₪ David Pescod's Late Edition March 25, 2008
ARISE TECHNOLOGIES (T-APV) $2.13 +0.65
TIMMINCO LTD. (T-TIM) $19.90 +1.91
We’ve been whining and complaining more than a little, that how
come the mess created by the boys on Wall Street is spilling over
into so many other sectors of the market? Who would have thought
with oil going from $85.00 to $110.00, we could still see oil and gas
stocks drop 50%? But that’s the market we are in, where there is still
a lot more fear than greed out there. Hopefully by the end of the
year, it will be quite different and Jeff Rubin of the CIBC will be right.
One story we have followed and are shocked by the stocks meltdown
is Arise Technologies. But in an article this past weekend in the
Globe and Mail, I think it will have people once again, looking at this
story.
Eric Reguly writes, “Solar power will cost next to nothing. The
fuel – the sun – is free. The price of the photovoltaic cells used to
covert sunlight into electricity will plummet. Just give it time. That's
the theory of Ian MacLellan, the founder, vice-chairman and chief
technology officer of Arise Technologies, a Canadian photovoltaic
(PV) cell company. But there's one small hitch: Arise doesn't have
time.
PV cells are still expensive. The solar energy market needs priming.
Arise shareholders want profits. Mr. MacLellan is 51 and would
like to see his company make a buck before he's a senior citizen.
Enter Germany. The ever-so-generous Germans tracked him down
and made him an offer he couldn't refuse - free money, and lots of it -
as long as Arise promised to build a PV factory on German soil. The
German love-fest even came with flowers for Mr. MacLellan's wife,
Cathy. Today, Arise's first factory is about a month away from completion
in Bischofswerda, a pretty eastern German town about 35
kilometres east of Dresden, in the state of Saxony. Covering two storeys
and 100,000 square feet, the sleek grey metal building will have
some 150 employees and produce enough PV cells each year to
power the equivalent of 60,000 houses. The value of the annual output,
based on today's prices, will be $375-million, or more than three
times the company's current value on the Toronto Stock Exchange.
"I couldn't build this in Canada," Mr. MacLellan said. "Germany is a
very high-quality environment for us. I have nothing to worry about."
Arise couldn't build the plant in Canada because the level of financial
incentives, engineering and construction expertise and general
awareness of the growth potential of renewable energy simply don't
exist there.”
For those who are interested in Arise Technologies, give the article
a read. Simply to www.globeandmail.com and under “Search”
type Eric Reguly. It’s called “Lessons from Germany’s Energy Renaissance.”
If you would like Sara’s report on Arise, e-mail Debbie at
debbie_lewis@canaccord.com.
CDN WESTERN BANK (T-CWB) $25.45 +1.36
CDN. IMP. BANK OF COMM (T-CM) $67.40 +0.60
Another article yesterday caught our attention because it’s not
too often a small bank based in Western Canada attracts the attention
of Bloomberg’s, which is read by just about every financial-
type around the world. They featured Canadian Western Bank
and you’ll notice that their chart is like that of many other financial
institutions around the world, but there are some pretty interesting
comments by writer Sean Pasternak on this bank.
He writes, “The top-performing North American bank stock of
the past five years has 35 branches, and is led by a chief executive
officer who has no voice mail and says he isn't smart enough
to understand complex debt investments. Canadian Western
Bank knows about lending to companies in oil-rich Alberta, however,
and that helped the company avoid quarterly losses for the
past 20 years. The stock more than quadrupled in the five years
ended Dec. 31, six times the return of the 24-member KBW Bank
Index, which includes Bank of America Corp. and Citigroup Inc.
``They focus on the high value-added, predictable businesses,''
said Martin Hubbes, chief investment officer at AGF Funds Inc. in
Toronto, which oversees about $28 billion and holds Canadian
Western shares. ``You don't see them getting involved in offbalance
sheet SIVs or capital markets activities.''
Canadian Western's profit probably will climb about 20 percent
this year, while the average bank will report a ``modest decline,''
said Dundee Securities Corp. analyst John Aiken. The Edmonton,
Alberta-based lender has avoided credit losses stemming from
the subprime mortgage crisis, which has led to about C$6.65 billion
($6.5 billion) of writedowns at bigger Canadian rivals Bank of
Montreal and Canadian Imperial Bank of Commerce.
The bank primarily lends to companies that service Canada's
oil and gas industry, the largest supplier of fuels to the U.S. Alberta's
jobless rate hit a 30-year low last year, and its economy is
forecast to lead Canada with 3.2 percent growth in 2008, according
to a Feb. 21 report from Bank of Nova Scotia.”
Pasternak also writes, “Chief Executive Officer Larry Pollock,
who has been in the position for 18 years, said the bank doesn't
invest in things it doesn't know. ``We're not smart enough to understand
that stuff,'' Pollock said in a telephone interview. ``I think
that's where everybody got caught. They got hoodwinked into
relying on ratings, when they should be concentrating on do you
really know what you're buying here?'' Instead, the bank's asset
liability committee, which consists of about 15 people ranging
from senior managers to accountants, evaluates credit risks case
by case. Canadian Western, which does about 80 percent of its
lending to companies, works primarily with firms that don't even
have credit ratings.”
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