Some quick updates on new buys that I’ve done over the past little while. I’m finding that I prefer to spend more time on just updates and what happened to these companies vs. writing about my investment thesis (unless there’s an incredible story behind it). What I’ve promised myself to do though, is update my Current Holdings page right away – which will give me some time to actually write about any new or removal of anything from the portfolios. Anyways, on to the new stuff:
TD Ameritrade is a securities brokerage service provider primarily serving customers through the internet, and a network of branches. When the economy picks up, stock markets rise, and with it – so do the people who want to invest in the market. All those folks with money in their mattresses or in GICs start hearing it’s a great time to get into the market and they start buying – they’ll buy mutual funds, ETFs, individual stocks, options, gold bars, etc. Some might even be more risky and start using margin (borrowing money to buy securities) – of whom this writer has been guilty of.
All these positive thoughts of investing should, and will, benefit brokerages – mainly in the form of commission, transaction fees, and interest revenue. This investment idea is pretty broad and probably could be done with any of the other major US discount brokers – Charles Shwab or eTrade come to mind – but TD Ameritrade has a relationship with TD Bank (Go CANADA!) .
American Tower basically owns cell tower real estate around the world – and they rent the space to carriers to place their antennas. This is an interesting play on the growing use of mobile data around the world. In fact, Leveno, the largest computer manufacturer, just announced that their mobile shipments were higher than PC shipments. With more mobile usage, means more carriers will be vying for customers through increasing coverage and improving density.
The company’s been in the news recently as a result of a scathing report by Muddy Waters – which the company and other research firms claiming Muddy Water’s claims are unsubstantiated. However, where’s there’s smoke, there may be fire, or at least, it definitely depresses the stock for awhile (as I had a similar experience with EBIX – which claims turned out to be semi-true). It’ll be something to keep an eye on.
Most folks probably do not know about this small bank mainly because its physical presence is very limited. Whereas a bank like Wells Fargo has 9096 branches, Bank of Internet (yes, surprisingly, that’s what it’s called) has 1 – and their customers mainly do their banking – you guessed it – over the internet.
This is a play on the growing and very hot internet banking business – which benefits from not having the same infrastructure of the old brick and mortar banks – there’s no need for ATMs, branches, tellers, etc. All those savings get passed on to consumers in the form of better rates (for deposits and loans).
Customers who use BofI are likely getting frustrated with their financial services and are looking to get better rates overall, or make use of the free transactions BofI offers at any ATM machine.
The company has continued to grow deposits at an astounding rate; and with those deposits; can lend out more money; which then accelerates the company’s earnings growth. I’ll continue to watch to make sure these numbers continue to grow, but if anyone doubts this business model, they should look no further than ING Direct – a dutch bank with a very similar model (albeit definitely larger) who unfortunately had to sell their operations in Canada (for $3.1B) and the United States (for $9B) to fund capital requirements in the home country.
WisdomTree Emerging Markets
In an attempt to diversify (something that I have mixed feelings about which I definitely will write about), I decided to have some exposure in emerging markets. Typically, when I want to “diversify”, I’ll find a relatively known ETF to invest in. It’s an easy way to “play in that market” without knowing much about the market. I came across DGS in some fool.com articles I was reading. What I like about it is it invests in emerging market small cap companies (a little more riskier but higher potential for return). It has also outperformed the standard ETF I would have bought (EEM) over the majority of time periods; and the dividend is a pretty nice 3.9% vs. the 1.92% EEM provides.
Disclaimer: The author owns shares in AMTD, AMT, BOFI, and DGS. A full list of holdings can be found here.