Solaris Resources (TSX:SLS) (NYSEAmerican:SLSR) has submitted an Environmental Impact Assessment (EIA) to Ecuador’s Ministry of Environment, Water, and Ecological Transition (MAATE) as part of its ongoing efforts to develop the Warintza Project in southeastern Ecuador. The EIA, comprising over 3,000 pages, reflects more than three and a half years of work, including community dialogue, environmental monitoring, and data collection. Solaris followed Ecuadorian regulations, and international best practices, and adhered to the Equator Principles framework and Performance Standards on Environmental and Social Sustainability from the International Finance Corporation.
This assessment is not Solaris’ first step in the permitting process for Warintza. The company had previously completed community consultations and submitted another EIA, which resulted in the granting of an environmental license in 2023. This enabled Solaris to advance exploration and develop infrastructure on the project site. Since then, the company has invested over $170 million in the project, with a substantial portion of procurement sourced locally. Currently, the project provides over 500 jobs, making it one of the most significant employers in the region.
Mr. Antonio Goncalves, Minister of Energy and Mines, commented in a press release: “The steady progress of the Warintza Project is positive for Ecuador. The Project is advancing in compliance with all legal regulations and will soon generate thousands of jobs and major economic growth in the Province of Morona Santiago. The administration of President Daniel Noboa supports this type of mining Project – one that has the support of the communities in its direct area of influence and is designed to meet high social, environmental, and technical standards.”
Mr. Sixto Cóndor, Governor of Morona Santiago, also commented: “Warintza is a project that will bring great opportunities and impetus to the development of the province. Like the Mirador project, which I recently visited, and its positive impacts in Zamora-Chinchipe, Warintza will be an engine for growth in Morona Santiago, with more generation of local employment sources, revitalization of the economy, social benefits, support for entrepreneurship, businesses and local suppliers. With Warintza, we will have a better province, with greater wealth to be distributed and better opportunities. We are ready to move forward.”
Mr. Antonio Castillo, Mayor of Limón Indanza, commented: “The people of Limón Indanza have benefited and will continue to benefit significantly through the creation of local employment and opportunities for the canton’s suppliers with the Warintza Project. The communities of Warints and Yawi decided to sign an agreement with the Company, through the Strategic Alliance, for the advancement of the Project and, as a Municipality, we respect and support this decision to work together.”
Mr. Javier Toro, Chief Operating Officer of Solaris, also commented: “The submission of the EIA and commencement of permitting for construction is a major milestone for the Warintza Project. We are very grateful to all our supporters, and in particular to our host communities and the Advisory Board of the Strategic Alliance of the Warintza Project who have been integral to the socialization of this EIA, the Mayor of Limón Indanza, the Governor of the Province of Morona Santiago, and the diligent professionals at MAATE.”
ESSAM Cía. Ltda., a well-regarded environmental consulting firm in Ecuador, prepared the EIA for Warintza. The firm has previously worked on other major mining projects in the country, such as the Mirador copper mine and the Fruta del Norte gold mine. ESSAM collaborated with international experts, including Knight Piésold Consulting, which provided expertise in areas such as waste management and water design, and Ausenco, which contributed to metallurgical studies and plant design.
With the submission of the EIA, Solaris is preparing to draw on the second tranche of a $15 million credit facility. This funding comes as part of an Offtake Credit Facility that the company had previously announced. Solaris currently has $84 million in available liquidity. The company expects to receive the next update on the project’s permitting process when the technical approval of the EIA is anticipated in the first half of 2025.
In addition to progressing the Warintza Project, Solaris has begun taking steps to move some of its operations to Ecuador. The company plans to transition its head office to Quito, Ecuador’s capital, where some of its senior management will be based. Solaris is evaluating further steps toward aligning its operations with local stakeholders and regulators as the project moves into its permitting phase. The company has indicated that this move is not expected to cause any adverse tax impacts or require changes to its stock exchange listings.
The Warintza Project, which has seen significant investment and progress, represents one of the few large-scale mining operations in Ecuador. It is important to the local economy, providing formal employment opportunities in a region with few alternatives. The submission of the EIA marks a major milestone for Solaris, with the company now awaiting government approvals to advance the project further.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
A Methanex Corporation plant is seen in Medicine Hat, July 16, 2018. Methanex will be paying US$1.15-billion in cash, issuing US$450-million in Methanex shares and assuming OCI’s US$450-million in debt and leases.Handout ./Reuters
Methanex Corp. MX-T of Vancouver is buying Amsterdam-based OCI Global’s international methanol business in a US$2.05-billion deal that expands the Canadian-based company’s U.S. presence.
In its purchase of assets, Methanex will be paying US$1.15-billion in cash, issuing US$450-million in Methanex shares and assuming OCI’s US$450-million in debt and leases.
OCI will end up owning a 13-per-cent stake in Methanex, subject to the deal receiving approval from regulators.
“We are pleased with the opportunity to achieve a significant ownership position and are highly confident in Methanex’s ability to create enduring value for shareholders,” OCI executive chairman Nassef Sawiris said in a statement.
The deal came after OCI launched a strategic review in the spring of 2023 of its methanol assets, said Mr. Sawiris, an Egyptian billionaire who co-owns the Aston Villa FC soccer team in England’s Premier League.
Methanol is a basic chemical building block made from natural gas. Methanex is a major producer and marketer of methanol, which is used to manufacture formaldehyde, a resin in particleboard, and also goes into the production of reformulated gasoline, among many other uses in chemical products.
“We’re inclined to view the deal as both strategic and attractive,” Raymond James Ltd. RJF-N analyst Steve Hansen said in a research note on Monday about Methanex. “The obvious trade-off is the company’s long-awaited buyback plan is likely now shelved.”
The transaction features OCI’s stake in two methanol plants in Beaumont, Tex., including one that also produces ammonia.
“The Beaumont plants benefit from access to North America’s abundant and favourably priced supply of natural gas feedstock,” Methanex chief executive officer Rich Sumner said in a news release.
Scotia Capital analyst Ben Isaacson said the assets to be purchased include a 50-per-cent stake in the Natgasoline facility in Beaumont.
“We believe Methanex is the natural owner of these assets, given how well the two portfolios fit. OCI started a strategic review 18 months ago, meaning the opportunity to consolidate the methanol market in low-risk jurisdictions is unlikely to have appeared again any time soon,” Mr. Isaacson said.
The transaction is slated to close in the first half of 2025 and provide a 20-per-cent boost to Methanex’s methanol production globally. Deutsche Bank and RBC Capital Markets served as Methanex’s financial advisers on the deal.
A legal dispute between OCI and Proman USA, the joint venture partner in Natgasoline, over shareholder rights has yet to be resolved. Methanex has the ability to carve out the Natgasoline portion of the transaction, if the dispute lingers.
On Monday, debt-rating agency Moody’s placed the Vancouver-based company’s ratings under review for downgrade. “Post transaction, we expect Methanex to allocate free cash flow toward debt repayment,” Moody’s said.
Shares in Methanex fell 8 per cent to close at $53.04 on Monday on the Toronto Stock Exchange.
The latest deal includes a methanol plant in the Netherlands, but the facility has been idle since 2021. OCI HyFuels, a producer of low-carbon methanol, also will be part of the transfer of various assets.
Methanex employs about 1,450 workers and stands to add another 280 employees after the transaction closes. There are also nearly 150 workers at Natgasoline.
Methanex’s current North American assets include the Medicine Hat plant in Alberta and Geismar facility in Louisiana, which are among an array of locations worldwide, including in Chile and Egypt.
Citing high prices for natural gas at the time, the company closed its methanol plant in Kitimat, B.C., in 2006. The industrial site is now being used by LNG Canada to build its terminal for exporting liquefied natural gas to Asia, starting shipments by mid-2025.
The chair of Methanex is Doug Arnell, who is CEO at Cedar LNG, an energy project to be built in Kitimat and aiming to start shipping LNG to Asia in late 2028. The Haisla Nation has a 50.1-per-cent stake in Cedar while Calgary-based Pembina Pipeline Corp. owns 49.9 per cent.
Air Canada said it is prepared to shut down most of its operations later this month as it faces a potential strike or lockout as a result of a labor dispute with its pilots.
The carrier warned that without a deal with the Air Line Pilots Association by Sunday, either side can call for a 72-hour strike or lockout notice.
Air Canada explained that it has been in talks with rival carriers to give airplane seats to its customers if its own flights are canceled.
Air Canada said Monday that it is making plans to shut down most of its operations if its pilots go on strike later this month.
The country’s biggest air carrier warned that while contract talks with the Air Line Pilots Association (ALPA) continue, the two sides “remain far apart.” Air Canada said if no deal is reached, beginning on Sunday either side could issue a 72-hour strike or lockout notice. It noted that would trigger its three-day wind-down plan that would progressively suspend all flights by Sept. 18.
The union represents more than 5,200 pilots for both Air Canada and Air Canada Rouge.
Air Canada CEO Says Shutdown Likely Unless Union ‘Moderates’ Demands
Chief Executive Officer (CEO) Michael Rousseau said that the ALPA’s salary demands “far exceed average Canadian wage increases,” and that unless the union “moderates” them, a shutdown is “increasingly likely.”
At a rally late last month, Air Canada ALPA Master Executive Council chair Charlene Hudy accused the airline of “not listening to our most pressing needs at the negotiating table regarding fair compensation, respectable retirement benefits, and quality-of-life improvements.”
Air Canada said that it has been negotiating with other air carriers to get its customers seats on their planes if a strike or lockout occurs. It added that passengers whose flights are canceled will be able to receive a full refund, and that they can reschedule trips set for Sunday through Sept. 23 at no charge. It said that window may be expanded if necessary.
Copper stocks elevated to the S&P/ASX 200 and S&P/ASX 300 including Sandfire Resources and Capstone Copper Corp
Radiopharmaceutical company Clarity Pharmaceuticals is among healthcare names elevated to the S&P/ASX 300
Newly listed mexican fast food chain Guzman y Gomez has climbed the ranks to the S&P/ASX 200, while pizza play Domino’s removed from S&P/ASX 200
September is here, Spring is in the air, flowers are blooming and the weather is warming up. Q2 for the Australian financial year also signals a rebalance of some key S&P/ASX indices.
Responsibility for rebalancing falls on S&P Dow Jones Indices, part of credit rating agency S&P Global. Indexes rebalanced in the latest quarterly review included:
S&P/ASX 20 – No change
S&P/ASX 50 – No change
S&P/ASX 100
S&P/ASX 200
S&P/ASX 300
S&P/ASX All Technologies Index
The September rebalance comes into effect before opening trade on Monday, September 23, 2024.
Of particular note in rebalances, the S&P/ASX 200 and S&P/ASX 300 are ones many fund managers or investors use as a cutoff for investments.
Entering the S&P/ASX 300 is a major milestone for a company, signifying they’ve made it to the big league.
With its broad industrial use case and status as a critical mineral to the global energy transition, including manufacturing of electric vehicles and EV batteries, copper has been attracting plenty of interest from investors this year.
While the copper price did very well at the start of 2024, briefly breaching record highs above US$11k a tonne in May, the commodity has retreated in the second half of the year as concerns about the global economy and a possible US recession intensify.
‘Doctor Copper’ – market lingo for the idea the commodity is a barometer of economic health – has come under pressure of late. That said, there are forecasts supply of the red metal won’t keep up with increasing demand, piquing interest in ASX copper plays and helping to lift some share prices.
And so, with a market cap of ~3.68 billion, copper-focused mining company Sandfire Resources (ASX:SFR) has been elevated to the S&P/ASX100.
Minelife founding director and senior resource analyst Gavin Wendt told Stockhead SFR was founded just over 20 years ago and has evolved from micro-cap exploration company to established copper producer in multiple jurisdictions.
“Sandfire’s early growth stemmed from the discovery of the high-grade DeGrussa copper-gold deposit, 900km northeast of Perth, which provided the business with the platform to grow and diversify across the globe, through the transformational US$1.865bn acquisition of the MATSA Copper Operations in Spain, and the development of the new Motheo Copper Operations in Botswana,” he said.
“Along the way the company has picked up a swag of industry awards, including Prospector of the Year, Best Australian Explorer, Developer of the Year, and Hard Rock Mine of the Year.
“Sandfire has been included in the S&P/ASX 100 Index as it’s market valuation has trebled to just under $4 billion since 2021.”
Wendt said also worth noting was the perhaps lesser-known copper play Capstone Copper Corp (ASX:CSC), with a market cap of just under $7 billion, which has been elevated to the S&P/ASX 300.
The dual Toronto Stock Exchange-listed company made its ASX debut in April and doesn’t have any Australian assets but has operations in Arizona, Mexico and Chile, with headquarters in Canada.
“The company’s secondary listing on the ASX is a strategic one, as it looks to tap into investors with an appetite for resources,” Wendt said.
“Capstone was born from the acquisition of its low-cost, underground Cozamin copper mine in Mexico in 2004, followed by the acquisition of Far West Mining in 2011, which gave it ownership of the Santo Domingo copper project in Chile.”
He said another major catalyst occurred in 2013 when Capstone acquired the long-life Pinto Valley open-pit copper mine in a prolific mining district in Arizona, USA from BHP (ASX:BHP).
“Then in 2022, Capstone Mining merged with Mantos Copper to form Capstone Copper Corp, cementing its position as a mid-tier copper producer with a diversified asset base.
“One of the driving factors for the merger was the creation of a world-class mining district by combining the operating Mantoverde mine with the Santo Domingo project, separated by only 35km in the Atacama region of Chile.”
CSC’s flagship copper asset is its Mantoverde Development Project in Chile, where it produced first saleable copper concentrate during June and expects to get up to full run-rate capacity during the second half of this year.
The Mantoverde project increases Capstone’s annual production by more than 50% from 164,000 tonnes of copper to around 260,000 tonnes of copper, on an annualised run rate.
With not many copper plays historically on the main ASX indexes, the inclusion of some new names opens up the opportunity for index funds to trade more equities focused on the commodity.
Also worth noting among resources stocks is the addition of coal producer Yancoal Australia (ASX:YAL) to the S&P/ASX 200 and S&P/ASX 300 since Chinese investors sold off their stakes.
Source: S&P GlobalSource: S&P GlobalSource: S&P Global
“The lithium space remains mired in negativity, impacted by both demand and supply considerations,” Wendt said.
“The lithium boom has turned to lithium bust over the past two years as a wave of new supply overwhelms weaker-than-expected demand for EV batteries.
“We’ve been here before, with a similar boom-bust cycle during 2016-2017, but the difference this time is that there is very little prospect of a speedy recovery.
Wendt said the short-term outlook is for prices to remain weak as the market digests surplus material.
“Lithium producers view their product as a bespoke chemical tailored to battery-makers’ tight specifications rather than as a generic commodity.
“However, lithium’s price behaviour is increasingly mirroring that of any other commodity, with periods of high pricing encouraging over-production that then leads to periods of low pricing.”
He said compounding lithium’s price weakness has been a downgrade in expectations for EV sales, as the Chinese market matures, and the Western market loses some of its recent momentum.
“But there’s also been a change in the product mix, with sales of pure battery slowing and sales of hybrid gas-electric vehicles booming, even in China,” he said.
This isn’t great news, however good for lithium, as many hybrids use a nickel hydride battery with no lithium.
“The outlook for lithium for the remainder of 2024 and beyond remains somewhat pessimistic,” he said.
Whilst the worst is likely behind us in price terms, a rapid turnaround is highly unlikely, based on soft market fundamentals that don’t appear to show any clear indication of changing any time soon.
“The lithium market has potentially entered a new period of price stability.”
Operating in the hot radiopharmaceutical space, CU6 recently announced it had been granted FDA ‘Fast Track’ designation for its 64Cu-SAR-bisPSMA, a new imaging agent designed for detecting prostate cancer. The CU6 share price is up ~257% YTD.
Some good news for shareholders of retinal diseases-focused biotech OPT, which have seen the company’s share price dip more than 80% in the past five years. OPT is regaining ground up ~15% YTD and back in a major index.
OPT currently has two pivotal trials underway aimed at getting US FDA approval for its drug candidate sozinibercept (OPT-302), a potentially new treatment for the leading cause of blindness among the over-50s – wet AMD (age-related macular degeneration).
Developer of LAG-3 immunotherapeutic products for cancer and autoimmune diseases, IMM also has several late-stage trials underway and has seen its share price rise ~19% YTD.
Morgans said this is positive for CU6, OPT and IMM as funds will need to weigh into them.
“All three companies have chunky clinical data due out over the next 12 months,” he said.
However, Morgans noted disinfection device maker Nanosonics (ASX:NAN) fell out of S&P/ASX 200, which could see some selling pressure as funds lighten positions.
“NAN share price has been strong recently after providing FY25 guidance, which looks conservative, and [then there’s] the CORIS approval potentially within 12 months,” the broker said.
Coris is NAN’s newest device intended for cleaning flexible probes commonly used in procedures such as colonoscopies, gastroscopies, enteroscopies, endoscopic ultrasounds and bronchoscopies.
NAN filed a de novo regulatory submission for Coris in April and is forecasting approval within about a year.
Mexican in, Pizza out
Mexican fast-food fave Guzman y Gomez (ASX:GYG) is also set to join the S&P/ASX 200 index from September 23 after making its much-anticiapted IPO on the ASX in June.
It’s not so good news for another fast food chain operator, though, with Domino’s Pizza Enterprises (ASX:DMP) out of the benchmark and S&P/ASX 100.
GYG is up 34% YTD, while DMP is down 51% after a string of news stories that have disappointed investors, including on Monday that it had been hit with a shareholder class action filed in the Federal Court of Australia.
“The proceeding includes allegations that Domino’s engaged in misleading or deceptive conduct and breached its disclosure obligations with respect to Domino’s expected performance in the Japan market,” DMP said in an ASX announcement.
“Domino’s denies any liability and will defend the proceeding.”
Strong tech performers head up ranks
There were three additions to the S&P/ASX All Technology index, all strong performers so far in FY24.
Catapult Group (ASX:CAT), which is up ~59% YTD, was originally established from a partnership between the Australian Institute of Sport (AIS) and the Cooperative Research Centres (CRC) to maximise the performance of Aussie athletes ahead of the Sydney Olympics.
CAT now provides wearable analytic devices to elite teams in 40-plus sports including NFL, AFL, the NBA and other basketball leagues, and US football (soccer).
Meanwhile Indian-focused fintech Findi (ASX:FND) has climbed ~270% YTD to become a new addition to the S&P/ASX All technology Index.
FND recently announced it expected to report FY25 revenue in the range of $80-90m, up from $66.5m in FY24 and FY25 EBITDA in the range of $30-35m, up from $27.4m in FY24.
“Following a record financial result in FY24, we are pleased to report strong expectations for the 2025 financial year,” chairman Nicholas Smedley said in the ASX announcement.
Objective Corp (ASX:OCL) is also a new addition to the index, up a more modest ~7% YTD. OCL provides software to government and enterprise customers.
“We remain confident that our overall ARR growth target of 15% is the right goal for us, and that our business model assures the growth achieved will drive an increased level of profitability,” he said.
Source: S&P Global
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MONTREAL, Sept. 09, 2024 (GLOBE NEWSWIRE) — WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) is pleased to announce that the shareholders of POWER Engineers, Incorporated (“POWER”) voted at their special meeting of shareholders in favour of the proposal to approve the previously announced acquisition of POWER by WSP (the “Acquisition”) pursuant to an agreement and plan of merger dated as of August 12, 2024 between WSP and POWER, among others.
The Acquisition received overwhelming support from POWER shareholders and was approved by over 99% of POWER shares voted at the special meeting, representing approximately 99% of the total issued and outstanding shares of POWER voted in favour of the Acquisition. This step marks an important milestone towards welcoming the POWER team to WSP.
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Closing of the Acquisition remains subject to certain customary closing conditions, including receipt of regulatory approval in the U.S. The Acquisition is expected to be completed early in the fourth quarter of 2024.
FORWARD-LOOKING STATEMENTS In addition to disclosure of historical information, WSP may make or provide statements or information in this press release that are not based on historical or current facts and which are considered to be forward-looking information or forward-looking statements (collectively, “forward-looking statements”) under Canadian securities laws. These forward-looking statements relate to future events or future performance and reflect the expectations of management of WSP (“Management”) regarding, without limitation, the growth, results of operations, performance and business prospects and opportunities of WSP or the trends affecting its industry.
This press release may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation, including about the pending Acquisition by WSP of POWER, the expected timing for the receipt of the regulatory approval and the closing of the Acquisition, and other statements that are not historical facts. Forward-looking statements can typically be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “forecast”, “project”, “intend”, “target”, “potential”, “continue” or the negative of these terms or terminology of a similar nature. Such forward-looking statements reflect current beliefs of Management and are based on certain factors and assumptions, which by their nature are subject to inherent risks and uncertainties. Although the Corporation believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that they will prove to be correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These risks and uncertainties are discussed in the “Risk Factors” section of WSP’s Management and Discussion Analysis for the fourth quarter and year ended December 31, 2023, and WSP’s Management’s Discussion and Analysis for the second quarter and six-month period ended June 29, 2024 and filed on SEDAR+ at www.sedarplus.ca, as well as other risks detailed from time to time in reports filed by the Corporation with securities regulators or securities commissions or other documents that the Corporation makes public, which may cause events or results to differ materially from the results expressed or implied in any forward-looking statement.
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The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information contained herein is made as of the date of this press release, and the Corporation undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.
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Overall, all signs are pointing to exercising a bit of market caution over the remainder of the year
Published Sep 09, 2024 • Last updated 1 hour ago • 4 minute read
Traders work on the floor of the New York Stock Exchange during morning trading on September 04, 2024 in New York City.Photo by Michael M. Santiago/Getty Images
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There are a lot of good things to talk about when it comes to the stock market these days, as equity markets and especially the S&P 500 and tech-heavy Nasdaq have surpassed all expectations despite the recent blip.
Even bond markets have performed well, pushing yields lower and pricing in multiple cuts, leaving investors wondering how much room there is for further appreciation.
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Overall, all signs are pointing to exercising a bit of market caution over the remainder of the year.
From a valuation standpoint, U.S. equity markets are looking very stretched. The S&P 500‘s price-to-peak-earnings ratio has moved up to 25.7, its highest level since 2000 and 49 per cent above the historical median, according to Charlie Bilello, chief market strategist at Creative Planning LLC.
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The S&P 500 is also trading at 2.9 times sales, nearly double the historical median and approaching its peak valuation in the fourth quarter of 2021. Topdown Charts Ltd.’s euphoriameter, a measure of forward price-to-earnings, VIX and bullish sentiment, is now at its highest level on record.
Looking ahead, we are also entering a period of seasonal weakness. The S&P 500 has fallen 2.3 per cent on average in September over the past 10 years, marking the only month with negative returns, according to calculations by the Motley Fool. The average return in September since the Second World War has been minus 0.8 per cent, with the VIX spiking an average of 10 per cent over the past 33 years.
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At the same time, investors are positioning for economic weakness in other sectors, pushing commodities to their lowest level since the 1930s when measured against the Dow Jones industrial average. Commodities such as WTI oil near-month contracts are down 12 per cent over the past 12 months, while copper near-month contracts are up only six per cent.
Meanwhile, everyone has been herding into U.S. tech, making it among one of the most crowded trades of all time. The five largest companies make up 28 per cent of the S&P 500, the highest in more than four decades.
This is also the case even within the top companies in the index. For example, 45 per cent of Nvidia Corp.’s revenue comes from just four companies, Microsoft Corp., Meta Platforms Inc., Alphabet Inc. and Amazon.com Inc., according to Bloomberg research.
It may not hurt to take advantage of the current level of complacency in the event this monster trade unwinds like it almost did a few weeks ago. Our approach resulted in a bit of near-term underperformance against passive strategies this year, still to the upside, but our conservative strategic positioning has allowed us the luxury of not having to worry as much as others who are all in on equities or even those deploying the traditional 60/40 strategy.
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By preventing large drawdowns and the associated risks of emotion entering the investment decision-making process, investors can increase the odds of meeting their specific financial goals and objectives.
More specifically, we’ve been positioning defensively via our option overlay on our U.S. equity position through put purchases financed by covered calls while continuing to extensively use structured notes, especially as a bond replacement. For example, we just did one on the iShares 20+ Year Treasury Bond ETF, where we get a 14.5 per cent coupon should the exchange-traded fund make any positive gains above zero per cent in 12 months.
We also like Canadian dividend companies such as utilities that are going to benefit from falling interest rates and the spread between their U.S. counterparts. For example, as at last Tuesday, the U.S. Utilities Select Sector SPDR Fund ETF is up 28 per cent over the past 12 months, while the Canadian iShares S&P/TSX Capped Utilities Index ETF is up only eight per cent.
Taking a deeper look within these ETFs in the global infrastructure space, Florida-based NextEra Energy Inc., which encompasses more than 14 per cent of the U.S. Utilities Select Sector SPDR Fund, is up 25 per cent over the past 12 months as at last Tuesday, while Brookfield Infrastructure Partners LP, which is also a holding of ours, is 16 per cent of the Canadian iShares S&P/TSX Capped Utilities Index ETF, but up only nine per cent.
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Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus.
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