The G.S.T. affect

This blog,usually, does not and will not write on government matters nor on fiscal policy.However it is the opinion of Workathon that economic growth would be higher if the G.S.T. tax was reduced to 3%.Firstly putting more money into the hands of consumers will always have a higher multiplier affect tnan in the hands of the government .That is ,expenditures by consumers will increase gross income by more than the same expenditure by the government.This has something to do with the government infrastrucure and the nature of products consumed.But a dollar of consumer income will increase gross income by more than a dollar and more than a dollar in the hands of the government. In addition,the G.S.T. tax raises an increasing amount of revenue for the government because it grows as national income grows.So this year at a 5% rate it raises about $85 billion in 2013.This is in addition to all other sources of revenue.This puts a tremenduous amount of money into the hands of the government and every year it increases.All this money(and some is wasted) has resulted in a very slow rate of growth for the Canadian economy.Growth will start to rise if the G.S.T is reduced to 3% and the consumer multiplier kicks in. 

Softchoice's turn

Robert Half needs to use the same two consultants as before to do this project.It should take about two weeks.We need to use my notes to find out what share purchases were made and recommended to buy.We need to look at each stock and see how it has done.Put this perhaps in an appendix.Lastly they need to put the contents of interviews with senior management(not only the president).If something went wrong was it in the execution of the plan or just lack of a plan at all.The report should be about 15 to 20 pages long with an appendix.They need absolutely to get a 15 to 20 minute presentation with the board of directors.Use an easel with drawing paper to show the board what they are talking about.This project is worth $35,000 and should be finished by April 25.There must of course be one last interview with the president to hear his defense on all matters.
workathon

Merger theory

My  actual "notes" are delivered on my other blog called Blogdaleupsome.Some of the theory of my "notes" will be explained on this blog.One of the reasons given in the Harvard Business Review for mergers creating synergies is that both companies must have similar corporate cultures.My "notes"allow and set up situations where both companies have similar corporate cultures.I buy shares in the smaller company in smaller amounts.This gives(in theory) a chance for the acquiring company to become familiar with the smaller company in a non-threatening situation.As the acquirer gets more of the shares gradually the two corporate cultures start to merge also.This ,I believe , is more effective than the situation where all the shares are bought in one short period.In addition,it gives a chance for the two chief executive officers to get to know each other on a gradual basis.This is certainly one reason I expect the synergies from my method to be greater than ordinary mergers.
Workathon

Is Chorus Aviation repositioning?

An earlier blog made the statement that Chorus Aviation seemed to be repositioning itself after the loss of the prestigious Thomas Cook contract.Since that time Chorus Aviation has fallen and stayed at that level.It is about two months away from reporting it's next quarter.Soon shareholders will start to take a closer look at Chorus management.Two redeeming features of management is that it has invested in it's maintenance facilities in Halifax and it is making money from leasing it's new aircraft(Q400 aircraft).

However the best and easiest comparison is to compare it to Air Canada,it's partner in regional air delivery.Air Canada's share price has tripled in the last four months ;it used to trade around $.90 and now it is around $2.70.Chorus is supposed to share in revenue from regional delivery in Canada.Over the same period Chorus has moved up maybe 15 to 20%.This is somewhat startling but maybe Chorus can pull out a good quarter.On the other hand Chorus was trading about $4.70(for about a week) in expectation of a good fourth quarter.When this did not happen the share price fell back to $3.90.Now as a consequence lots of people(including me )want a good quarter or else maybe somebody's job.

Just in the corner

Just Energy has consistently traded in the $9.00 to the $11.00 per share range.About two weeks ago it fell to the $8.00 range.However this was not the end of the story;recently it trades at the $7.50 area.Behind this fall is the release of quarterly results.It was an ordinary  report which talked about a 10% increase in the customer base and revenues.The report however compared the 2012 results with 2011 results and gave some very spurious numbers.Noone believed these super -duper comparisons.This gave a shadow to it's quarterly report.However the report went further and talked about a reduction in the dividend;this when the quarterly report showed that the payout ratio has gone down not up.In other words the dividend seems safer now.
The share price fell a little bit on a weekly basis this week.It is possible that shareholders are worried about a dividend reduction in April.I feel that if Just Energy reduces it's dividend and the share price stays in the $7.00 to $7.50 range that the board of Just Energy should look at firing the C.E.O. and the C.F.O.
blogdaleupsome

Cline Mining's tough decision

Cline Mining used to trade over $1.00 four or five months ago.Now it is trading about$.10 a share.This is bad but a few weeks ago it was trading at $.05 a share.It's prospects are slightly better.Cline was unable to pay an interest payment of $2,500,000.For awhile their new Elk mine was the only producing mine  but now it too is under temporary suspension.Cline needs about $35,000,000 to pay off it's debts.
Cline has lined up financing from a company called Marret.The Marret plan will have a rights offering of $35 million and a conversion of debt into common shares of $25 miilion.Cline has now a second offer by a group;this plan is called the Cline Transaction.It will give Cline $35 million in cash to pay off Marret.The Cline Transaction will acquire 50%of their securities or require the sale of assets.The Marret plan will be implemented if Cline does not have a binding agreement.
At this point the Marret plan seems cheaper because it will give Cline time to achieve higher commodity prices for it's chief product -coal.However a right's offering now would be expensive and would dilute their existing shares.But the trick for Cline is not ot convert to common shares but into a senior secured lien.Over time Cline could try to get cheaper long term debt because in the final analysis every dollar saver on interest goes right into earnings.


workathon