By the way, I see nothing wrong with you staying in AIOCF. It was just all the movements of the value of the Canadian dollar which made it too complicated for me (not only in buying and selling the stock in Canada, but the value of their past and present earnings changing in dollars as the exchange rate changed while I was looking at the stock price in US dollars. I have enough of that with CRTO, but at least with CRTO it’s actively traded on the Nasdaq, and it’s a very compelling story).
Saul,
Interesting. The value of the Euro has also been dropping against the dollar. In fact, it is likely that with ECB QE the Fed’s future interest rate increases that the Euro will keep falling relative to the dollar. Yet, you have over 8% in CRTO and sold out of AIOCF.
I previously passed on CRTO, but I started revisiting it yesterday. Running the numbers on CRTO is a lot more complicated than for most stocks: they report in Euros, the don’t report adjusted EPS, they provide forward guidance in ex-TAC sales and in adjusted EBITDA. I’ve started figuring out their earnings.
Here’s what I did to get their adjusted EPS
Step 1: I take their Adjusted Net Income which they report in their press releases every quarter.
Step 2: I look up their diluted shares and divide Adj NI by the shares. This gives me the adj EPS in Euros.
Step 3: I look up the exchange rate and convert to USD. I’m still debating with myself whether I should use the current exchange rate for all their historical quarters or whether I should use a different time specific exchange rate for each quarter (i.e. look up the historical exchange for each period individually. Thoughts?
Some more thoughts on CRTO: the stock is a great buy IF the earnings will keep growing in the future. The technology of digital marketing moves very fast and they will need to keep up to maintain their growth.
CRTO has been growing fastest in the Americas and it’s likely this will continue. This alleviates concerns about future USD strengthening, especially if a large part of their operating costs are in Europe. The same is true for AIOCF: strong sales in the US should alleviate concerns about a weakening CAD.
Regarding AIOCF, my biggest concern is that their CEO is hell bend on growing the top line. I don’t know if this is an ego thing or what. I have posted on this several times in the past year. There are other companies that are growing revenues AND growing EPS at a huge clip. Who cares if a company grows sales without this growth also dropping to the bottom line. For this reason, I have limited my allocation in AIOCF. Saul has not seemed concerned about this in the past so I was surprised that he exited AIOCF. Is this another one of his premonitions that seems to happen often?
Chris