office in Dubai, Brookfield Explores Hotel Portfolio Sale for Up to $1.5 Billion
Financial Markets & Economies

According to Tyson Foods the cost of beef, chicken, and pork rose sharply in the third quarter. The food giant said it will be passing these increased costs to food service and retail consumers. It’s not just food. Inflation is hitting almost every sector of the economy. As a matter of fact, inflation reached a 30-year high in the U.S. Interestingly, that did not stop consumers. Mega retailers such as Walmart, Home Depot, Target, and Lowe’s all recorded a jump in sales and earnings that beat expectations.

According to the U.S. Census Bureau, retail sales rose 1.7% in October which is more than double the rate economists projected. That is in effect a 16.3% increase in sales. Spending also surged in October by 1.7%. This is exactly what we have been writing about when it comes to inflation and inflation protection. As consumers we cannot do much other than seeking substitution for the products and services we use or the places we shop. Walmart for instance saw an increase in revenue due to increased traffic of people looking for cheaper alternatives. In the end it is the investors who ultimately benefit from these stellar company earnings.

 

 
Good to Know

The $1.2 trillion infrastructure bill is now signed into law by President Joe Biden. The plan now officially includes $550 billion in spending for roads, bridges, and expanded broadband access. More specifically the bill includes $110 billion in funding for roads, bridges and major projects, $39 billion to modernize public transit, $66 billion to invest in railroad maintenance, and $11 billion to invest in pedestrian safety programs.

The infrastructure bill also seeks to facilitate and encourage the use of renewable energy as $8 billion will be used to build a network of electric vehicle chargers and about $7.5 billion will be spent on zero-emission buses and ferries. Another $55 billion will go toward clean drinking water and $65 billion will go toward broadband infrastructure and development. An amount of $42 billion will be spend on ports and airports and about $73 billion will go towards updating and expanding the nation’s power grid.


In case you were wondering how all these will be funded, the spending will be paid for by using more than $200 billion from unused funds that were previously allocated for coronavirus relief. An amount of $50 billion will come from delaying Medicare rebates, and $50 billion from unused unemployment insurance from certain states. Despite the bill widening the federal budget deficit by over $250 billion over ten years, the mere prospects for the upcoming spending have already sent infrastructure stocks sharply higher.

 
Your Portfolio Highlights
 
The Solar Resources Fund (SRF) seeks substantial capital appreciation by investing primarily in a diversified portfolio of international publicly traded equity securities. The fund may also invest in equity funds, but not more than 10% of its net assets in the securities of a single fund. The fund is long-only and concentrates its research and capital on undervalued resource companies, such as precious metals, base metals, and the energy sector (oil, gas and renewables). Some of these investments carry a greater risk, but this allows for extraordinary return potential in the future. The Solar Resources Fund returned +19.50% so far this year. In the highlight this week we have Dundee Corporation with a performance of +19.42% year-to-date.
 

Dundee Corporation (DC-A) is a Canadian active investor with more than 30 years of experience in the mining sector. Dundee aligns itself with the interests of issuers and co-investors and bring a disciplined and collaborative investment approach to delivering long-term, sustainable value from undervalued mining assets through its subsidiaries. This is done by focusing on the long-term, thoroughly evaluating and de-risking opportunities, investing proprietary capital alongside other investors, and relying on a team of technical and financial experts who know mining.

Dundee Corporation ventured out and explored different other businesses other than mining in 2011 onward. Although they had success in some of these new ventures, they lost sight of their core business which was mining. Jonathan Goodman returned to the company as CEO and Chairman in 2018 to “bring back Dundee”. Dundee’s long-term plan involves operating three mining investment and finance businesses: Dundee Mining (Private Equity Style), Dundee Goodman Marchant Partners, and CMP (Flow-Through Fund).


*Please visit the Dundee Corporation website for more information or click on one the images below for their latest presentation.

Ada Tepe - The first greenfield mine in Bulgaria (Dundee has 100% ownership)
Dundee Corporation - Year-to-date stock price movement
 
Brookfield Asset Management (BAM) announced earnings last week and recorded record inflows of $34 billion. The financials result in Q3 were also very strong reflecting the continued growth and excellent investment performance across businesses. The strong inflow was supported by the closing of the Real Estate and Global Transition flagship funds, monetization activities, and the stable cash flows from the invested capital. Distributable earnings came out on $1.2 billion for the quarter and $6.6 million for the last 12 months. Brookfield remains focused on the goal of doubling the size of its business in the next five years.
In Other News
 
We wish you a pleasant weekend and hope you stay safe.

Kind regards, 
Shernel Thielman 
Investment Manager 

www.lunarasset.com | shernel@lunarasset.com 
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