3.4% Dividend YieldOpportunistic repurchase authorization funded with dividend reduction.Fekola mine in Mali concerns are resolved, expecting to receive mining authorization in early 2025.First commercialization of Goose mine in Canada in September.BTG expects 2025 production growth of 27%.Strong financial position, selling off royalties and issuing convertible notes to bolster cash position and pay down high-interest revolver.Investment Thesis $B2Gold(BTG)$ is a gold mining company operating the tier-1 Fekola mine in Mali and several other low-AISC (all-in sustaining cost) mines. In our last coverage, we emphasized the broader macroeconomic tailwinds for gold. Since then, gold has reached record highs. However, BTG has seen its share price collaps
Building_Benjamins
Founder of Tradition Capital Management in 2000. Named “PSN Manager of the Decade” for All-Cap in the 2000s and “PSN Manager of the Decade” for Dividend Value in the 2010s.
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Economic and Market Review January 2025
A popular theory among traders is that US stocks rise higher in January than in other months. Appropriately deemed the January Effect, the effect is typically explained by traders entering position after tax-loss selling has completed, but over the last decade the effect has lost much of its visibility. Similarly, if stocks rise in January, the year will end positively in 85% of cases.US stocks had a volatile start to January, with the Fed raising long-term inflation targets, Trump following through on tariffs, and disruptions in the tech industry. The S&P $.SPX(.SPX)$ was buoyed by consumer spending coming in above expectations with inflation coming in at expectations.Oil prices peaked in the middle of the month at $78.71 following stronger i
Economic and Market Review January 2025
Turnaround Looks Likely for B2Gold with Geopolitical Risks Mitigated
Turnaround Looks Likely for B2Gold with Geopolitical Risks Mitigated
Perrigo Paves the Way for Recovery with Margin Focus
4.6% Dividend Yield, 21 consecutive years of growth.Concluded quality assurance program in the infant formula segment, expects to ramp production and return to form by 2026.Entering cost saving program, through consolidation of the organization and headcount cuts expects to save $150 million by 2026.Creating new ‘disruptive growth’ team to identify new markets to enter.Refinanced debt on the balance sheet, with new maturities not starting until 2030. Expects meaningful deleveraging below 3.0x net debt to EBITDA by 2026.Entering into voluntary non-renewals of contracts that are margin dilutive.Investment Thesis $Perrigo Co PLC(PRGO)$ is a pure player in the OTC consumer healthcare market. Since our last coverage on PRGO, it has continued to slim do
Perrigo Paves the Way for Recovery with Margin Focus
Secular Silver Shortfall Could Keep Prices Higher for Longer
$0.40 annual base dividend, yielding 1.89%.Variable dividend program linked to gross debt, paying up to $0.72 annually or yielding 3.3%.Demand projected to continue to outstrip supply in silver markets, with PAAS estimating an annual shortfall of 150 Moz to 2028.Strong base of gold assets (73% of revenue) with high silver exposure (20% of revenue).Record high cash position of $887.3 million thanks to the sale of non-core assets, giving PAAS no net debt.For the year ending December 2024, PAAS had an output of 21.1 Moz of silver and 893 Koz of gold.Investment Thesis $Pan American Silver(PAAS)$ is the second largest primary silver producer in the world, focused on developing primary deposits in the Americas. For the year ending December 2024, PAAS ha
Secular Silver Shortfall Could Keep Prices Higher for Longer
First Solar Shines Through Cloudy Market
Growing manufacturing base to 25GW by 2026, with 14GW in the US. Fully integrated supply chain independent of Chinese supply mitigates most tariff risks.Sell-off driven by fears of loss of IRA tax credits, however, FSLR remains profitable without the credits and its unlikely they will be repealed in their entirety.Largest US solar manufacturer and #10 in the world by market share.FSLR’s 17 TOPCon patents might yield a third-party sale or royalties, as the U.S. International Trade Commission looks into banning infringing imports and the Chinese government upheld FSLR’s ownership.FSLR’s CdTe modules have higher temperature tolerance and lower annual degradation rates compared to Chinese-dominated c-Si modules.Investment Thesis $First Solar(FSLR)$ is
First Solar Shines Through Cloudy Market
Economic and Market Review December 2024
$.DJI(.DJI)$ $.SPX(.SPX)$ $.IXIC(.IXIC)$ $Invesco QQQ(QQQ)$ $NASDAQ 100(NDX)$ $SPDR S&P 500 ETF Trust(SPY)$ $WTI Crude Oil - main 2502(CLmain)$ $Gold - main 2502(GCmain)$ $iShares 20+ Year Treasury Bond ETF(TLT)$ OverviewDespite a “Santa Claus Rally” not materializing, the S&P500 ended the trading year up 23%, after rising 24% in 2023. This back-to-back performance is the best since 1997 and 1998.
Economic and Market Review December 2024
Shift to Smoke-Free Sparks Steady Dividend Growth
4.5% dividend yield, 16 consecutive years of dividend growth.Renewed interest in the US market, bringing new IQOS products to market in the second half of 2025 and continued investment in the Zyn brand.Plans to re-institute share repurchase program after reaching 2.0x net debt to EBITDA target, currently 3.0x.Smoke-free nicotine products have 2.6x the gross margin per unit compared to cigarettes.Brand-loyalty in cigarettes has meant price increases have offset or even exceeded volumes.Investment Thesis $Philip Morris(PM)$ was formed in 2008 when $Altria(MO)$ spun out its international segment. Since then, PM has grown to be the largest public tobacco company in the world by volume, holding 14.0% market share
Shift to Smoke-Free Sparks Steady Dividend Growth
Onshoring Brightens Canadian Solar’s Future
Trading at far less than the sum of its parts, with Recurrent Energy and CSI Solar combined being worth $89.89 per CSIQ share.Sold 20% of utility-scale project manager to Blackrock, repositioning it to begin operating battery-storage and solar-generation to enhance recurring revenues.The global push toward renewable energy is secular and likely to accelerate as AI-driven datacenter demand rises.Onshoring more of the manufacturing base to the US will mitigate tariff risks in both batteries and solar.CSI Solar has shipped over 22 GW of solar components year to date, making it the #5 spot in global market share.Investment Thesis $Canadian Solar(CSIQ)$ is a solar power company that designs and manufactures solar power solutions and provides utility-le
Onshoring Brightens Canadian Solar’s Future
Civitas Continues to Deliver Peer-leading Free Cash
4.2% base dividend, 50% of free cash flow going toward share repurchases.Colorado regulatory uncertainties have historically pressured valuations, but the early 2024 agreement has delayed major risks until 2028.Civitas has partially shifted to the Permian Basin, emphasizing cost reduction in drilling operations rather than outright production gains.Still some minor expansion in DJ Basin, advancing with 4-mile lateral drills in premium-priced high-grade oil.Investment Thesis $Civitas Resources(CIVI)$ was formed in 2021 through the merger of two Colorado DJ Basin Pure Players, Bonanza Creek and Extraction Oil and Gas. Since then, it has become the second largest producer in the DJ Basin and has recently expanded operations into the Permian Basin in
Civitas Continues to Deliver Peer-leading Free Cash
Bath and Body Works Has Long Term Earnings Potential
2.2% Dividend YieldLoyal customer base, with loyalty members making up 80% of sales.85% of the supply chain originated in North America, mitigating tariff risk.Produces 55% of its end products in-house, with 40% of products on offer being seasonal only.Peer leader in sales per square foot with $1,074/sqft in sales.Expanding into ‘adjacent’ markets like products marketed at men and products marketed to Gen Z to boost new-customer growth.Investment Thesis $Bath & Body Works Inc.(BBWI)$ is a North American chain of home-good stores specializing in scented products and self-care. BBWI was formed after L Brands spun off Victoria’s secret into its own publicly traded entity (VSCO), with L Brands changing its name to Bath and Body Works. In recent ye
Bath and Body Works Has Long Term Earnings Potential
Tyson Foods Farms Free Cash Despite Cyclical Downturn
3.14% Dividend Yield13 consecutive years of dividend increases, most recently increasing by 2% in November 2024.Despite overlapping downcycles in pork and beef markets, Tyson generated $1.5 billion in free cash flow.Shifting more production to high margin value-added products like pre-made food and pre-seasoned meat across all segments.Targeting leverage ratio of net debt to EBITDA of under 2.0x, currently 2.6x with most debt maturing past 2027.Investment Thesis $Tyson(TSN)$ is an American meat-processing giant, producing about 20% of the consumer beef chicken and pork sold in the United States. With both pork and beef markets experiencing a cyclical downturn, coupled with a strained consumer, Tyson has seen its margins contract and volumes remain
Tyson Foods Farms Free Cash Despite Cyclical Downturn
Economic and Market Review November 2024
$.SPX(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $.DJI(.DJI)$ $GLOBAL X DOW 30® COVERED CALL ETF(DJIA)$ $.IXIC(.IXIC)$ $Invesco QQQ(QQQ)$ $NASDAQ 100(NDX)$ OverviewEquity markets closed at another record high on the last trading day of November. November was the best month of the year for the S&P 500 and Dow Jones, with the S&P 500 having its best YTD performances since 2013. Largely gains came from renewed market optimism following a Trump victory and strong preliminary economic data.With
Economic and Market Review November 2024
Deficit Dilemma: Inflation and Sectoral Shifts in a New Administration
Deficit Dilemma: Inflation and Sectoral Shifts in a New AdministrationThe DOGE (Department of Governmental Efficiency) Committee faces significant challenges in addressing the $2 trillion deficit, with most expenditures politically untouchable.Inflation is expected to rise by 2025, driven by persistent deficit spending and nominal GDP growth.Gold $Gold - main 2502(GCmain)$ remains a strong long-term hedge despite recent sell-offs, with equities favored over bonds during inflation.Natural gas may see growth due to rising electricity demand, while crude oil demand remains stagnant.Healthcare reform faces resistance due to lobbying, despite inefficiencies driving up costs significantly.Subsidies for green energy and electric vehicles may decrease
StoneCo’s Elevated Take-Rate Yields $350 Million Buyback
Recently announced $350 million repurchase agreement, representing more than 10% of shares.Despite pressure from low-cost payment architectures, STNE has been able to maintain a high take-rate thanks to value-added services.Management indicated it may sell off the software arm to run a more lean and transparent business.Obtained banking license in early 2024, allowing it access to cheaper funding and increases the stickiness of the business model.Brazil has a fragmented payments industry with ample cross-selling opportunities. Investment Thesis $StoneCo(STNE)$ is a Brazilian fintech providing hardware solutions for SMBs (small-medium business) and provide payment acquiring services. Since the start of the year, STNE’s stock price has declined
StoneCo’s Elevated Take-Rate Yields $350 Million Buyback
Despite Neuroscience Setback AbbVie has Strong Recovery Ahead
3.95% Dividend Yield.Stock dropped 17.3% on the failure of Emraclidine in Phase 2 Trials, a drug only projected to make up ~7% of revenues.Aggressively expanding oncology offerings, acquiring ADC (antibody drug conjugates, non-chemo cancer drugs) expert ImmunoGen.Expects to replace Humira revenue in 2025 with two new immunology drugs and grow to be more than $27 billion in annual revenues.Shifting focus in neuroscience to Alzheimer’s and Parkinson’s, areas with few effective on-market treatments.Investment Thesis$AbbVie(ABBV)$ is a biopharma company, made famous by its blockbusting Humira, at one point the best-selling drug in the world. As biosimilars have eroded Humira ABBV has gone on an acquisition spree to replace lost Humira revenues while a
Despite Neuroscience Setback AbbVie has Strong Recovery Ahead
FNF has Strong and Safe Dividend Despite Housing Market
3.3% Dividend Yield recently announced 4% dividend increase.Expects robust housing recovery in 2026, betting on a similar timeline for commercial real estate.#1 market share in the US for title insurance, in both agency and direct sales.F&G has secular tailwind in life and annuity from aging population.Despite downturn in housing market, FNF grew revenues by 8% over the first 9 months of 2024.Investment Thesis $Fidelity National(FNF)$ is a provider of title insurance and settlement services to the mortgage industry, and a provider of annuity and life insurance through F&G which owns approximately 85% of.We believe we are at the cyclical bottom of the housing market, and at a long-term bottom for commercial real estate. As rates come down an
FNF has Strong and Safe Dividend Despite Housing Market
Total Energies Has Strong Free Cash Backed By High Yielding Growth Profile
5.3% Dividend Yield with 5% dividend growth.Strong long-term production profile, expecting a 4% CAGR output increase to 2030 with breakeven below $30/boe (barrel of oil equivalent).Long-term focus on LNGs (Liquified Natural Gas), expecting to grow export capacity by more than 50% by 2030, with 6 Mt/y (million tons per year) in long-term supply contracts signed with Asian importers.Trades at an attractive valuation at just 7.8x earnings.Committed to $2 billion in buybacks each quarter of 2025.Investment Thesis $Total SA(TTE)$ is a French energy company specializing in petroleum extracting and refining. TTE is the third largest non-OPEC producer in the world, producing 1.6 mmbbl/d of liquids (million barrels per day) and more than 5 bcf/d (billion cu
Total Energies Has Strong Free Cash Backed By High Yielding Growth Profile
Global Payments Slims Down with SMB Focus
Committed to repurchasing 2.3% of shares within the next quarter, on top of a modest 1.0% dividend.Strong presence in the SMB (Small-medium business) space, consolidating its 16 brands into one coherent entity.#1 commercial card processor in the US, processing more than 35 billion transactions annually across 830 million accounts.70% attachment rate for new offerings to existing customers.Investment Thesis $Global Payments(GPN)$ is one of the largest payment processors in the world, primarily working on the acquirer side. GPN processes more than 75 billion transactions a year with 5 million merchant customers in more than 38 countries. Compared to its other ‘legacy’ peers, GPN has targeted middle-market enterprise as its growth avenue. I
Global Payments Slims Down with SMB Focus
Economic and Market Review October 2024
$.DJI(.DJI)$ $.SPX(.SPX)$ $.IXIC(.IXIC)$ $iShares 20+ Year Treasury Bond ETF(TLT)$ $Gold - main 2412(GCmain)$ $WTI Crude Oil - main 2412(CLmain)$ OverviewReal GDP growth came in at 2.8% year over year, with inflation moderating to 2.4% year over year, though food and shelter were still elevated.Real disposable income rose once again for the quarter ending September 2024, the 27th straight monthly rise and the longest streak since record keeping began in 1959. However, the savings rate remains at near record-lows at just 5% compa
Economic and Market Review October 2024
TDK’s Tech Surge Sparks Free Cash Potential
TDK is leader in small solid state batteries and announced supply agreement with AppleGrowth areas in wearables, phones, IoT (Internet of Things) and EVs (Electric Vehicles)Dominant market share in several areas, including in smartphone battery components, holding the #1 market share of 50-60%.Strong manufacturing and materials science expertise, first to bring silicon anode batteries to market in 2023.Targeting late-stage development products for M&A.Aggressive capital efficiency plan, potentially divesting business units that do not meet the 10% ROIC watermark.$1 USD = 150 JPYInvestment Thesis $TDK Corp.(TTDKY)$ is a Japanese industrial components supplier, manufacturing 120,000 different products across 80 business units and 4 segments. We
TDK’s Tech Surge Sparks Free Cash Potential
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