Archives for January 9, 2018

There’s This Entrepreneurial Spirit’: Calgary Charts New Course for its Economic Future — Again

The skyline of downtown Calgary, as seen from the ridge above the north bank of the Bow River. Calgary Economic Development is now working on a new economic strategy for the city’s next 25 years.

With arched windows and Edwardian pilasters, the Odd Fellows Hall in downtown Calgary harkens back to a time when city fathers dreamed of a prairie metropolis as great as Chicago.

Today, the 105-year-old structure is alive again with the ambitions of another generation of Calgarians, one with an eye on Silicon Valley, not the Windy City.

It’s the home of Nucleus, a not-for-profit hub where the users — ranging from startups to post-secondary schools to venture funds — meet, work, learn and discuss innovation.

If all goes well, it’ll be a hotbed for Calgary’s emerging technology sector.

Or as 29-year-old Mark Blackwell, one of the bright minds behind Nucleus, enthusiastically puts it, this will be a place to “start figuring our shit out as it relates to Calgary 2.0.”

High-tech entrepreneur Mark Blackwell, who found success in California’s Silicon Valley, believes Calgary’s technology sector has a promising future.

What will Calgary 2.0 look like? Blackwell is one of many people invested in that question. Calgary’s future is a hot topic in offices from corporate headquarters to city hall.

It’s also a subject of intense focus at Calgary Economic Development (CED). The organization, already spearheading efforts to land Amazon’s second headquarters, is now crafting Calgary’s new economic strategy.

‘I think we still suffer from the stereotype of Stampede and cowboys and pickup trucks and oil, which is not a very innovative stereotype.’
– Adam Legge, former president of the Calgary Chamber of Commerce
It’s a sweeping exercise scrutinizing the city’s strengths and weaknesses, the talent it’s producing, industries that could be built upon and potential opportunities for upcoming sectors.

“For the last 25 years we have led economic and population growth in this country,” said Court Ellingson, CED’s vice-president of research and strategy.

‘We will continue to lead this country’

“And it is our plan that over the next 25 years we will continue to lead this country and we will double our city in size.”

It’s a tall order.

While it’s been barely five years since CED’s last strategy was inked, in some ways, it’s been a lifetime. Calgary once had the swagger that came with $100 US oil and a boom that delivered jobs, immigration and investment.

The good times would never end. Then they did.

Oil prices began a long slide in 2014, ultimately skidding below $30 per barrel two years later. Downtown towers emptied out as layoff notices spread far and wide. Alberta’s unemployment rate hit its highest point in two decades.

Even now, with the provincial economy leading the country in growth, unemployment at 7.3 per cent remains greater than the national average.

Calgary Economic Development, which has received international attention for its efforts to lure Amazon, is now working on an economic strategy for the city’s next quarter century.

CED is now looking to further broaden Calgary’s financial prospects, with perhaps no better example than the organization’s ambitious chase of the Amazon prize — a bid that has grabbed headlines despite going up against the likes of Toronto, New York and Washington, D.C.

CED is sifting through reams of analysis to identify Calgary’s advantages. Grafted onto it will be consultations with hundreds of citizens. The work, which began late last year, will be completed in the next few months.

“There’s an understanding in this community that we are going through a structural change of the economy,” Ellingson said.

“We often see or think about the reflection of that structural change being the change to oil and gas, but actually the whole globe is going through an era of change right now.”

Recent upheaval has forced many cities to take a hard look in the mirror. And there’s no shortage of communities looking for ways to shift their reliance from one industry and spread it over several.

Calgary — and the province — has been down this road before.

Diversification efforts important

In the late 1990s, with oil prices sagging, the province pumped both money and air into Alberta’s nascent technology sector. While there were successes, diversification efforts took a back seat when oil boomed again.

Former chamber president Adam Legge says Calgary must not lose focus on diversification, especially with the strides made in agriculture, technology, tourism and transportation.

These days, officials note that the city is making big strides in agriculture, technology, transportation and tourism.

For instance, Tourism Calgary reports that the city attracted a record 83 events in 2017, ranging from the arts to athletics. In the third quarter of the year, the sector saw a year-over-year increase of an additional 72,779 overnight hotel rooms sold during the three-month summer period — also a record.

“Tourism brings over $1.7 billion [Cdn] to our economy, locally, every year,” said Cassandra McAuley of Tourism Calgary.

“When tourism is strong, and when we have a strong city, it really has a strong ripple effect.”

Former Calgary Chamber of Commerce president Adam Legge says the focus on diversification can’t be lost.

It’s important, regardless of oil prices, because Calgary is facing a long climb after the last collapse. In fact, it could be 10 years before it feels like the city has got its groove back, Legge said.

He cites Calgary’s education levels, quality of life and enviable location as reasons for optimism. But the city has challenges.

He worries local government may struggle with the pace of innovation and believes Calgary still labours under the stereotype of a city that doesn’t necessarily embrace change.

“I think we still suffer from the stereotype of Stampede and cowboys and pickup trucks and oil, which is not a very innovative stereotype,” Legge said.

Innovation is no stranger to Blackwell, however. And, as Calgary tries to find its economic way, it’s people like him from whom CED will seek input.

Blackwell knows the buzz of a thriving tech sector, taking a Calgary software company on a “roller-coaster ride” through California’s Silicon Valley.

“We almost went bankrupt twice … but we got some really good advisers,” he said. “Long story short, we kind of kept it between three of us and sold it for just about $30 million.”

Valley life was good, but Blackwell chose to return to his hometown to help grow the local sector. He thinks Calgary can create something special and sees a lot of promise in the young, talented entrepreneurs who are striking out on their own instead of scanning job boards.

“We can’t forget that this city was built from entrepreneurs in a whole different era, and there’s this entrepreneurial spirit that drives this town,” he said. “It’s now just an entirely different game.”

SpaceX Launches Secretive Zuma Spacecraft

SpaceX kicked off the new year with a mystery-shrouded mission to deliver a government spacecraft, called Zuma, into orbit.

SpaceX launches secretive Zuma spacecraft

After more than a month of delays, a SpaceX Falcon 9 rocket vaulted toward the skies at 8 p.m. ET Sunday with the secretive payload. It launched from Cape Canaveral Air Force Station in Florida.

The space exploration firm, which is headed by Tesla (TSLA) CEO Elon Musk, initially scheduled the Zuma mission last November.

SpaceX gave a couple reasons for the schedule changes. At one point, SpaceX said it delayed the mission for “fairing testing.” The fairing is the very top portion of the rocket that houses the payload. “Extreme weather” also slowed down the company’s launch preparations.

Last week, SpaceX finally declared that both the rocket and the payload were “healthy” and ready for launch.

On Sunday, Zuma was delivered to low-Earth orbit, which is typically defined as any orbital path less than about 1,200 miles above the Earth’s surface, according to NASA. Zuma’s precise destination was not disclosed.

That was not the only thing kept secret about Zuma.

The spacecraft was built for the U.S. government, and it’s not unusual for the government to keep information about sensitive payloads under wraps. Typically these payloads involve a military concern, such as national security, defense or surveillance.

When asked about the project in November, Northrop Grumman (NOC) — the Virginia-based aerospace and defense company that built the Zuma spacecraft — declined to give any details about the spacecraft or reveal which arm of the government funded it.

“The U.S. Government assigned Northrop Grumman the responsibility of acquiring launch services for this mission,” the company said in a statement. “Northrop Grumman realizes this is a monumental responsibility and we have taken great care to ensure the most affordable and lowest risk scenario for Zuma.”

The company declined further comment Sunday.

Because of Zuma’s secrecy, SpaceX didn’t live stream the entire mission. But there was still plenty for SpaceX to show off after launch.

The company executed its signature move: guiding the first-stage rocket booster back to Earth for a safe landing.

Just over two minutes after liftoff Sunday, the first-stage booster separated from the second stage and fired up its engines. The blaze allowed the rocket to safely cut back through the Earth’s atmosphere and land on a pad at the Cape Canaveral Air Force Station.

SpaceX lands boosters so they can be reused in future missions. It’s meant to help make spaceflight cheaper.

The Zuma launch kicked off what SpaceX hopes will be an exciting year.

The company completed a record-setting 18 launches last year, and SpaceX plans to do even more this year, according to spokesman James Gleeson.

Later this month, the company plans to debut its latest invention: the Falcon Heavy. The monstrous rocket will have three times the thrust of the Falcon 9.

An exact date for the inaugural launch has not been set, but Musk wrote on Instagram last week that SpaceX is looking to do it before the end of the month.

Supercharge Your TFSA With These 3 Dividend-Paying Stocks

It’s the most wonderful time of the year. I am, of course, talking about TFSA investing time! As the calendar switches over to 2018, Canadian investors can make another $5,500 contribution to their TFSAs.

Some might argue that with interest rates currently on the rise (both the Federal Reserve and the Bank of Canada have hiked the key interest rate in 2017, and more increases are expected in 2018), dividend-paying stocks are not as appealing, but I disagree, and I have history to back me up.

According to data compiled by Professors Fama & French, dividend-paying stocks have outperformed non-dividend payers, averaging 10.4% annual growth vs. 8.5% from 1927 to 2014 and have also exhibited lower volatility. You can bet against that long-term trend if you wish, but I think every portfolio should include at least some dividend-paying stocks. Today, let’s take a closer look at three stocks that are worthy of consideration to invest your fresh TFSA capital in 2018.

Genworth MI Canada (TSX:MI)

The company is the largest private residential mortgage insurer in Canada and is a dividend-paying machine. In 2017, the company hiked its dividend for an eighth consecutive year since its IPO in 2009 and currently yields over 4.3%. With a current payout ratio of only 35%, the dividend appears sustainable, and future increases are also a possibility.

The company is up over 28% year to date, but it still looks relatively cheap, trading very close to book value (1.03) and at 7.42 times earnings.

Killam Apartment REIT (TSX:KMP.UN)

Our next contestant is one of Canada’s largest residential landlords, owning and operating 184 apartment properties and 35 manufactured home communities.

Owning shares of a real estate investment trust (REIT) is a great way to gain exposure to real estate and offers some advantages over direct real estate investing. These advantages include greater liquidity (you can sell your shares almost instantly and at a very low fee) and the ability to collect your income (dividends) without having to deal directly with bad tenants.

This REIT offers a yield of 4.36% and hands out distributions on a monthly basis.

BCE Inc. (TSX:BCE)(NYSE:BCE)

Finally, we have Canada’s largest communications company, the well-known BCE.

This is by no means what you might call an exciting company in terms of growth, and it won’t make you rich overnight, but it’s as steady as it gets when it comes to paying out dividends. The company has increased its dividend every year since 2009, sometimes more than once a year, and it has a yield of 4.75% as of this writing.

The telecommunications industry might seem saturated, but BCE keeps finding ways to add to its top line. One such example is its recent acquisition of Manitoba Telecom Services.

The payout ratio of 86% is a little high, but it’s not unusual for a mature company and is also in line with its peers in the industry. The dividend should remain sustainable, as long as BCE maintains or increases its market share and continues to increase its yearly revenue. It has done a remarkable job on both counts in recent years.

Foolish bottom line

These three companies currently yield over 4% and provide diversification benefits for investors, given that they operate in three different sectors. Do yourself a favour in 2018: add those solid companies to your TFSA and collect fat dividend cheques for years to come.

3 Reasons to Hold Gold Throughout 2018

Last year, gold increased by close to 13%. The shiny metal finally seems to have found a bottom after declining by close to 35% in the preceding years. Investors have had very little utility for the metal during an expanding economic period, as stocks performed so well. In spite of acting as a hedge against inflation and safety in the wake of any major calamity throughout numerous generations, it never ceases to amaze just how fast the metal can be thrown aside, and yet it never loses its lustre.

Coming into 2018, investors have not had it this good in a very long time. With close to a decade between now and the previous recession, gold may see a lot of interest for a variety of reasons over the next year.

Cryptocurrency

As many investors have used this new currency to diversify their portfolios and hedge against market fluctuations, the running to the exits? may create a huge demand for gold, which may act as a catalyst for investors to see massive gains from the metal. Although there are very few productive uses for gold, it will not stop investors from considering investing in companies such as Goldcorp Inc. (TSX:G)(NYSE:GG), which currently trades close to tangible book value.

North Korea

With the potential for governments, companies, and investors alike to get spooked, the uncertainty between countries (even if it is insignificant to the greater economy) has historically been a reason for investors to rush into gold. With relations between North Korea and the United States in a very delicate state, it could take no more than a tweet to send the price of gold up by another 10%.

As a reminder, the smaller the gold company, the more sensitive it is to the overall price change of the metal itself. In the case of Eldorado Gold Corp. (TSX:ELD)(NYSE:EGO), the amount of tangible book value per share is nothing short of $4.49, as the current share price sits at less than $2. Investors can reap the huge potential that this name has to offer should gold increase further in value.

Higher interest rates

With interest rates on the rise, investors will need to familiarize themselves with this terminology: backwardation and contango.

As gold is a commodity that can be stored, the price for delivery in the future will be higher than the current spot price. This is contango. In the event that the price for delivery in the future is set at a lower rate than the spot rate, it would be known as backwardation.

In the case of gold, higher interest rates may cause a gap in the spot and future prices and a higher future price will be needed to justify tying up money in a transaction. Although the jury remains out on this particular point, the expectation is that this aspect has properly been priced into the market over the past few years, making gold a very attractive investment for 2018.

Cougar Hunt in Alberta Sparks Debate Among Scientists, Hunters and Activists

Cougar hunt in Alberta sparks debate among scientists, hunters and activists

EDMONTON — Hunters have been killing cougars in Alberta for decades.

They often follow prints in the snow or use dogs to track the big cats before they are shot with guns or bows.

Last month, outdoor television host Steve Ecklund’s cougar hunt led to online threats and criticisms — including a penis comment from Laureen Harper, wife of former prime minister Stephen Harper — after he bragged about it on social media.

Similar outrage followed the killing of No. 148, a well-known Banff grizzly bear, by a hunter in British Columbia last summer.

Both kills were legal.

Scientists say a cultural divide still exists — even within their own community — about hunting large carnivores.

“It’s seeing a much greater value on an individual animal rather than a population, but the system is set up for us to manage populations, not individuals,” said Adam Ford, an assistant professor of biology at University of British Columbia Okanagan.

“You see this come up when the individual-focus conservation people see a dead cougar and call people out for having a small penis.

“The way hunting has been designed for a long time is to not have an impact on the population.”

Alberta has regulated its cougar population since 1969. An annual quota allows up to 155 animals to be hunted each year.

The province estimates there are 2,000 to 3,500 cougars.

Both the government’s top carnivore expert and University of Alberta biologist Mark Boyce have said it’s a sustainable population that must be managed because cougars can prey on cattle or become a public safety risk.

Similar debates have taken place around grizzly bears. The hunt in B.C. was banned last month after surveys showed it wasn’t supported by most residents.

Although people are concerned about “beautiful cuddly carnivores” being shot, Ford said he worries scientists have been weighing in on the ethical debate over hunting.

“My morals are different than yours, but facts should be facts,” he said, noting he’s working on a paper looking at the growing divide between scientists on issues such as hunting.

Hunters have defended the hunt as a tradition.

“As outdoor enthusiasts, we look for opportunities to get into the outdoors,” said Wayne Lowry, a hunter and past president of the Alberta Fish and Game Association. “The cougar season offers a very late-season hunting opportunity.”

Lowry, who killed a cougar near Crowsnest Pass about 15 years ago, said it’s unlike any hunt he’s experienced.

“It took me two years,” he said. “For me, it was a once-in-a-lifetime kind of event.

He still has the mounted cat in his home.

“It was a great experience … You see the dogs get excited and you get excited as well.”

Lowry admitted there’s a lot of controversy about hunting.

“The debate is the same regardless of who it is, where it happens and what the species is. You have people who don’t like it and people who do.”

One scientist said the outrage is not generally with hunting, but an ethical debate over killing large carnivores that can suffer. Chris Darimont, associate professor of geography at the University of Victoria, said hunting for sport makes people uncomfortable.

“They cannot accept the idea that people kill carnivores not to feed their families, but to feed their egos,” said Darimont, who is opposed to killing animals other than for food or protection.

Ecklund said in a social media post that he made a stir-fry from the cougar, although eating the meat isn’t required by law.

Darimont, who hunts one elk or deer a year for food, said it’s a “thin veil of deception” for hunters to say they’re eating the animals, because predator meat isn’t very tasty.

“Wildlife managers for decades have acknowledged that these (animals) are not killed for their meat, but for their trophy items.”

The cougar hunt in Alberta should be re-evaluated, Darimont suggested. Science shows there are risks in overharvesting, because it’s tough to count carnivores and get a clear picture of the population, he said.

“There’s lots of uncertainty. Managers can and do make mistakes, and then we are just starting to learn of the evolutionary and social costs of killing large carnivores.”

The Alberta government says it hasn’t received any calls to end the hunt since the cougar controversy hit.

The province did ban the grizzly bear hunt in 2006 due to concerns about a dwindling population — although recent increases in some areas have led to calls to allow it to return in Alberta.

Bombardier, Inc. Reminds Investors Why it’s Still a Bad Buy

Bombardier, Inc. (TSX:BBD.B) has managed to disappoint investors yet again. While the company planned to deliver between 20 and 22 CSeries jets in 2017, the final number came in at just 17. However, Bombardier maintains that it should still be able to meet its goal of delivering 40 jets this year.

The problem is that Bombardier’s reputation has been problematic, which serves as a reminder that even though it partnered with Airbus earlier in the year to produce its jets, Bombardier can’t miraculously heal all that ails the manufacturer.

Investors initially responded positively to the news of the partnership, as it was expected to create efficiency and avoid costly tariffs south of the border. Although it may be too early to judge the strength of the new partnership, investors should not be too quick to trust the company’s projections and expectations.

The company is known for being late and unreliable

New York’s Metropolitan Transportation Authority (MTA) didn’t even consider Bombardier for a bid on its subway cars because of Bombardier’s reputation for being late on its deliveries. The contract was worth as much as US$3.2 billion, and MTA wasn’t the only customer that sought out other vendors.

Metrolinx, Ontario’s largest transit authority, followed a similar path when it refused to let Bombardier bid on a contract for the operator’s GO Transit trains. The company even tried to get out of an existing contract with Bombardier as a result of that company’s manufacturing and quality issues.

The company’s poor reputation is just one of many reasons why Bombardier is a bad buy.

Stock is back on the decline

Bombardier had a strong 2017 that saw its share price rise by as much as 40%. However, in the past month, the stock has lost more than 10% of its value.

Lack of profitability should be a big concern

Despite help from the government, Bombardier continues to be plagued with losses in each of the last four quarters, and there is no reason to expect that to change anytime soon.

The company’s revenue was up less than 3% in its most recent quarter, and although working with Airbus has helped bring in more deals for its CSeries jets, Bombardier will have to share those sales and profits (if any) under a partnership agreement.

Bombardier is a speculative investment at best

Although investors may point out that returns were very strong in 2017, Bombardier’s share price has dropped more than 26% over the past five years.

With no profits, limited sales growth and negative equity, it’s hard to find a reason to buy shares of the company’s stock unless you’re a speculator. In the short term, Bombardier could offer you some returns if you’re able to pick low entry points, but this is not a stock that holds much promise over the long term.

What should investors do?

The safest thing investors can do at this stage is to adopt a wait-and-see approach. Until Bombardier can prove that it can kick its old habits and turn its business around, it will still be a high-risk investment.