International
Midstream energy: A profitable bridge to a renewable future?
Midstream energy: A profitable bridge to a renewable future?
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Midstream energy companies probably aren’t front of mind when considering lower-carbon investment opportunities.
Stacey Morris, Head of Research, Alerian
In fact, almost the contrary. As society has become more aware of the impact of climate change, investors have progressively reduced allocations to the traditional energy sector, of which midstream companies are a part.
This trend has been facilitated by a growing number of responsible investment products, including ETFs, that explicitly and routinely exclude, or at the very least under weight, companies linked to fossil fuel industries.
Yet, according to Stacey Morris, Head of Research at midstream indexing specialist Alerian, many of the firms operating in this space actually specialize in lighter hydrocarbons, such as natural gas, that will play an important role as lower-carbon bridging fuels en route to a renewable future.
Morris, who recently shared her views on the midstream energy sector in a webcast hosted by ETF Strategy in partnership with white-label ETF platform HANetf (see ‘Midstream Energy: An Investment Grade Investment Opportunity‘), notes that the transition to renewable energy is likely to take much longer than most would expect. While electrification and decarbonization are key themes in developed economies, approximately three billion people are still dependant on solid fuels for cooking. Sweden, which is a country at the forefront of the energy transition, is targeting carbon neutrality in 2045 – that’s 25 years from now.
Meanwhile, the United Nations has set a medium-term goal of reducing greenhouse gas emissions by 45% over the next decade.
This combination of long-term ambition for carbon neutrality and shorter-term reduction goals points to the utility of relatively cleaner bridging fuels in achieving progress on the path to meeting ultimate end goals. Ardent climate change purists will argue for the immediate surrender of all carbon fuels, but others, perhaps more pragmatic, contend that a gradual transition that incorporates the use of bridge fuels is more feasible.
| FEATURED PRODUCT
Alerian Midstream Energy Dividend UCITS ETF – Tracks the Alerian Midstream Energy Dividend – 60% exposure to lower carbon bridging fuels – 11.6% dividend yield with 83% of constituents – Available on London Stock Exchange in USD – Expense ratio of 0.40%. |
For those investors who consider themselves to be sympathetic to this latter view, Morris believes the Alerian Midstream Energy Dividend Index offers a compelling tool for exposure to companies that are poised to benefit during a bridging period while also providing a very attractive income proposition to boot.
This index is the underlying reference for the Alerian Midstream Energy Dividend UCITS ETF, which was launched in July in partnership with HANetf. The fund is available on London Stock Exchange in US dollars (MMLP LN) and pound sterling (PMLP LN), and on Xetra (JMLP GY) and Borsa Italiana (MMLP IM) in euros. It comes with an expense ratio of 0.40%.
The ETF provides exposure to North American midstream energy infrastructure companies – companies that own and operate pipelines, storage facilities, refineries, and import/export terminals that facilitate the transportation or processing, for fees, of natural gas, natural gas liquids, and crude oil to customers in domestic and international markets.
This segment is typically more resilient than upstream producers due to steady cash flows based on long-term contracts that are often linked to inflation. The fee-based nature of midstream operators, as well as the regular presence of minimum volume commitments, makes their cash flows less sensitive to commodity prices than other parts of the energy value chain, providing useful defensive characteristics.
These companies are typically organized as Canadian corporations (C-corps) or as Master Limited Partnerships (MLPs) – a corporate structure that enjoys a tax-advantage in the US that enables cash flows to be passed on to investors as attractive dividend distributions.
The index includes US and Canadian companies, both MLPs and C-corps, which belong to the Oil & Gas Storage and Transportation industry group, a subset of the Energy sector, as defined by the Global Industry Classification Standard (GICS). Constituents are weighted by aggregate annualized dividends in a bid to boost income potential, while any individual security is capped at 10% to ensure diversification.
Importantly, about 60% of the index by weight is allocated to companies that are primarily focused on transporting and processing natural gas. Natural gas is widely considered to be the key bridging fuel (assuming, of course, one acknowledges such an approach to carbon reduction) for the energy transition, with studies indicating that natural gas produces roughly half the carbon emissions of coal and 30% less than oil when burned.
US natural gas production has accelerated over the past ten years, expanding by roughly 5% per annum with the US currently on track to become the biggest exporter of liquefied natural gas by 2025. Midstream companies, through extensive capital expenditure over the past decade, have established core infrastructure for moving liquefied natural gas to the coast and thereby play a vital role in facilitating the world’s access to this cleaner bridging fuel.
Beyond this, some of the index’s largest constituents – Enbridge (10.4%), TC Energy (8.4%), and Williams (7.4%), for example – are directly investing in renewables, with Williams targeting net zero emissions by 2050, further showcasing how even traditional energy companies are aligning with a low-carbon future.
This is something that is not always recognized in ESG approaches, meaning that investors who adhere to blanket exclusionary approaches could be throwing the baby, i.e. an attractive portfolio proposition, out with the bathwater when the bathwater isn’t all ‘bad’. As more investors do this, those investors who accept a role for bridge fuels could potentially earn an outsized yield premium.
Unparalleled income opportunity
The midstream segment was dealt a significant blow by this year’s Covid-19 disruption – the Alerian Midstream Energy Dividend Index plummeted 60% between 21 February and its bottom on 18 March. While the index has recovered somewhat since then, it is still down 39% year-to-date (data as of the market’s close on 18 September).
According to Morris, however, the sell-off has been overdone and represents a unique moment for investors. Falling valuations have pushed the segment’s yield to near all-time highs, presenting a significant opportunity for income-seeking investors in the record low-interest-rate environment. The yield on the index is currently at 11.6%, notably above its five-year average of 7.4% and head and shoulders ahead of other income-producing asset classes such as REITs (3.5%), utilities (3.5%), and bonds (1.2%).
Despite the index’s unusually high yield, fears of a value trap would appear to be overdone when one considers that investment-grade-rated credits make up some 83% of the total weighting.
Alongside this, Morris points out that MLPs are typically omitted from mainstream indices, such as the S&P 500, while their historically low correlation to other income-yielding securities makes them attractive portfolio diversifiers.
For pragmatic investors who recognize the need to balance real-world income demands and portfolio diversification requirements with a reasonably grounded climate conscience, then the midstream energy space should not be rejected out of hand. Indeed, it seems wholly deserving of much closer inspection.
The post Midstream energy: A profitable bridge to a renewable future? first appeared on ETF Strategy.
Government
Bolsonaro Indicted By Brazilian Police For Falsifying Covid-19 Vaccine Records
Bolsonaro Indicted By Brazilian Police For Falsifying Covid-19 Vaccine Records
Federal police in Brazil have indicted former President Jair…
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Federal police in Brazil have indicted former President Jair Bolsonaro for falsifying his Covid-19 vaccine card in order to travel to the United States and elsewhere during the pandemic.
Federal prosecutors will review the indictment and decide whether to pursue the case - which would be the first time the former president has faced criminal charges.
According to the indictment, Bolsonaro ordered a top deputy to obtain falsified Covid-19 vaccine records of himself and his 13-year-old daughter in late 2022, right before he flew to Florida for a three-month stay following his election loss.
Brazilian police are also waiting to hear back from the US DOJ on whether Bolsonaro used said cards to enter the United States, which would open him up to further criminal charges, the NY Times reports.
Bolsonaro has repeatedly claimed not to have received the Covid-19 vaccine, but denies any involvement in a plan to falsify his vaccination records. A previous investigation by Brazil's comptroller general concluded that Bolsonaro's vaccination records were false.
The records show that Bolsonaro, a COVID-19 skeptic who publicly opposed the vaccine, received a dose of the immunizer in a public healthcare center in Sao Paulo in July 2021. [ZH: hilarious, Reuters calling the vaccine an 'immunizer.']
The investigation concluded, however, that the former president had left the city the previous day and didn't leave Brasilia until three days later, according to a statement.
The nurse listed in the records as having applied the vaccine on Bolsonaro denied doing so and was no longer working at the center. The listed vaccine lot was also not available on that date, the comptroller general's office said. -Reuters
"It's a selective investigation. I'm calm, I don't owe anything," Bolsonaro told Reuters. "The world knows that I didn't take the vaccine."
During the pandemic, Bolsonaro panned the vaccine - and instead insisted on alternative treatments such as Ivermectin, which has antiviral properties against Covid-19. For this, he was investigated by Brazil's congress, which recommended that the former president be charged with "crimes against humanity," among other things, for his actions during the pandemic.
In May, Brazilian police raided Bolsonaro's home, confiscating his cell phone and arresting one of his closest aides and two of his security cards in connection to the vaccine record investigation.
Brazil's electoral court ruled that Bolsonaro can't run for public office until 2030 after he suggested that the country's voting system was rigged. For that, he has to sit out the 2026 election.
International
This gambling tech stock is future-proofing the world’s casinos
Supported by the universal thrill of a quick payout and the need for leisure, gambling stocks make a compelling case for long-term returns.
The post This…
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Supported by the universal human thrill of a quick payout, and the need for leisure and entertainment to bring enjoyment to adult life, casinos will remain essential spaces for people to dream and play for the foreseeable future, making gambling stocks a prospective space to look for long-term returns.
According to Research and Markets, the global casino industry was valued at US$157.5 billion in 2022, and it will grow to US$224.1 billion by 2030 at a compound annual growth rate of 4.5 per cent. This trend includes:
Approximately 100 million gamblers in the United States, who generated US$66.5 billion in revenue in 2023, a 10 per cent gain from 2022, which itself was a record year A little fewer than 20 million gamblers in Canada, who generated about C$15 billion in revenue in 2023 A global addressable market of thousands of casinos, and more than 4.2 billion people who gamble at least once every year, according to a 2016 study by Casino.orgThe main challenge with attracting these billions through casino doors is they sway heavily toward middle age. The mean age of U.S. casino visitors has hovered around 50 for the past decade, with a similar trend across the world, forcing casinos to attract younger, tech-savvy customers, many with less gambling experience, to continue growing profits for their stakeholders over the long term.
Investors seeking exposure to a leadership position in building the bridge between casinos and the next generation of gamblers should evaluate Jackpot Digital (TSXV:JJ). The Vancouver-based company is a manufacturer of dealerless electronic table games that deliver immersive experiences tailored to the digital age, while earning casinos attractive returns on investment.
The gambling technology stock benefits from no direct competition in the dealerless poker space, with orders spanning North America, Europe, Asia, Africa and the Caribbean, a long-established presence with major cruise ship brands, such as Carnival, Princess Cruises and Holland America, and a growing land-based presence with orders or ongoing installations across 12 U.S. states. Its highlight partnership to date is a master services agreement with Penn Entertainment, the country’s largest regional gaming operator with 43 properties across 20 states.
Jackpot Digital’s differentiated technology and well-rounded management team are at the heart of its success in landing several blue-chip casino gaming companies as customers.
Jackpot BlitzThe gambling technology stock’s flagship product, Jackpot Blitz, is a dealerless poker table featuring three of the world’s most popular variations – Texas Hold’ em, Omaha, and Five-Card-Omaha – brought to life through slick 4k graphics on a 75-inch touchscreen, and offered in three formats – pot-limit, no-limit and fixed-limit – designed to attract a diversity of revenue from casual to experienced players.
Spokesperson and NFL championship-winning coach Jimmy Johnson explains the benefits of the Jackpot Blitz. Source: Jackpot Digital.The table also comes equipped with house-banked mini-games, including blackjack, baccarat and video poker, as well as side bets on the main poker game, such as Bet the Flop, all of which keep players engaged and entertained between, and even during, poker hands. The stunning Jackpot Blitz machine also offers multi-venue “Bad Beat” jackpot functionality, allowing casinos to offer a “Poker Powerball” with massive Jackpots, further enhancing the attractiveness of Jackpot Blitz to new players.
It’s by striking a balance between the needs of the modern gambler, and efficiency and profitability that in-person operators couldn’t hope to match – unless they ordered the machine for themselves – that Jackpot Digital has earned itself the top spot in dealerless poker.
Player benefitsWhen a veteran or novice gambler takes a seat at the Jackpot Blitz, his or her experience begins with an easy-to-use interface, laid out in a modern and stylish design, programmed to respond to hand gestures that bring real casino play into the digital age, including card bending and chip jingling.
Source: Jackpot Digital.The table’s intuitive controls, combined with instant payouts and its dealerless nature, translate into faster game play, which maximizes playing time and player excitement, while minimizing human error and the intimidation new gamblers might feel about approaching an analog poker table. The gambling technology stock’s in-house development team is also constantly working on new games to keep content fresh, with a special focus on bringing international games and regional versions of poker to casino audiences in Asia, South America and the Indian subcontinent.
As hands are laid down and pots pile up, players can also track game stats in real time, which inform future strategy and enhance the thrill of the moment with an added element of competition.
Operator benefitsFrom an operator’s perspective, a floor of automated gaming tables can meaningfully and instantly reduce casino staff expenditures and management pain points, while avoiding wage inflation, labour shortages and supply costs.
The Blitz is no slouch on revenue either, dealing more hands per hour, resulting in higher revenue and higher profitability, which is further enhanced by onboard side bets and mini-games that can be played while players are engaged in a poker hand.
The Jackpot Blitz’s economics are attractive to operators thanks to its ability to accommodate non-stop play, while monetizing downtime through side games and bets. While a human dealer must spend time shuffling, interacting with players, and consulting with colleagues, the Jackpot Blitz can accept wagers 100 per cent of the time, making sure gamblers get the action they came for and operators see a return on their investment.
Source: Jackpot Digital.
Beyond gaming revenue, casinos are further incentivized to onboard the Jackpot Blitz because of its fully customizable advertising functions, including logos, card backs, chips and felt colors, all of which bolster casino culture and enable the pursuit of revenue from third-party advertising partners.
The Blitz ties its value proposition together by generating automatic reports – including demographics and consumer behaviour through a rewards card system – and plugging directly into most back-end management systems, saving casinos the hassle of manual tracking, while also minimizing tampering, money-laundering and theft through the use of isolated servers.
Whether it’s streamlining the player experience or putting automation at the service of operators’ bottom lines, Jackpot Digital’s flagship product is positioned to create value, and plenty of it.
Jackpot Digital’s path to profitabilityAfter existing as an exclusively cruise-ship-based operation since 2015, Jackpot Digital suffered a steep decline in revenue during the COVID pandemic, falling from C$2.18 million in 2019 to C$0.42 million in 2021.
Management quickly pivoted in the face of uncertainty, redesigning the Blitz to execute on a land-based expansion strategy – backed by Gaming Labs International certification in fall 2023 – which is bringing about a successful turnaround after the re-emergence of the casino business. Revenue more than tripled to C$1.43 million in 2022, and reached C$1.57 million through three quarters of 2023, with the company expecting to ramp up significant recurring revenue after it installs several dozen machines currently in its backlog.
The Jackpot Blitz electronic gaming table in action. Source: Jackpot Digital.
The first installation of land-ready Jackpot Blitz machines is now completed at the Jackson Rancheria Casino in California, as the company announced today. The three-machine installation marks a new era of growth for the company, having announced 25 Blitz deals since November 2021 (slide 12), with many more across Canada and the United States in the works, in addition to a strong pipeline in Asia and Europe.
“Jackpot Digital could be a profitable company right now if it only focused on care and maintenance of the revenues it currently generates. But that’s not why we’re here,” Mathieu McDonald, Vice President of Corporate Development at Jackpot Digital, said in a recent interview with Stockhouse. “We intend to scale up to many multiples of the tables we have out right now, with the potential for up to 2,000 tables over the next three to five years.”
According to McDonald, the company is fielding three to five inquiries per week about the Blitz from casinos around the world that recognize the machines’ first-mover advantage in dealerless poker and potential expansion into other games in need of automation.
Jackpot Digital’s ambitious plan of action is supported by a management team of proven gambling, finance, advertising and legal professionals, many of which have been serving Jackpot stakeholders for more than two decades.
A long-tenured management teamThe management team behind Jackpot Digital is led by Jake Kalpakian, who has served as president and chief executive officer since 1999, including under the gambling technology stock’s former incarnation as Las Vegas From Home.com Entertainment Inc. Kalpakian brings more than 30 years of experience managing small-cap publicly listed companies, granting him a steady hand when it comes to maneuvering through the volatility of the economic cycle.
Kalpakian’s efforts are supported by three directors whose well-rounded expertise positions Jackpot Digital for long-term sustainable growth:
Gregory T. McFarlane, a director at Jackpot Digital since 1999, previously ran an independent advertising firm and holds a degree in mathematics from the University of Toronto. McFarlane is also a co-founder of the popular Control Your Cash personal finance website. Chief financial officer Neil Spellman, a director at the company since 2002, boasts an almost two-decade track record as vice president at Wall Street firm Smith Barney, where he developed a multi-industry understanding of the journey to profitability. Finally, Alan Artunian, a director since 2017, currently serves as CEO of Nice Guy Holdings, a corporate and legal consulting company advising clients across a diversity of sectors.Guided by a strategic management team, and benefiting from a macro-trend toward casino automation, Jackpot Digital is on course to ride a wave of millions of gamblers looking for an elegant, tech-informed alternative to traditional in-person play.
A multi-bagger opportunityThe Jackpot Digital opportunity sets up savvy investors who recognize the soundness of the company’s value proposition. The tremendous risk/reward value of Jackpot Digital gives investors the opportunity to ride the macro-trend toward casino automation, as deals for the Blitz keep pouring in, the company adds games to its portfolio, and the global casino industry adds hundreds of billions in revenue through this decade.
Join the discussion: Find out what everybody’s saying about this gambling technology stock on the Jackpot Digital Bullboard.
This is sponsored content issued on behalf of Jackpot Digital, please see full disclaimer here.
The post This gambling tech stock is future-proofing the world’s casinos appeared first on The Market Online Canada.
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Gates-backed PhIII study tuberculosis vaccine study gets underway
A large study of an experimental vaccine for the world’s biggest infectious disease has finally kicked off in South Africa.
The Bill & Melinda Gates…
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A large study of an experimental vaccine for the world’s biggest infectious disease has finally kicked off in South Africa.
The Bill & Melinda Gates Medical Research Institute (MRI) will test a tuberculosis vaccine’s ability to prevent latent infections from causing potentially deadly lung disease. Last summer the nonprofit said it would foot $400 million of the estimated $550 million cost of running the 20,000-person Phase III trial.
It’s a pivotal moment for a vaccine whose origins date back 25 years when scientists identified two proteins that triggered strong immunity to the bacterium that causes tuberculosis. A fusion of those proteins, paired with the tree bark-derived adjuvant that helps power GSK’s shingles shot, comprise the so-called M72 vaccine.
After decades of failures in the field, the vaccine impressed scientists in 2018 when GSK found that it was 54% efficacious at preventing lung disease in a 3,600-person Phase IIb study.
But the Big Pharma decided that a full-blown trial was too expensive to conduct on its own. Gates MRI stepped in to license the vaccine in early 2020, right before the Covid pandemic shifted global vaccine priorities towards the coronavirus, further stalling the tuberculosis shot.
“There’s been frustration that it’s taken so long to get this trial up and running,” Thomas Scriba, deputy director of immunology for the South African Tuberculosis Vaccine Initiative, told Endpoints News last summer.
At last, the vaccine is getting a chance to prove itself in a bigger study. If successful, it could lead to the first new shot for tuberculosis in over a century.
Emilio Emini, CEO of the Gates MRI, told Endpoints that the initial results may come in roughly four to six years. “Hopefully this will galvanize a refocus on TB,” he said. “It’s been ignored for many, many years. We can’t ignore it anymore.”
A substantial impact
Even though an existing vaccine helps protect babies and children against severe tuberculosis, the bacterium responsible for the disease still causes roughly 10 million new cases and 500,000 deaths each year.
Emilio EminiBy vaccinating adolescents and adults who test positive for infections but don’t have symptoms of lung disease, the Gates MRI hopes the shot will help prevent mild infections from becoming severe ones, curtail transmission of the bug, which is predominantly driven by people with lung disease, and reduce deaths.
“The impact would be substantial,” Emini said. But he cautioned that the biology behind mild and severe diseases is still mysterious. “The reality is that no one really knows what keeps it under control.”
The study, which will take place at 60 sites across seven countries, will include some people who are not infected with tuberculosis to ensure that the vaccine is safe in that broader population.
“Having to pre-test everybody is not going to make the vaccine easy to deliver,” Emini said. If the vaccine is ultimately approved, it will likely be used in targeted communities with high tuberculosis, rather than across a whole country, he added. “In practice, you would immunize everybody in those populations.”
Emini described the Gates MRI’s rights to the vaccine as “close to a worldwide license.” GSK retained rights to commercialize the vaccine in certain countries but declined to specify which ones.
A spokesperson for GSK said that the company “has around 30 assets under development specifically for global health … none of which are expected to generate significant return on investment.”
“It is not sustainable or practical in the longer term for GSK to deliver all of these alone. So we continue to work on M72, but in partnership with others,” the spokesperson added.
If the shot works, Emini said that the Gates MRI will sublicense it to a manufacturer that will be responsible for making and marketing the vaccine. The details are still being worked out, he noted.
vaccine pandemic coronavirus deaths new cases transmission africa
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Gates-backed PhIII study tuberculosis vaccine study gets underway
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