If You Own Mastercard, You May Be Rich! (Depending on your broker)
Mastercard (MA) completed it’s massive 10-to-1 split today – and temporarily making my account look like I had struck it rich (giving me 9 additional shares @ $833 for each share I owned). Unfortunately, if your broker properly addressed the split, you may not feel the same amount of euphoria as I. Shares have gone up around $75 (or $7.50 in post-split terms; or just 10%) prior to the split announcement in early December. Of course, part of the price going up could be attributed to the company also announcing a 83% dividend increase. However, it always surprises me that when these companies with lofty stock prices (high dollar amount, not value) announce a split, you can usually count on a good 5-10% gain if you already own shares. This has always been explained as a psychological boost for individual investors – they are more willing to purchase stocks with a lower price. It’s almost like they are thinking: hey, Mastercard use to sell for $800, and now it’s $80?! What a steal! Folks, it’s like me giving you $100 and getting back 2 x $50s in return – there’s no steal; or sale – certainly market efficiency at its (not so) best.
C$ Continues Downward Trend
The loonie lost a penny today and as I check, looks to be down another half a cent as the Bank of Canada, to no surprise, continued to keep interest rates low. Economists will say a low C$ is good for exports as it makes it cheaper for other countries to buy our goods. It unfortunately means goods from outside Canada will be more expensive for Canadians; but also means we as citizens might pick cheaper produce from Canada than from the States (or elsewhere). Buying more Canadian goods (by Canadians ourselves or other countries) should help grow our economy as I’m sure the BoC is watching all the numbers closely. As mentioned in my year-end review, it was expected that the C$ drop against the US$ (although not as fast) and anyone with US stocks will get a little tailwind to help their portfolio (already YTD, that currency benefit has resulted in a 4.29% gain). I was going to write that the TD Direct Investing US Money Market Sweep I wrote about a previous post did not apply to US$ dividends but will need to confirm – TD tends to be a month late on posting dividends to the account which may be a reason why my last dividend did not get the sweep applied (real dividend was paid before I signed up for the sweep). Most articles will say you shouldn’t bother with any currency-hedged funds/ETFs as in the long run, it should even out. Not sure if I agree – it would assume the investor is making the same consistent investment year in and year out, when we really do change our strategies as we get older. For this year (at least so far), using currency-hedged securities has reduced some potential gains.
Blackberry on the Rebound
Blackberry (BBRY, BB.TO) looks to be given a new life, up over 50% in the first 22 days of the year (40% if you bought on the US market). The company looks to be doing all the right things since Fairfax pulled its takeover bid off the table and instead opted for providing $1B in financing. Since the appointment of new CEO, John Chen, the company has replaced key management personnel, announced a partnership with Foxconn to manufacture devices, and just announced selling most of its Canadian real estate – which should provide some additional funds for the company’s turnaround. Good news didn’t stop there as the US Defense Department continued its support for the company’s devices. At the end of the day, BBRY still has to provide great products and services to continue winning support. Consumers are getting more accustomed to phones based on iOS and Android (with more features and functionality) and while BlackBerry has stated that they are targeting the business community, those same businesses are listening to their employees (who don’t want to carry two devices), and are looking at how to make BYOD (bring your own device) a reality.