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Due Diligence: Toromont Industries Ltd. - Building Together For An Exciting Future

Due Diligence: Toromont Industries Ltd. - Building Together For An Exciting Future
Hi,
This is my first attempt at writing a DD report. I hope it makes sense.
Just a few cautionary words:
  • Grammar (and English in general) is not a skill of mine. There will be a few parts that you might have to decipher, good luck.
  • I tried not to provide too much commentary and stick to the facts. I know you are spending your valuable time reading this and you probably don't want to listen to some random guy on the internet pontificate.
  • For those of you who are easily offended/triggered, can't take a joke, or sarcasm isn't your taste, DO NOT click the spoilers.
Lastly, the following is just my findings, by no means is it a representation of all the information out there. It is just the baseline for me to have confidence in becoming an owner of the Company. Do your own due diligence or talk to a financial advisor to find what is best for you and your financial situation.
Happy reading!

Highlights

  • Over the last 5 years the stock price has more than doubled.
  • Toromont dominates market share over everything east of Manitoba in Canada.
  • Customer base is heavily diversified, giving the Company many opportunities to expand into multiple industries.
  • Dividend has increased for 31 consecutive years. It has been paid for 52 consecutive years
  • The management team is extremely knowledgeable and have a good track record

Introduction

Toromont Industries Ltd. (TSE:TIH) provides specialized equipment in Canada and the United States. The Company operates two business segments: The Equipment Group and CIMCO. The Equipment Group supplies specialized mobile equipment and industrial engines for Caterpillar Inc. (NYSE:CAT). Customers for this business segment vary from infrastructure contractors, residential and commercial contractors, mining companies, forestry companies, pulp and paper producers, general contractors, utilities, municipalities, marine companies, waste handling companies, and agricultural enterprises. CIMCO offers design, engineering, fabrication, and installation of industrial and recreational refrigeration systems.
The Company was founded in 1961 and operates out of Concord, Ontario. As at December 31, 2019, Toromont employed over 6,500 people in more than 150 locations across central/eastern Canada and the upper eastern United States.
The primary objective of the Company is to build shareholder value through sustainable and profitable growth, supported by a strong financial foundation.

Description of the 2 Main Business Segments

  1. The Equipment Group includes the following 6 business units:
  • Toromont CAT: one of the world’s largest Caterpillar dealerships which supplies, rents, and provides product support services for specialized mobile equipment and industrial engines
  • Battlefield Equipment Rentals: supplies and rents specialized mobile equipment as well as specialty supplies and tools.
  • Toromont Material Handling: supplies, rents, and provides product support services for material handling lift trucks
  • AgWest: an agricultural equipment and solutions dealer representing AGCO, CLAAS and other manufacturers’ products
  • SITECH: provides Trimble Inc (NASDAQ:TRMB technology products and services. Trimble is a SaaS company that provides positioning, modeling, connectivity, and data analytics software which enable customers to improve productivity, quality, safety, and sustainability. Target industries: land survey, construction, agriculture, transportation, telecommunications, asset tracking, mapping, railways, utilities, mobile resource management, and government.)
  • Toromont Energy: supplies, constructs, and operates high efficiency power plants up to 50 MW, using Caterpillar's leading power generation technologies. Toromont Energy operates plants that supply energy to hospitals, district energy systems, and industrial processes.
  • Performance in this segment mainly depends on the activity in several industries: road building and other infrastructure-related activities, mining, residential and commercial construction, power generation, aggregates, waste management, steel, forestry, and agriculture.
  • Revenues are driven by the sale, rental, and servicing of mobile equipment for Caterpillar and other manufacturers to the industries listed above.
  • In addition, Toromont is the MaK engine dealer for the Eastern seaboard of the United States, from Maine to Virginia.
  • MaK engine is a marine diesel engine manufactured by Caterpillar
  1. CIMCO is a market leader in the design, engineering, fabrication, installation and after-sale support of refrigeration systems
  • Performance in this segment is dependent on the activity in several industries: beverage and food processing, cold storage, food distribution, mining, and recreational ice rinks.
  • CIMCO has manufacturing facilities in Canada and the United States and sells its solutions globally.
  • CIMCO services the ice rinks of 23 out of 31 NHL teams. So if you are watching a game and the ice is shitty, you know who to blame… the Ice Girls, obviously.
  • For those of you who live in the GTA and have skated on The Barbara Ann Scott Ice Trail at College Park, the trail was created using CIMCO proprietary CO2 refrigeration technology.

Management

CEO, Scott J. Medhurst has been with the company since 1988. He was appointed President of Toromont CAT in 2004 and he came into his current position as President and CEO in 2012. He is a graduate of Toromont’s Management Trainee Program.
CFO, Mike McMillan joined the executive team in March of 2020. His predecessor, Paul Jewer is retiring this year and has been working with McMillan during the transition period.
VP and COO, Michael Chuddy has been with Toromont since 1995.
On average, leaders have 29 years of business experience and have served at Toromont for 19 years. Seeing long tenures, good stock performance, excellent business planning and execution is usually a sign of strong leadership. In addition, insiders hold more than 3% (~$175 million) of the company’s outstanding shares. Medhurst owns more than 170 thousand shares, Chuddy owns just under 100 thousand shares and the former CEO and current Independent Chairman of Board of Directors, Robert Ogilvie owns more than 2 million shares, making him the 4th largest stockholder. High insider ownership typically signals confidence in a company's prospects. Compare this to Toromont’s main Canadian competitor, Finning, where insiders own less than 0.4% ($12 million) of the company (this number varies depending on where you look, I just took the highest one I found).
Recently insiders have been selling stock (Figure 1). I cannot speak to the reasons why insiders are selling but the remaining position owned by the insider is sizable and demonstrates that the executive still has confidence in the company. Some of the reasons insiders sell are: they don't believe in the company’s future, they need money for personal use, they are rebalancing their portfolio, among others.
Figure 1: Buy and selling activity of insiders (the data is from MarketBeat, so take that for what it's worth).
On a somewhat unrelated but still related note, 50% of Toromont employees are also shareholders.

Growth Strategies

Toromont has five growth strategies (expand markets, strengthen product support, broaden product offerings, invest in resources, and maintain a strong financial position). I chose to focus on the following two strategies, as they seemed most prevalent.
  1. Expand Markets
  • Toromont serves a wide variety of end markets: mining, road building, power generation, infrastructure, agriculture, and refrigeration. This allows for many opportunities for growth while staying true to their core competency. Further expansion into new markets doesn't require Toromont to build a whole new business model or learn the intricacies of the new industry because their products stays the same. Thus, the main concern is the application/selection of the products for the customer.
  • Expansion is generally incremental. Each business unit focuses on market share growth and when the right opportunity presents itself, geographic expansion is archived through acquisitions.
  1. Strengthening Product Support
  • In an industry where price competition is high, product support activities represent opportunities to develop closer relationships with customers and differentiate Toromont’s product and service offering from competitors. After-market support is an integral part of the customer's decision-making process when purchasing equipment.
  • Product support revenues are more consistent and profitable.

Growth Through Acquisition

Rapid growth in this industry is generally driven through acquisitions. Toromont has gone through multiple acquisitions since the 90’s:
  • Acquisition of the Battlefield Equipment Rentals in 1996
    • Toromont grew Battlefield from one location to 82 locations
  • Acquisition of two privately held agricultural dealerships in Manitoba to form AgWest Equipment Ltd
  • Acquisition of Hewitt Group of companies in Q3 2017 for a total consideration of $1.0177 billion
    • $917.7 million cash ($750 million of which was finances through unsecured debt) plus the issuance of 2.25 million Toromont shares (equating to $100 million based on the 10 day average share price)
Acquisition of Hewitt Group of companies
This acquisition allowed Toromont to make headway into the Quebec, Western Labrador, and Maritime markets, as Hewitt was the authorized Caterpillar dealer of these regions. Hewitt was also the Caterpillar lift truck dealer of Quebec and most of Ontario and the MaK marine engine dealer for Québec, the Maritimes, and the Eastern seaboard of the United States (from Maine to Virginia).
Toromont had total assets of $1.51 billion before the acquisition, the acquisition added $1.024 billion in assets, nearly doubling the balance sheet (look at Figure 2 for more details about the acquisition).
Figure 2: (all numbers are in thousands) The final allocation of the purchase price was as of Dec 31, 2018, Note 25 of 2018 Annual Report. $1.024 billion was added to the Toromont’s B/S
Large acquisitions like this one can be the downfall of a company. Here are some of the risks highlighted by management at the time of the acquisition:
  • Potential for liabilities assumed in the acquisition to exceed our estimates or for material undiscovered liabilities in the Hewitt Business
  • Changes in consumer and business confidence as a result of the change in ownership
  • Potential for third parties to terminate or alter their agreements or relationships with Toromont as a result of the acquisition
  • Whether the operations, systems, management, and cultures of Hewitt and Toromont can be integrated in an efficient and effective manner
In 2018, the Company started and successfully completed the integration of the Maritime dealerships acquired through Hewitt under Toromont’s decentralized branch model (bottom up approach). Under a decentralized model, regional leadership make business decisions based on local conditions, rather than taking top down mandates. A bottom up approach is an advantage in businesses like Toromont where the customer mix can vary vastly from region to region. It allows for decision-making that is better aligned with customemarket needs and more attuned to the key performance indicators used to manage the business. In 2019, the integration of the decentralized branch model was implemented in Quebec after its success in Atlantic Canada in 2018. Successful integration of Hewitt into the Toromont family shows the depth of industry and business knowledge possessed by the management team. Being able to maintain inherited customer relationships and ensure low turnover is no easy feat. Many companies have completely botched these kinds of acquisitions. One that comes to mind is Sobeys (the second largest food retailer in Canada) acquiring Safeway for $5.8 billion. Three years later, they wrote off $2.9 billion as a loss because they did not anticipate the differences in consumer habits in Western Canada vs Eastern Canada, among other oversights.
The result of the acquisition and Hewitt’s integration with Toromont’s existing business produced a 39% increase in EPS in 2018 and 14% increase in 2019.

Dividend

Toromont pays a quarterly dividend and has historically targeted a dividend rate that approximates 30 - 40% of trailing earnings from continuing operations.
In February 2020 the Board of Directors increased the quarterly dividend by 14.8% to $0.31 per share. This marked the 31st consecutive year of increasing dividends and 52nd consecutive year of making a dividend payment. The five-year dividend-growth rate is 12.09%.
Table 1: Information about the last eight dividends

Risks/Threats and Mitigation

Dependency on Caterpillar Inc.
It goes without saying that Toromont’s future is heavily dependent on Caterpillar Inc. (NYSE:CAT). For those who don't know, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. It has a market cap in excess of $68 billion. All purchases made by Toromont must be made from Caterpillar. This agreement has been standing since 1993 and can be terminated by either side with 90 days notice.
Given that the vast majority of Toromont’s inventory is Caterpillar products, Caterpillar’s brand strength and market acceptance are essential factors for Toromont’s continued success. I would say that the probability of either of these being damaged to an unrecoverable point are low, but at the beginning of this year, I would have said the probability of the world coming to a complete stop was very low too and look at what happened. Anything is possible. The reason this is a major consideration is because it's a going concern issue. Going conference is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary. This term also refers to a company's ability to make enough money to stay afloat or to avoid bankruptcy. If there was irrevocable damage to Caterpillar’s brand, Toromont is no longer a going concern, meaning the company would most likely be going bankrupt or liquidating assets. The whole Company might not go under because the CIMCO, SITECH, and AgWest business units would survive but, essentially ~80% of the business would be liquidated.
In addition to the morbid scenario I laid out above, Toromont is also dependent on Caterpillar for timely supply of equipment and parts. There is no assurance that Caterpillar will continue to supply its products in the quantities and time frames required by Toromont’s customers. So if there is supply chain shock, like the one we just saw, there is the chance that Toromont will not have access to sufficient inventory to meet demand. Which in turn would lead to the loss of revenue or even to the permanent loss of customers.
Again, both of these threats have low a probability of occurring but either could single handedly cripple Toromont’s business. As of now, Caterpillar continues to dominate a large market share (~38% as per Gurufocus) in the industry against large competitors like John Deere, CNH Industrial, Cummins, and others.
Caterpillar's stock has been on a slow decline for a couple years but that is due to reasons beyond the ones that directly concern Toromont’s day-to-day operations. I would say if you don't believe in Caterpillar’s continued market share dominance, investing in Toromont is probably not for you.
Shortage of Skilled Workers
Shortage of skilled tradesmen represents a pinch point for industry growth. Demographic trends are reducing the number of individuals entering the trades, thus making access to skilled individuals more difficult. Additionally, the company has several remote locations which makes attracting and retaining skilled individuals more difficult. The lack of such workers in Canada has caused Toromont to become more assertive and thoughtful in their recruitment efforts.
To combat this threat, Toromont has/is:
  • Recruited 303 technicians to achieve growth targets
  • Created 208 student apprenticeship programs
  • Working with 19 vocational institutions in Toronto to teach about best practices and introduce the Company as a future employer to students
As a result of these initiatives and others, Toromont saw their workforce grow by ~8% 2019. Growing the workforce is one of the primary building blocks for future growth.
Cyclical Business Cycle
Toromont’s business is cyclical due to its customers' businesses being cyclical. This affects factors such as exchange rates, commodity/precious metal pricing, interest rates, and most importantly, inventory management. To mitigate this issue, management has put more focus on increasing revenues from product support activities as they are more profitable than the equipment supply business and less volatile.
Environmental Regulations Affecting Customers
Toromont’s customers are subject to significant and ever-increasing environmental legislation and regulation. This leads to 2 impacts:
  1. Technical difficulty in meeting environmental requirements in product design -> increased costs
  2. Reduction in business activity of Toromont’s customers in environmentally sensitive areas -> reduced revenues
Threats such as these come with a business of this type. As an investor in Toromont, you can't do much to mitigate these kinds of threats because it's out of your hands. Oil and gas, mining, forestry, and infrastructure projects are major drivers of the Canadian economy, so I think there will always be opportunity for Toromont to make money, regardless of government action.
Impact of COVID19
While the company had been declared as an essential service in all jurisdictions that it operates in, Q1 2019 results were lower as a function of COVID19 reducing activity in many sectors that Toromont services. Decline in mining and construction projects lead to a decrease in demand for Toromont products in the latter part of the quarter. Revenues were trending for 5-7% growth for the quarter before the effects of COVID19 were felt.
Management cannot provide any guidance on how to evaluate the impact of COVID19 on future financial results. They are focusing on ensuring the continued safety of employees and working with customers and the jurisdiction they operate in to evaluate appropriate activity levels on a daily/weekly basis. Lastly, management is keeping a close eye on how this crisis has led to an increase in A/R delinquencies and financial hardship for customers.
The Executive Team and the Board of Directors have taken a voluntary compensation reduction. Wage increase freezes and temporary layoffs have been implanted on a selective basis. Management believes that expanding product offerings and services, strong financial position, and disciplined operating culture positions the Company well for continued growth in the long term.
Competition
Toromont competes with a large number of international, national, regional, and local suppliers. Although price competition can be strong, there are a number of factors that have enhanced Toromont’s ability to compete:
  • Range and quality of products and services
  • Ability to meet sophisticated customer requirements
  • Distribution capabilities including number and proximity of locations
  • Financing through CAT Finance
  • E-commerce solutions
  • Reputation
  • Financial health

Main Competitor in Canada: Finning International Inc.

Finning International Inc. (TSE:FTT) is the world's largest Caterpillar dealer that sells, rents and provides parts and service for equipment and engines to customers across diverse industries, including mining, construction, petroleum, forestry and a wide range of power systems applications. Finning was founded in 1933 and is headquartered in Vancouver, Canada.

Toromont Industries Ltd Finning International Inc.
Market Cap $5.84B $3.02B
Price $65.66 $18.49
Dividend Yield 1.87% 4.36%
Number of Employees >6,500 >13,000
Revenues (ttm) $3.69B $7.57B
Trailing P/E Ratio 19x 11x
Price/Book 3.71x 1.35x
Profit Margin 7.71% 3.54%
Places of Operations Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland & Labrador, most of Nunavut, and the Northeastern United States British Columbia, Yukon, Alberta, Saskatchewan, the Northwest Territories, a portion of Nunavut, UK, Ireland, Argentina, Bolivia, and Chile
Table 2: A quick comparison between Toromont and Finning.
I am sure there are some people looking at this table and thinking Finning looks rather promising based on the metrics shown, especially in comparison to Toromont. Finning’s dividend yield, P/E, and price/book look more attractive. Their top line is 2x. Not to mention it operates worldwide and is the only distributor in the UK, while Toromont only operates in half of Canada.>! Before you go off thinking “I need to use my HELOC to buy some Finning,” as some people on this subreddit are prone to do, ask yourself: do you see any cause for concern in the metrics listed above? !<
One glaring question I have is: why is Finning trading at half of Toromont’s market cap given that it operates internationally and has twice the number of employees and revenues of Toromont?

Q1 2020 Financial Results


Figure 3: Q1 2020 Income Statement
Overall operating income, net earnings, and EPS all decreased even though Toromont saw an increase in revenue for the quarter compared to Q1 of 2019.
  • All of these decreases were contributed to COVID19, as the pandemic lead to increases in costs
Historically, Q1 has always been Toromont’s weakest quarter. Q1 accounts for ~20% of yearly earnings and is consistently the least profitable quarter. Toromont’s profit margin generally ranges from 5%-9% progressively increasing into the later half of the year. This is good news for investors with the thesis that the economy will return to "somewhat normal" in the latter half of this year. The majority of the earnings for 2020 are still on the table for Toromont to earn. If current conditions persist, or there is a second wave and lockdown later in the year, we will most likely see a regression in Toromont’s growth to last year’s levels or even lower.
Assuming the world does return to “normal,” many of Toromont’s customers (especially in mining and construction) may try to catch up for lost time with increases to their operational activity, leading to an increase in Toromont’s sales for the remainder of the year. Of course this is a major assumption but it’s a possibility.
Below is a comparison of the last eight quarters. You can see the clear cyclical nature of their business.
Figure 4: Last eight quarters of earnings

Sources of Liquidity

Credit
  • Toromont has access to a $500 million revolving credit facility, maturing in October 2022
  • On April 17 2020 they secured an additional $250 million as a one year syndicate facility
Cash Position
  • Cash increased by 22.6 million for the quarter
  • Cash from operations increased 13% Q1 2020 compared to Q1 2019
  • The company also drew $100 million from their revolving credit facility
  • $4 million dollars of stocks were repurchased during Q1 2020
Given their access to $750.0 million dollars of credit and cash on hand equaling $388.2 million, the Company should have sufficient liquidity to operate if COVID19 and its aftermath persist for an extended period of time.

Financial Analysis

Analysis of Debt
Historically, Toromont has had very low debt levels. The spike in late 2017 was due to the acquisition of Hewitt. Management paid off the debt aggressively in 2018. At the end of December 2019 Toromont had $650 million of debt maturing between 2025 and 2027. As a result of COVID19 the company has taken on more debt. This additional access to debt accounts of the slight uptick in historical debt in 2020 (Figure 5).
Figure 5: Toromont’s historical debt, equity, and cash
The long-term debt to capitalization ratio is a variation of the traditional debt-to-equity ratio. The long-total debt to capitalization ratio is a solvency measure that shows the proportion of debt a company uses to finance its assets, relative to the amount of equity used for the same purpose. A higher ratio means that a company is highly leveraged, which generally carries a higher risk of insolvency with it.
The debt-to-equity ratio is at 47% and debt-to-capitalization ratio is 32%, Toromont has $388 million in cash that could be used to pay down debt by nearly 50% and bring the net debt-to-equity to 23% and net debt-to-capitalization to 18%. As mentioned before, management is holding on to cash to insure sufficient liquidity during these times.
The implication of these ratios is that Toromont does not take on large amounts of debt to finance growth. Instead the Company leverages shareholders equity to drive growth.
For comparison, Finning has a debt-to-equity ratio of ~100% (it differs between WSJ, 99%, and Yahoo Finance, 101%). The nominal amount of their total debt is ~$2.2 billion, which gives them a long-term debt to capitalization ratio 62%. Finning carries $260 million in cash.
Figure 6: Toromont’s debt-to-capitalization and debt-to-equity ratios
Profitability Ratios
Return on equity (also known as return on net assets) measures how effectively management is using a company’s assets to create profits.
Toromont’s return on equity is generally around 20%. Go to Figure 6 to look at the ROE for the last 4 years. In comparison, Finning has had a ROE of ~11% for the last three years, about 3% in 2016 and a negative ROE in 2015 (as per Morningstar).
Return on capital employed (ROCE) tries to find the return relative to the total capital employed in the business (both debt & equity less short-term liabilities). Toromont’s ROCE (ttm) for March 31 2020 was 22%. This means for every dollar employed in the business 22 cents were earned in EBIT (earnings before interest and tax). Finning had a ROCE of 11% as of December 2019.
Liquidity Ratios
Working capital is the amount of cash and other current assets a business has available after all its current liabilities are accounted for. In the last ten years, Toromont’s working capital has fluctuated between 1.6 at its lowest (2018) to 2.8 at its highest (2016). At the end of 2019 it was at 1.8. Meaning current liabilities equate to 60% of current assets.
Interest coverage ratio is used to determine how easily a company can pay their interest expenses on outstanding debt. Toromont has an interest coverage ratio 15x (as per WSJ). Finning on the other hand is at 4x. At this point I feel like I'm just beating up on Finning.
For those of you who made it this far, I have to admit something to you. This whole post is just a facade to ask you a question that has never been asked on this subreddit before: Should I buy BPY.UN? It keeps going down and I'm worried if I buy it, it will keep going down and I'll lose money. I don't want to lose money. Although if you go through my post history, you'll see I've been looking at/buying penny stocks.

Key Performance Measures

Below is a chart with key financial measures for the last four years. A few things I want to highlight:
  • Toromont had large capital expenditure last year (most of it went to increasing inventory) so they have the choice to keep capital expenditure down this year and preserve cash
  • From the start of 2018 (aka end of 2017) to the end of 2018 Toromont stock was down about 3% while the TSX Composite was down more 12% and S&P was down 7%. This stock has a history of out performance not only on the upside but also on the downside. I'll go into a bit more detail in the next section.
Figure 7: Summary of key financial measure for the last four years

Price Chart Comparisons

I don't do technical analysis. To those who do, good luck to you because let's be real, you'll need it. This section is just to get an idea of past performance and evaluate the opportunity cost of investing in Toromont compared to a competitor or a board based index fund.
I thought it would be easier to look at pictures as opposed to reading a bunch of numbers off a table.
For the sake of not creating a picture album of screenshots, I just looked at charts for the last 5 years. If you're interested in looking at different time intervals you can do so on google finance.

  1. Toromont Industries Ltd v. Finning International Inc.
Figure 8: Five year price chart of TIH v. FTT
These are the only two Caterpillar distributors on the TSX, making them direct comparisons. If I was looking for exposure to this industry, I would be choosing between these two companies (on the TSX anyways). There isn't really much to evaluate here. It's like they saying: “A picture is a thousand words,” or in this case, it's 128%. If you have time, go look at the graph from August 1996 to now. I can safely say it hasn't been much of a competition. Toromont has outperformed by ~2500% in stock price appreciation alone. If you're a glass half full kind of person, I guess you could look at this disparity as Finning having enormous upside. LOL

  1. Toromont Industries Ltd v. S&P 500 Index
Figure 9: Five year price chart of TIH v. VFV
If I'm not buying individual stocks, I’m buying the S&P 500 and to a lesser extent a Nasdaq index fund. This gives me a second look at the opportunity cost of my money. The story is not as bad as the Finning comparison. If you had bought $100 dollars of Toromont stock 5 years ago, it would have turned into $207 today, whereas the same $100 dollars in VFV would have became $157.
Just a quick aside, you can see the volatility in Toromont’s stock is much higher compared to the VFV. VFV has a relatively smooth trend upwards while Toromont trends upwards in a jagged path. This is the risk of single stocks, they move up and down more erratically, leading inventors who don't have a grasp of the business or conviction in their pick to panic sell or post countless times on Reddit asking why their stocks keep going down. “I bought the stock last week and it's done 3% already, do you guys think it’s going bankrupt? I thought stonks only go up???”

  1. Toromont Industries Ltd v. S&P/TSX Capped Industrials Index
Figure 10: Five year price chart of TIH v. ^TTIN
The S&P/TSX Capped Industrials Index isn't my favourite comparison for Toromont because its constituents cover many industries ranging from waste management (WCN), to railways (CNCP), to Airlines (AC, lol, had to mention it. I miss the days when there were double digits posts about AC. I wonder where those people have gone, because I can tell you where AC stock has gone... absolutely nowhere). Regardless, I used TTIN because I deemed it a better comparison to Toromont than the entire TSX. The story is on par with the other two comparisons. Toromont’s out performance is significant.
I just threw this bonus chart in here because when I saw it, I was like BRUHHH (insert John Wall meme)… It's completely unsustainable but that's impressive given the vast differences between the two.
  1. Toromont Industries Ltd v. NASDAQ-100
Figure 11: Five year price chart of TIH v. ZQQ
Now, of course, past performance does not dictate future results and all that good stuff, but it really gets you thinking about how the rewards disproportionately favours winners compared to the overall market. People are generally happy getting market returns (i.e. the just buy VGRO people) but being able to pick even a few winners really pays. This reminds me of the Warren Buffet quote: “diversification is protection against ignorance.” The context of the quote is that if you are able to study a few industries in great depth and acquire a wealth of knowledge, you can see returns astronomically higher than those who diversify across the board market. The problem then becomes you put yourself at risk of having all your eggs in one basket. Look at what's happening with Wirecard in Europe right now. This is why the real skill in investing is managing risk.

Analyst Price Targets and Estimates

The prince targets set for by analysts range from $63-$81. The average price target is ~$72, with the majority of targets within the 70-$71 range. Given the current price of $65.66, there is a ~10% upside. These price targets haven't changed much due to COVID19 even though revenues and EPS forecasts have been downgraded for 2020. The consensus estimate on 2020 revenues is $3.36 billion, down from the actual revenues of $3.69 billion in 2019 and the consensus EPS for 2020 is $3.01 down from actual EPS of $3.52 for 2019 and $3.10 for 2018. The fact that revenues and EPS forecasts have been downgraded, yet price targets remain untouched, for the most part, indicates that the effects of COVID19 are expected to be short-lived.
Figure 12: Earnings and estimate ranges for Toromont. Note: EPS numbers in this graphic are diluted EPS numbers.

Valuation

Multiples
Assuming P/E ratio stays the same as it has been for the last 12 months (~19x) and EPS goes down to ~$3.00 (as per analyst consensus), the implied price would be $57.
Using the last 12 months of revenues, the EV-to-Revenues ratio is at 1.56x. Assuming that ratio stays the same and with revenues estimated to be ~$3.36 billion, enterprise value (EV) comes out to $5.2416 billion. Using Q1 2020 figures for shares outstanding (82.015 million), cash ($388.182 million), and debt ($745.703 million), the implied price for a share is $58.94*.
\Note: Enterprise Value is equal to market cap plus total debt minus cash.)
Dividend Discount Model
The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.
The average dividend growth rate is 12% for the last 5 years is 12%. There is no way Toromont can increase the dividend at this pace in the long term, thus, I chose a long term dividend growth rate of 5%. This is the assumed rate in perpetuity. The required rate of return will equal WACC, 6.85% (averaged from 2019 Annual Report). The dividend over the last year is $1.16 (two payments of $0.27 in 2019 and two payments of $0.31 for 2020).
The fair value equals $65.84.
Figure 13: DDM calculation.

Closing Thoughts

There is no doubt that Toromont trades at a large premium. The current P/E is 19x and the CAPE ratio (Shiller P/E) is 26x. The fair value of the Company as per Morningstar research is in the mid $60 range.
Based on all valuations I did and analyst price targets, I would start buying in the high $50 range or maybe the very low $60 range, but my belief in the company has to do with long term thematic trends and how the Company operates, rather than today's price. Although I have to admit, the price does look more attractive now than it did in the beginning of June when the stock hit new all time highs. It seems like the only companies hitting new all time highs these days are tech companies, so it's refreshing to find a non-tech company achieving the same feat.
Toromont is not going to double next year or the year after that. It is a relatively low margin business, with slow growth and a cyclical business cycle. I like that the Company has strong financials, low debt, and good management. They don't take shortcuts or unwarranted risk. Future growth will mostly be driven through acquisition, but management is cautious with acquisitions and don't overextend themselves. One of the biggest problems Finning has been facing for the last couple years is political and social turmoil in South American countries which is affecting their mining clients and thus affecting revenues/margins.
The Q2 earnings are reported on July 22 202. We should have a clearer picture on the prospects of the Company from management. Hopefully we have a better idea of the COVID19 situation by then too. Regardless, I think the company is in a position where its services will always be in demand so short term fluctuations are not something that shake my confidence in this pick.

Limitations and Further Areas of Research

By no means is this an exhaustive due diligence report. This is enough for me to feel confident in the business and its trajectory. Limitations/further areas of the research include:
  • Looking into the growth of each sector Toromont services and extrapolating that growth to calculate Toromont’s future growth opportunity.
    • As per IBIS Research the heavy equipment rental market in Canada is ~$8.3 billion. It grew 1.1% yearly for the last 5 years.
    • The US market is estimated to be $47 billion, with an average growth of 2% for the last 5 years
      • Sorry but I couldn't get my hands on future projections as each report is $750
  • More research into competitors
    • I chose to include Finning only for simplicity’s sake. But there are many other competitors like:
      • United Rentals (NYSE:URI) provides similar services to Toromont/Finning in 49 U.S. states, 10 Canadian provinces, Puerto Rico and four European countries. The only thing being they aren't distributors for Caterpillar.
      • Rocky Mountain Dealerships Inc (TSE:RME) sells, leases, and provides product and warranty support for agriculture and industrial equipment in Western Canada
      • Holt Cat, N C Machinery, Ziegler CAT (none of these companies are publicly traded)
  • Further analysis can be done on the B/S and accounting treatments.
  • The effects of automation in the industry
    • Distributors in the US have started working with industrial automation companies to provide autonomous construction equipment on rent to contractors
      • Sunstate Equipment Co.'s partnership with Built Robotics
  • I was not able to do a discounted cash flow, which would be critical to finding the intrinsic value for Toromont and having true confidence in the company and its trajectory.
  • Further analysis of CIMCO and prospects of future growth
    • Based of the financials, CIMCO seemed like a small part of the business, which is why I mainly focused on the Caterpillar dealership side
These are not all the limitations or areas of further research, they are just the glaring one that came to mind.
>! I know I took a few shots at people in this post. It's all in good jest. If you're offended well.... maybe you should be. I don't know, you have to figure that out on your own or you could make a post on Reddit asking random people on the internet whether you should be offended or not. !<
Remember I'm not an expert, I'm just a random guy on the internet.

Disclosure

I am long Toromont. This information is not financial advice. Please do your own research and/or talk to a financial advisor. All data provided is current prior to the market opening on June 29, 2020. Inconsistencies in data can be due to many reasons, the foremost being that data was spruced from multiple different websites.
submitted by Dr_Sargunz to CanadianInvestor [link] [comments]

[f][t'au/inquisition] All The Joys of Sartheno

First bit of my work for NaNoWriMo this year. Trying something a bit new. Hope it's enjoyable all the same.
Truly we are living in an age of wonder.
ALL THE JOYS OF SARTHENO
ONE
The shuttle Crassus-33 dipped out of a high holding pattern, its sober grey hull strobed a brief crimson by the marker-lights of watchful drones. Far beneath glimmered the lights of Sartheno, whose eternal sprawl and endless rains made aerial transport a preference of dignitaries and social elite as they travelled between the city’s mansions, spires and courts. Despite boasting the latest in civilian-available avionics and engines, Crassus-33 and its sister ships still took several hours to cross a full length of the city’s disparate districts.
For some, Sartheno encompassed the entire world. They would live, love, and die without seeing even the border districts, much less beyond the walls. Even for those who believed themselves well-travelled and cosmopolitan within the sub-sector, Sartheno seemed a vibrant hub of commerce and culture.
‘Cosmopolitan’ certainly seemed the applicable word to describe the accommodations and habitats that had recently come to dominate Sartheno’s skyline. Great domes of midnight blue competed with Ecclesiarchy steeples and Administratum edifices. Gentle spires now stood opposite formal residences of the rich and influential. Alien architecture twined amidst the long-standing Imperial like the roots of great trees interlinking. It was not subtle, nor was it intended to be.
We grow together.
It would be impossible to deny this was the case. Sartheno’s occupation by the T’au Empire had been a boon for all, from the lowest menials in the border-districts who now enjoyed consistent hab-block heating and the mass distribution of rain-capes to the noble houses and banking cartels enrichened by new trading routes and markets hungry for post-Imperial goods.
The shuttle’s sole passenger relaxed deeper into the plush couch that dominated the shuttle’s fuselage. Fit for a full complement of socialites to gossip and scandalise in comfort with unobtrusive safety tethers for turbulence or unexpected manoeuvres, no expense had been spared in the construction and upkeep of Crassus-33. Nor was obtaining the service of a luxury shuttle in the realm of even middling merchants - they were the sole domain of the rich, the influential and the powerful. Conglomerates were formed for the sole purpose of obtaining shared use and title of just one such ship.
A smile danced across her face.
It was not a pleasant smile. It was the mock-grin of a jungle predator that distracted from the bunching muscles and coiling tail that signalled a fatal leap.
Inquisitor Eris Marran looked harmless enough at a distance. Shorter than the human galactic standard, willowy where others would have filled out with muscle, she would not have looked out of place serving as a majordomo or House secretary. With her black hair up in an uncomplicated tail, dark trousers and a white blouse buttoned with polished brass and cinched at the wrists with copper, she was every inch an unobtrusive professional attendant such as would be found at any gathering of upper society.
And the disembarkation of such a woman from a luxury shuttle, alone, would cause no end of speculation and gossip. Which was the point, after all - keep them talking, keep them looking away from the real target.
The smile widened - then vanished as the lounge’s vox-set chimed. ‘Down in two, ma’am. We’ve got clearance. Landing grid is mostly clear but a few stragglers and the on-site say they’re mostly done with the introductory speeches. Fashionably late, no entourage, as requested. You’ll make quite a splash, if you don’t mind me saying so.’
‘Thank you,’ she replied, voice husky with a lifetime of lho. ‘I shall commend your flexibility and discretion to House Chaii.’
‘Much appreciated, ma’am. Have a good night.’
The vox clicked off. The shuttle banked gently, the inertia compensators humming as they worked.
Passing through the layers of drone security, Crassus-33 navigated the authorised path with easy grace, the shuttle’s thrusters angling and firing to allow a smooth descent towards a clear blister large enough to hold a dozen such craft comfortably. It nestled against the far larger dome of its parent structure - the new-made Auditoria, intended as a meeting ground for all the races of the Greater Good to come together in comfort and companionship, finding common ground and strengthening their bonds.
A section of the blister swung away to permit the shuttle entry, gliding shut on near-invisible rails behind. A green beacon flashed on a docking pad close to an umbilical passage leading to the Auditoria itself, where Crassus-33 settled with all the care of a dame-fowl on her egg clutch.
Eris stood, smoothing out her blouse. After a moment, while sensors confirmed atmosphere suitability and content, the lounge’s private embarkation portal opened, a ramp telescoping down to the landing pad. A rich combination of scents - hard rain, atmospherics, hard-working air purifiers - greeted her as she left the shuttle. Nobody else did, as she had planned - but already eyes were turning her way, surprise and interest that the ground crews working the shuttles did nothing to hide, jealousy concealed poorly behind scorn by those dignitaries who had shared a similar ship with a group of their peers. Comm-beads would already be buzzing with questions.
She paid no heed to the disorder in her wake as she marched towards the passage connecting the outer blister with the Auditoria. An attendant in a smart black bodyglove nodded to her and activated a panel, the obscuring plastek sliding away to admit her.
It was like stepping into another world.
A world of shocking informality. The T’au, for all their consideration of caste and hierarchy, understood that at least the appearance of equality should be maintained. The Auditoria’s roof was masked in a projection of colourful night, where stars of impossible colours cavorted. Cunningly-installed lumens shone down from towering foliage, transplanted from alien planets to carefully-cultivated turf that neither broke at a footfall or stained the expensive clothing of those present. Lanterns swung overhead, born by the ever-present drones. Hidden projectors piped in a pleasant, foreign melody.
Around tables laid with exotic fruits and meats from across the Empire - clearly labelled in several languages, with allergy and nutrient warnings - were xenos of a dozen different stripes. Grey-furred Nicassar turned their lambent orange eyes, bright with mischief, on Kroot hooting with laughter at some unintelligible jest. A low-set pool pumped with warm, thick fluid held the rolling mounds of the green-skinned Galg, their eye-stalks questing about them while burbling in their own tongue. Vespid danced high above, their wings forming a soothing undertone to the unseen music.
Eris could not help the revulsion that squatted low in her gut. A lifetime of fear and hate was not wiped away by a single peaceable evening. Worse still were the humans who walked, talked and laughed with their new -- she could not bring herself to think of them as allies. With their new masters, the conquered making much of their conquerer’s benevolence. Licking the boot and calling it freedom.
She showed nothing of the sickness she felt, moving towards a meeting of xenos. A member of the T’au Water Caste, tall and slender, exchanging pleasantries with a diminutive demiurg, the latter still dressed in ceremonial banded clan-armour. Scrawled across the plates in alien runes were a millennia-long list of ancient grievances done to the alien’s ancestors, oaths sworn to be avenged lest the spirits of the dead never find peace. As she approached, the two exchanged a bow, and the demiurg walked away without a backwards glance. A proud people, and committed, and within the bounds of acceptable abhumans - it would have been far better for the species to have joined itself with the Imperium rather than the Greater Good.
The T’au turned to face her, his expressive features lighting with approval. ‘Eris,’ even his voice radiated warm and humour, and she could not help but feel the disgust she harboured diminish at such an open greeting. ‘I did not think you would come yourself. It is welcome to see you again.’
‘Clearthought,’ she replied, answering with a grin of her own, ‘Wouldn’t think you’d say that, considering when we parted last I’d just threatened you with a gun.’
‘It was understandable,’ the T’au brushed it away with a meeting of his hands, the of-no-moment gesture. ‘And I am grateful for your aid.’
‘How is Por’la Kaimas?’
‘Recovering well. The mind-helpers believe that it was the only thing that inhibited her full healing. It will take time, but she will be returned to full health, thanks to you.’
‘And Quist. Don’t forget him. He’ll sulk otherwise.’
The T’au blinked and looked about, confused. ‘Is he also in attendance?’
Eris waited for the Water Caste envoy to register the jape, waiting for the realisation to dawn in his eyes. Though the T’au were, on average, shorter than baseline humanity, their gazes met almost level. It was one of several things that helped Eris anthropomorphize the xeno, to relate to the envoy as a human, even though his skin was a deep blue and the robes he wore were a tailored indigo-and-gold replete with T’au symbols of office.
There was a danger in that, too. Too much familiarity and it would be difficult to pull the trigger when the time came. The Water Caste were trained manipulators, each and every one. No interaction with them was without risk: of overplaying a hand, of revealing more than one should. The disarming innocence, respect and warmth, were more likely to be social weapons than a real feeling.
Clearthought’s eyes narrowed. ‘He is not here.’
Eris kept her mouth straight by an inhuman effort, imitating the alien’s flat tone perfectly. ‘He is not.’
The effort grew too much. She burst with laughter, a rasping roar that only magnified at the understanding that spread across the T’au’s face. Humans and xenos both halted their own conversations to stare, open-mouthed, at the modestly-dressed woman making an envoy of the Empire the butt of a bad joke. There was tension, then, the stretching of emotions - for many there understood the razor-thin margin the current peace rested on.
If the envoy took offence, a single word or gesture would bring the ochre-clad Fire Warriors stationed discreetly about the Auditoria to bear, and the woman who insulted him would be quietly shepherded away - to a re-education camp or worse.
But there were many reasons Clearthought had risen to his post and prestige. Not simply a dedication to the Greater Good, but an earnestness that had vexed - and pleased - his instructors and superiors in equal measure. He had not been assigned to the Atoll or to Sartheno by whim or mistake.
His flat features contorted in something close to a grimace. Then an uncontrolled snort. And then he, too, was laughing, throwing his head back, scalp-lock shaking with mirth.
The tension vanished. All around, human and xeno both turned back to their own affairs, the noise in the Auditoria rising back to its previous volume. Eris wiped a tear from the corner of one eye, then beckoned a passing attendant with a tray of beverages over to pick out a sweet local nectar. The crystalline decanter was warm when she passed it to her recovering companion, who accepted graciously.
‘Few speak so plainly as humans,’ the T’au smiled after a long drought. ‘We T’au often find our honour and pride too valuable to taint with irreverence. You would not do as well to tease a member of the Fire Caste in such a manner.’
‘I’ll tease whomever I please,’ Eris replied, ‘As the Terran playwright Shakespire recorded in Remus and Jolanet, ‘Men’s eyes were made to look and let them gaze; I will not budge for no man’s pleasure, I.’’
“There have been some whose positions have been subject to change, however. That is the reason I requested your Inquisition’s presence at this gala. The information could not be trusted to messenger or courier drone. We walk a fine line of mistrust and co-operation, as you know. If the knowledge were to slip out, the position of the Empire here in the Atoll would be compromised. Even become untenable.’ The T’au handed the decanter back, his mien serious. ‘You understand, yes?’
Eris nodded. The time for play was over. ‘Orders from above are clear. This is no longer a matter of vague policy. Those I answer to have commanded that the Atoll remain strong. The situation in Ultramar is tenuous. Denying the Archenemy here is vital.’
‘The Council reconvened. The Black Ships may be permitted to return.’
The Inquisitor nearly dropped her drink. ‘What?’
‘It required a great deal of argument and concession, but the decision has been made. We can ill-afford another mind-science event like Dantalos Square or the manifestation within Eagle Row.’ Clearthought looked away, as though the words were hard to say aloud. ‘We believed we could contain your so-called ‘psykers’. We believed that it was an issue with how your Imperium treated them. We believed we could do better.’ His eyes closed a moment, then opened again, hardened. ‘We failed. We have no mechanism for this. The situation will only worsen if we do not allow your Black Ships to come again.’
‘Will you need assistance from the Anathema Psykana?’
‘No. We are working on isolating those who display talent in the mind-science in closed facilities. We have told them it is for training and examination. They believe us. They are filled with relief that they will not be given to the Ships. Your Interrogator was right when he spoke of necessity - I did not comprehend it then. I do now. If there were another way…’
Eris reached out a hand to the T’au’s arm unconsciously. She did not draw back. ‘Chaos is a poison. You can’t reason with it. You can’t be benevolent. And these poor souls, they’re a gateway for it. Some will find life in service. The others… they could not be saved.’ She squeezed, gently. ‘Believe me. They could not. I’ve served the Ordo for long enough to know that.’
‘I do.’ His eyes lifted to meet hers, and the gratitude in them hurt her heart. ‘Thank you.’
‘Think nothing of it. Orders, remember?’ She released his arm.
‘Of course. Orders.’ A thin smile. ‘The coldest of comforts.’
‘Speaking of.’
Eris looked around for a nearby attendant to signal for another beverage, and found none close by. She hadn’t known what to expect when answering the envoy’s request for a meeting, but there were rare enough times a member of the Holy Ordos had occasion to mingle with high society and enjoy the fruits protected by their unceasing labour. The message Clearthought had conveyed was an important one - and surely it could wait an hour or three while she browsed the buffet.
Besides, to leave with unseemly haste after a quick meeting would be scandalous. Why, it was a noble effort on her part, truly, to spare the envoy such salacious and affronting talk.
The T’au cleared his throat politely, drawing her attention away from the dining tables. ‘There is one other matter. A trifle which I hesitate to concern you with. I had expected…’ the gesture of words-not-spoken-in-haste. ‘Someone else.’
‘An underling, you mean? A minion? One of my shadowy associates to play cloak-and-dagger with?’
‘Of that nature, yes.’ Abruptly, the conversational tack changed. ‘I had not expected you to be so familiar with these events, I confess, though I have little but my experience with the, ah, frugality of the Fire Caste to draw on. You must have spent much time in Imperial society.’
Ah. The probing. The seeking, dressed up as casual conversation. The appropriately awkward switch: easy to put off as naivete or innocence, particularly after a moment of supposed vulnerability. Yet what harm was there in it? It was a simple prize to give, and one that may very well buy another concession down the line. What use a past but to prepare for the future?
‘Not as much as I’d like,’ Eris confessed. ‘The Ordo Hereticus is the youngest of the Inquisition’s children. We have the most to prove - and so much of my time has been spent down in sewers and chasing over rooftops for cults and lodges, rather than unwinding intrigue and corruption in the Noble Houses. We watch the watchers, true, but we never seem to catch as many of them as we do indentured slaves and manufactorum workers.’
‘So you are no stranger to menial tasks, then.’
‘Sometimes it only feels like menial tasks.’ She waved her hand, dismissing the coming objection. ‘No, go on. I’m here, and if it’s something that can be resolved quickly, then the sooner it’s done.’
‘There is a matter that requires… some discretion.’
That piqued her interest. Sharply. ‘Amongst the steadfast T’au? And I assume this can’t be resolved… internally?’
‘It would be a matter of great shame if it were to be uncovered, yes.’
‘And it involves a member of your Caste, I imagine, or it wouldn’t be coming from you - or to us.’
‘Very perceptive, Inquisitor.’ That earned another smile from the Water Caste envoy. ‘A superior has lost something dear to him and wishes it to be returned. He believes it has been taken by the son of a human merchant, and as you are aware, Sartheno may be quiet for now - but the forcible arrest and prosecution of a human noble by our authorities would reflect poorly on many. It could provoke lingering hostile sentiments. And as you have said, this is a time for unity, not discord.’
‘I did say that. So what’s been taken, then? Cargo shipments? Are we dealing with smugglers here, or licensed goods? I’ll need any relevant shipping manifests, but I can guarantee we can return any misappropriated merchandise quickly and quietly - and ensure the merchants in question are suitably chastened.’
‘It is not cargo or a question over shipping,’ the T’au replied. Was there a hint of a flush to his face? ‘He has reported the theft of his daughter.’
Eris was quite glad that she hadn’t managed to find another drink in the meantime. The results would have been wonderfully inelegant.
‘His daughter? By a merchant’s son?’
‘Yes.’
‘You are aware that she may not wish to be returned, yes?'
Clearthought ducked his head, though Eris could see the flush deepen. 'Yes.'
'Throne preserve us.'
submitted by wecanhaveallthree to 40kLore [link] [comments]

Stratfor - Poland Takes a New Direction

Długo się zastanawiałem czy wrzucić to tutaj czy na /Poland ale na /Poland mało kogo by to interesowało, sub jest raczej pełen wiadomości typu ,,co najlepiej zwiedzić w Krakowie".
Raport Stratforu.
"By Adriano Bosoni
Two events last week show the direction where Poland is moving. On Dec. 15, during a visit to Kiev, Polish President Andrzej Duda promised financial, political and energy support for Ukraine. A few days later, on Dec. 19, people in Warsaw and other Polish cities protested the government's controversial appointment of five new judges to the Constitutional Court — the second protest over the issue in two weeks. These two events, though seemingly unrelated, suggest the beginning of a new political phase in the country that will be felt across Europe.
After eight years under a business-friendly and pro-EU government, the Poles voted for a nationalist administration in a general election in October. Voters were exhausted with an establishment in power for almost a decade. Some also believed the benefits of EU integration and economic liberalization were not equally distributed among the population.
The newly elected Law and Justice party ran on a promise of lowering the pension age, reducing taxes for small and medium-sized businesses, increasing family benefits, raising taxes on banks and foreign-owned supermarkets, and cutting the country's reliance on foreign capital. The party also has a skeptical view of the European Union and believes Poland should protect its national sovereignty and remain outside of the eurozone.
The new government's early actions confirmed that it would not shy away from controversy. The administration in Warsaw appointed contentious figures to key Cabinet positions, accused the media of manipulating the population, criticized the German government for its position on the refugee crisis and Russia, and started a war of words with the president of the European Parliament. These moves prompted opposition parties, EU officials and international media to accuse the Polish government of authoritarianism, warning that the administration's actions would herald a new era of isolation. However, the reality is more complex.
Poland's Transformation
In the coming months, the Polish state probably will have a larger presence in the economy and will attempt to influence the justice system and the media. Warsaw's attempt to replace Constitutional Court judges appointed by the previous administration with judges supported by Law and Justice is an early sign of the central government's quest for greater influence. From the new government's point of view, if it wants to reverse some key decisions made in the previous decade and expand its political control of the country, it will need support from parliament, the judiciary and the media.
Poland's new political phase is intimately connected with events abroad. Law and Justice has repeatedly been compared to Hungary's ruling Fidesz party because both parties are reacting to what they perceive as increasing Russian aggressiveness and a progressively fragmenting European Union. These parties are skeptical of the benefits of EU integration and believe the post-national European model has failed to deliver the economic and political stability it had promised. Law and Justice and Fidesz assume that as the European core weakens, with no powerful patron to replace it, the concentration of power in the hands of the state is one of the few options they have to improve their positions in an increasingly uncertain geopolitical environment. Moreover, similar to Hungarian Prime Minister Viktor Orban, Polish Prime Minister Beata Szydlo and her policies probably will clash with the liberal ideals enshrined in the European Union. However, knowing that Poland (like Hungary) can no longer keep Russia at bay by integrating further with the European Union, Law and Justice cares less about the disapproval of the Western elite than about its ability to sustain Polish sovereignty.
However, the Carpathians and several independent states separate Russia from Hungary. Hungary does not feel nearly as threatened by Russia as Poland does, enabling Budapest to flirt with Moscow when needed — an option Warsaw clearly does not have.
Besides the inability to approach Russia, the Law and Justice party's Euroskeptic strategy has two shortcomings. The first is money. The new government in Warsaw may be skeptical of the benefits of EU membership, but Poland is one of the largest recipients of EU aid, in the form of structural funding and agricultural financing. In the coming months, Warsaw will challenge Brussels and protest whatever measures it feels undermine Polish sovereignty while understanding that Brussels has the power to cut funding for Poland. Moreover, the new administration will have to be careful regarding which allies to alienate and when. The government's plans against banks and supermarkets probably will irritate investors and governments in Western Europe and the United States at a time when Poland still needs military and financial support from abroad.
The second is Poland's civil society. Unlike the previous government including Law and Justice, which was part of a fragile multi-party coalition, Szydlo controls a strong majority in parliament. This fact suggests that the government will enjoy political stability, at least during the first months of its term. However, Polish society will become increasingly divided among pro- and anti-government camps, creating fertile ground for protests and demonstrations from both sides. Warsaw will have to find a way to expand its control of the country while keeping social dissent within tolerable margins
Poland's Foreign Strategy
Poland's domestic transformations will affect its international behavior, but the country's foreign policy is not likely to change drastically. Poland cannot afford to be isolated. Located at the heart of the North European Plain and surrounded by powerful countries (Germany to the west and Russia to the east), Poland traditionally has had to seek alliances to secure protection. This strategy rarely worked — Poland was repeatedly invaded and partitioned — but it is a strategy Warsaw simply cannot avoid.
After the end of the Cold War, Poland sought to multiply its alliances. It joined the European Union and NATO, hoping that a political, economic and military alliance with the West would keep it safe. It also formed the Visegrad Group, a political alliance with the Czech Republic, Slovakia and Hungary, and sought deeper cooperation with Germany and France through the Weimar Triangle. Simultaneously, Warsaw built a strong bilateral alliance with the United States, hoping that its military support and investment would keep Russia at bay.
The political environment in Europe has changed dramatically since Warsaw made these decisions, but Poland's core imperatives have not. Poland needs its alliances more than ever, especially considering the crisis in Ukraine. The most important of these alliances is the one with the United States, Poland's ultimate protector. But Warsaw also needs to protect its ties with the European Union, if only to prevent the bloc from moving too close to Russia. But the Law and Justice party is asking a valid question: What do those ties mean in the context of increasing European fragmentation and Russian assertiveness?
The new Poland will be more combative than its predecessor. It will challenge German leaders on issues such as the refugee crisis, demand a larger NATO presence in Eastern Europe, resist moves to concede sovereignty to Brussels and defend the right of the Polish parliament to make its own decisions. It will side with the United Kingdom in its push to protect non-eurozone members from policies designed for the currency union and will share London's vision of a multiple-speed Europe, where not all member states are meant to integrate at the same speed and in the same policy areas.
Poland will also reassess its priorities and start looking more to the east and the southeast, particularly to its traditional spheres of influence: the Baltic area and Ukraine. The previous administration had moved Poland in this direction already, and in the coming years these changing priorities will be more visible. In addition to being former territories of the Polish-Lithuanian Commonwealth between the 16th and 18th centuries, these two regions share Poland's concerns about Russia. A recent plan to build a natural gas interconnector between Poland and Lithuania, early discussions over a similar pipeline between Poland and Ukraine, and Poland's promise of a 1 billion euro (roughly $1.09 billion) credit line for Ukraine show Warsaw's intent to provide support.
Poland and Lithuania will coordinate on pressuring the European Union to be tough with Russia, especially when it comes to maintaining sanctions against Moscow. The two countries also will work together to reduce energy dependence on Russia. For example, in mid-December Lithuania finally connected its electricity market to Poland and Sweden, and now all the Baltic countries are in talks to synchronize their electricity networks with EU grids.
Finally, Warsaw will try to move beyond its alliance with the Visegrad Group to include Romania, the other large country in the region, where seemingly chaotic domestic politics also do not affect the country's foreign affairs priorities. So far, Warsaw and Bucharest's alliance is mostly diplomatic, but the two administrations have been meeting intensively in recent months and plan to increase political, military and economic cooperation in the future.
What the New Poland Means for Europe
Poland will want to retain its EU membership, but Warsaw will increasingly view the European Union as a club of sovereign nations linked by common and fluctuating interests rather than by the dream of a federal Europe. Thus Warsaw will cooperate with Brussels when it serves its needs but will also look for alternatives while trying to keep its foreign policy as independent as possible. The most interesting of these alternatives is the construction of regional alliances from the Baltic Sea to the Black Sea — a strategy meant to both resist Russia and oppose EU policies that go against Poland's interests. Warsaw will not be alone; several EU members in the region share many of Poland's views.
Warsaw's interest in Eastern and Southeastern Europe is growing at a time when regionalization seems to be emerging within the European Union. In November, media revealed that the Dutch government had discussed the possibility of creating a smaller version of the Schengen area that allegedly would include just a handful of Northern European countries, suggesting that the Netherlands will also be interested in protecting its ties with its main political and trade allies as Europe fragments.
Of course, the European Union is unlikely to break up in the immediate future, but it is notable that governments are making plans for a time when Continental integration begins to reverse instead of expand. Academics have discussed the concept of a multiple-speed Europe, in which different groups of countries cooperate on different issues and do not integrate at the same pace, for decades. But now governments are starting to accept it as the new state of affairs for the European Union.
The most important aspect of Poland's new political phase is that the largest country in the European Union's eastern flank is no longer in love with the idea of Continental integration. Poland is not alone in this sentiment; many EU members are Euroskeptic, including France and the United Kingdom. But the rise of Euroskeptic sentiment in a region that only a decade ago was the most enthusiastic about the political and economic benefits of EU membership speaks volumes about the Continental bloc's crisis."
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Jak otworzyć konto typu margin. Przede wszystkim trzeba mieć świadomość, że tak samo jak każda inna pożyczka, tak i margin jest oprocentowany. W przypadku brokera Sogotrade, z którego usług korzystam, odsetki od kwoty margina do wysokości 10000 USD wynoszą 9% w skali roku; dla kwot do 50000 USD jest to 8%, dla kwot powyżej 50000 USD – 7%, a powyżej 100000 USD – 5.75%. Ważne jest, aby wiedzieć, że depozyt zabezpieczający to nie jest koszt transakcji. Cała kwota wraca na Twoje konto wraz z zamknięciem pozycji. Zwrot depozytu zabezpieczającego jest uzależniony od niektórych czynników, takich jak rodzaj rynku czy dźwignia finansowa na rachunku głównym. Trading, coaching i mentoring od najlepszych traderów na TradingView. Praktykuj to, czego się nauczyłeś, na forexie, akcjach, obligacjach i innych instrumentach finansowych. Dołącz do naszej społeczności i zacznij swój trading bez użycia prawdziwych pieniędzy, nie ryzykuj! Margin Trading oraz jego zalety i wady. Handel z marżą jest technicznie podobny do handlu z dowolnym innym instrumentem, główna różnica polega na tym, że możesz kupować akcje o wartości większej niż twoja początkowa wpłata. Innymi słowami, Margin Trading jest podobny do wykorzystywania kapitału własnego, ale z wykorzystaniem Margin buying is risky even when there's no bubble -- whenever the stock market is in decline, margin accounts can destroy assets. In 2008, the CEO of Oklahoma City-based Chesapeake Energy lost nearly $500 million when the company's stock declined and he was forced to meet a margin call [source: Zarroli]. Buying stocks on margin is a fairly advanced investing technique because it's more risky

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Margin Trading Tutorial in 5 minutes

This is not financial advice and these are simply my own opinions, as such, this should not be treated as explicit financial, trading or otherwise investment advice. This video shows you how to open & close a Margin Long Trade on the Binance Exchange ----- Binance Margin Trading Full Video Tutorial #1: Binance Create Margin Account : https://youtu.be ... Do's & Dont's (Tips) of Intraday Trading in NSE Explained in Hindi - pivottrading.co.in - Duration: 48:07. Sourabh Gandhi Zerodha Upstox Aliceblue Partner 96,632 views 48:07 HDFC securities presents extended e-margin where you can buy small portion of stock value and get 100% benefit. Trade with HDFC securities e-Margin and enhance your buying power. You can amplify ... This video will explain to you the basics of Bitcoin Futures and how they work. This will cover margin requirement, settlement dates, leverage, long, short, and trading hours. Cboe Bitcoin futures ...

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