Year: 2016

Zenbanx Canada, no more??

Hamilton

We have had some misgivings about the use of a “technology” company in a credit union, see our blog of Sept. 1, 2015, one that was missed by the defamation suit that was launched at about that time against me. The suit, by the way, is perhaps still operational despite the fact that the instigators have not lived up to their commitments.

In that blog I estimated that Zenbanx would loose another $5 mln. by year-end 2015. I was again too optimistic as the actual loss turned out to be $6.6 mln. for the last 6 months of 2015. See below;

zenbanx income 2015

The total since inception mid 2014 is now $16.617 mln. but that does not include certain managerial and professional expenses that were born by the parent and conservatively are in the order of another 1.5 mln. or so. What little revenue there was comes from, of all things, foreign exchange translations and rentals. Payroll, occupancy and governance are now well over 3 mln. a year. Little wonder then that the credit union is looking to “renegotiate” the deal with ZBH. Unfortunately that will not be as easy as it was in the past as the two Senechals have been reduced to one, no doubt after a “golden handshake”.

A particular paragraph, under “related party transactions” on page 36 caught our attention;

zenbanx board statement

First of all, we the members, did not even know that there were board directors at ZBC. It was  mentioned in passing at the last AUM but you would have had to listen very carefully. The board members, at least those that were named are Ralph Kikkert, Marijke Kanters, Jennifer Visser and Angela Pollard. The person the statement refers to is of course now ex-Vice-chair Angela Pollard or, more precisely, Pollard and Associates which company was petitioned at the court by the credit union in stead of Collins Barrow, well before she herself stepped down. Not only did that result into “billings” of a few hundred thousand dollars but now there is an additional $96,000 to share between the four of them. The concept of appointed directors is alive and well despite the regulators earlier strong objections and clear prohibitions against professional people holding office within a certain time period in the Credit Union Act.

     Before this whole affair is over and done with we would estimate that the financial damage of this predictable unwise experiment will be around $25 mln.  Even at 60% that is twice the self proclaimed catastrophic event that was mentioned in the offering memo for the B share issue and this one is, for the most part, not tax-deductible. No statement of material change was ever issued even though these developments were blatantly obvious starting from mid-year 2015. More on that some other time.

SLB, Schlumberger N.V. update

Hamilton

SLB mar 24 2016 bslb mar 24 2016 s

You did not know that Schlumberger is a Dutch company? Well it is, at least for tax purposes.

We are concerned that SLB suggest that oil could go down further, perhaps after a period of sideways action. From the big picture it is perfectly clear that we are looking at a “flat” that is incomplete and can still easily go to $40 or beyond. In fact it is  a classic flat without any warts at all. Therefore this C wave should unfold in a 5-wave sequence pretty well straight down. To date we can only count waves 1, 2, 3 and (part) of 4. There is still more of 4 to go and then 5. Already there is a possibility of overlap between waves 2 and 4 which should not happen. This can be explained by assuming a triangle is in the making as wave 4. In EW there is a school of thought that where overlap occurs with a triangle, it is not the extreme that counts but the value at the apex or e-wave of that triangle. Technically then there is no problem and we should expect a 5th wave at some point between now and a year from now. It is highly unlikely that this should happen without oil itself also getting hit. See also the oil blog.

NWC, North West Co.

Hamilton

NWC mar 24 2016 bNWC mar 24 2016 s

This  storied company is a retailer that does much of it’s business in the North West presumable. Chances that you would actually own the stock are relatively slim, but for the few that do this may be worth taking note of. Long-term we have , potentially, a clean 5 wave sequence up. Short-term we have a classic diagonal which is always a termination pattern, in this case a 5th wave of 5. On top of that it is very reliable or predictive. The stock should return to the base of this pattern at the very least. From here that is about $10 or roughly 30%. A much more likely target, wave 4 of previous degree, is at about $13 so we would definitely sell this stock.

Originally this was a competitor of the Hudson Bay Company. At some point they merged and in 1990 the name was revived  again as a separate company. The long-term chart above therefore covers most of the company’s life.

HSI, Hong Kong index update and review.

Hamilton

HSI march 24 2016

 

We have been rather prescient with our calls on this index and , and by extension, the Shanghai index as well.  So a review of the EW reading for this index might just be appropriate.

Our big picture take on this is that the index made a B-wave high last year and is now falling in wave C which should take the index down by about 2/3d’s, to the 4th wave of previous degree or even the 4th of 3 of previous degree, and, as is often the case, to a level that corresponds with C being equal to A in the “flat” A-B-C.  All of those things are somewhere between 1000 and 800 on the index, all three of them, so they form a nice cluster. Moreover we already seem to have broken through the lower boundary of the 40 to 50 plus channel that has contained this index for most of it’s existence, the only clear exception being the 2008 peak. A swing to the other side now would not be an unreasonable expectation if you think of the pendulum overshooting the lower boundary by a similar amount, more or less.

In short we remain as bearish as before even if we are not entirely sure of the short-term EW position of this index, that is is it wave 2 of 3? or are we still in wave 2 of the 5 wave sequence that wave C should follow? In any event, I doubt that the index will be able to re-enter the channel, roughly at about 22500. Before that 21000 if exceeded, would cause a number of overlaps that are highly unlikely.