by Travis Johnson, Stock Gumshoe | January 25, 2019 4:15 pm
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Thanks for this review Travis. I’m long several of these stocks as well. The metals stocks have been a disappointment for some time. However the REITs; MPW and IIPR have been quite successful and you certainly deserve accolades for them and I thank you for those picks. I bought IIPR in Feb., 2018 and sold half of it in Dec.,2018 because it had doubled. I continue to hold all of the MPW position because it has such a good dividend and it’s growing.
Regards,
Frank
Midas gold has been encountering protests from local cities about its gold mine. Most seem to think the big money involved and local politics will eventually win this battle, but it is disturbing. One can probably trade the range between support and resistance until the breakout of gold finally materializes. It’s heading higher as we encounter another week.
Could you please comment Travis on whether from a dividend income standpoint, is it better for a US taxpayer to hold Sprott in a taxable vs tax-deferred portfolio?
I don’t know how their dividends are classified, if they’re earnings or return of capital. Canadian withholding should be a wash, and dividend tax rates also depend on your tax bracket. Personally, I hold it in a taxable account and put US income generators like REITs in my tax-deferred accounts — though new rules make that less advantageous too.
Thank you, Travis, for your analysis of your portfolio; insightful as always. Regarding Kennedy -Wilson, an intriguing holding, my questions are: Why would a corporate entity in the real estate / property sector choose to be REIT or, as Kennedy-Wilson, a non-REIT ( i.e., a regular, publicly traded company)? Are the advantages ( or diaadvantages), from the vantage point of the corporate entity, primarily realed to taxation? Thank you.
The only real advantage for a corporation is that if they convert to REIT status they get to avoid federal taxation and pass through their tax obligation to shareholders. Kennedy-Wilson hasn’t ever paid a particularly high tax rate (it has averaged less than 4% for the past five years), presumably because of depreciation and rolling over real estate gains into new projects, so it looks like avoiding REIT status doesn’t cost them much… and converting to a REIT cuts into their flexibility to some degree. That’s my perception, though I haven’t asked the company and I’m not a taxation expert.
Travis, Just wondering what kind of upside potential Sprott Inc. may have. I did pull up several charts & see that this stock appears to see it’s all time high of 9.79ish in the summer of 2011, very reasonably coinciding with golds all time high. The stock popped nicely in April of 2014, April of 2016, & April of 2018 again coinciding with a noticeable rise in gold prices, but not really earth shattering. (about a dollar a share + or -) Thank You!!
Mostly depends on how high gold goes, and whether there’s a surge of interest in their gold ETFs. As of last quarter they were more or less breaking even thanks mostly to the ETF management fees, so AUM growth from here would essentially drop directly to
The bottom line.
Don’t have the math at hand, but basically any AUM above recent levels * the management fee = the amount by which profit will increase. What investors will pay for that is a mystery.
Past movements by Sprott before 2018 aren’t necessarily all that relevant, it was a very different company then. Much more driven by ETF fees now, after the acquisition of Central Fund of Canada.
Ligand Pharmaceuticals (LGND) announced a bombshell today, they’re selling Promacta to Novartis and Royalty Pharma for $827 million… a phenomenally huge deal to offload what is by far Ligand’s most valuable asset. That gives Ligand a ton of cash to make its next deal, but it also means they are losing a huge chunk of their anticipated annual revenue and earnings… and it’s the chunk that was arguably most reliable and most predictable. They were expecting over $100 million in Promacta royalties this year, and that number could have doubled over the next few years with some new approvals and continued strong sales by Novartis, but Promacta did have a coming wave of patent expirations from 2021-2028 that was likely starting to concern investors a little, so this gets rid of that worry. It’s going to be an interesting story, conference call going on now and after-hours investors don’t really know what to think just yet, the stock price hasn’t really moved just yet.