Knowledge is Power: FIRE, US Stock Valuations, Retirement Edition

Before the Global Financial Crisis(GFC) of 2008-09, FIRE used to mean Financial Services, Insurance and Real Estate(FIRE) to define the US economy. FIRE sectors used to the hottest to be in. Then the FIRE burned out economy. Nowdays millennials have redefined FIRE to be Financial Independence Retire Early where people extreme measures to retire as early as 30 or 40 to escape the daily grind of crazy corporate life in the US.

Butter Cow

The Lithium Triangle: Maps

The Lithium Triangle contains over 70% of the world’s lithium reserves. The below map shows the location of this resource-rich area:

Click to enlarge

Source: gxy.com

From The Absolute Return Letter by Niels Clemen Jensen:

Lithium can be found on all continents. China has significant reserves and so does Australia, but South America holds the biggest reserves and produces the most lithium – the majority of it in an area called the Lithium Triangle, which is where Argentina, Chile and Bolivia meet (Exhibit 3). The Lithium Triangle accounts for well over 50% of global lithium production.

 

The Lithium Triangle is known for its high quality salt flats, including Bolivia’s Salar de Uyuni, Chile’s Salar de Atacama, and Argentina’s Salar de Arizaro. The Lithium Triangle is believed to contain over 75% of existing known lithium reserves with Bolivia alone accounting for about half of global reserves.

Source: The Absolute Return Letter – Nov 2018, Absolute Return Partners

 

World GDP by Country 1960 to 2017: Chart

The GDP growth by select countries of the world since 1960 is shown in the cool animated graphic below. China’s growth since 2000 is astonishing.

Click to enlarge

Source: Ramiro Marra

Itau Unibanco Holding SA ADR Stock Split

Brazilian bank Itau Unibanco(ITUB) has announced a stocks split in the ratio of 1:1 on its ADRs. Holders will receive one additional ADR for each two ADRs held as of the record date. The full details of the stock split are detailed in the notice below.

Itaú Unibanco Holding S.A.

NOTICE TO STOCKHOLDERS

50% Stock Split: Periods and Instructions

Itaú Unibanco Holding S.A. (“Itaú Unibanco” or “Company”) informs its stockholders, in addition to the Material Fact disclosed on May 24, 2018, that the Central Bank of Brazil approved, on October 31, 2018, the resolution taken at the Extraordinary General Stockholders’ Meeting held on July 27, 2018 in connection with the Company’s stock split, to be carried out as follows:

• the current 6,536,090,232 book-entry shares with no par value that comprise the capital stock, 3,305,526,906 of which are common and 3,230,563,326 are preferred shares, will be 50% split. As a consequence, stockholders will receive one (1) new share for each two (2) shares of the same type they own;

• Baseline date: November 19, 2018;

• Trading: As from November 21, 2018, the Company’s shares will be traded ex-rights to the split, and it is certain that these new shares will be included in the stockholders’ position on November 26, 2018;

• Rights of the Split Shares: these new shares will be fully entitled to the earnings to be declared as from November 26, 2018, under the same terms of the common and preferred shares issued by Itaú Unibanco, as applicable;

• Dividends: Monthly dividends will be maintained at R$0.015 per share so that the total amounts monthly paid by the Company to stockholders will be increased by fifty percent (50%) as from January 02, 2019. The annual minimum dividend assured to preferred shares will also be maintained at R$0.022 per share;

• Fractions of Shares: Stockholders may transfer fractions of shares arising from the split in the period from November 26, 2018 to December 26, 2018, and any remaining shares arising from the fractions of shares will be separated, grouped in whole numbers and sold on the B3 S.A. – Brasil, Bolsa, Balcão (B3 – Brazilian Exchange and OTC) on January 11, 2018, and the net amount determined will be made available to the stockholders of these fractions as from January 24, 2018; and

• International Market: the securities traded on the U.S. market (ADR – American Depositary Receipt) will also be split by fifty percent (50%) so that investors will receive one (1) new ADR for every two (2) ADRs they hold on the base date. Accordingly, the ADRs will continue to be traded in the proportion of one (1) preferred share of the Company to one (1) ADR.

Source: Itau Investor Relations

Disclosure: Long ITUB

Banco de Chile ADR Stock Split

Banco de Chile(BCH) is one of the largest banks in Chile. The ADR closed at $88.26 on Friday but reached over $104 in the beginning of this year. According to a new from the depository the ADR will have a split in the ratio of 3:1 soon. The details of the split are noted below:

  • Ticker: Banco de Chile(BCH)
  • ADR Record Date: Nov 15, 2018
  • ADR Payable Date: Nov 21, 2018
  • ADR Effective Date: Nov 23, 2018

The original ADR ratio was one ADS to six hundred Common Shares. This is being changed to a new ratio of one  ADS to two hundred  Common Shares. As a result of this change, ADR holders will receive 2 additional ADRs for each ADR they own as of the record date Nov 15, 2018.

For many years now, BCH has issued two cash dividends and one stock dividend each year. The cash dividends were issued in March and July and the stock dividend also in July. Unlike those dividends, the planned ADR split is being implemented by the depository and not the bank. Lower share prices after the split may drive more liquidity in the ADR trading.

The long-term price return of BCH is shown below:

Click to enlarge

Source: Google Finance

Disclosure: Long BCH