The Canadian Investor - Two Canadian Companies Making Big Acquisitions

Episode Date: March 23, 2023

In this week’s episode we talk about UBS acquiring its rival Credit Suisse with the help of the Swiss central bank as we continue to see issues in the banking sector. We also discuss recent CPI prints for both Canada and the US and what implications it might have going forward. Symbols of stocks discussed: CS, UBS, ATD.TO, CP.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Register for ShakepaySee omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Today is March 21st, 2023. My name is Brayden Dennis, as always joined by the magnificent Simon Belanger. Dude, I was looking for some more adjectives for you and I just threw it in the chat gpt i'm

getting a little like reliant on it you know like it takes a while to build these kind of software habits i'm starting to make ways with the ai thing this is for real man did she uh professor love to you or what or just say the is it a her is that what i don't know yeah wasn't there like when they did testing it became like sydney when it was the more personality one so i just assume it was a her because of that yeah the like the lead engineer cto uh, at open AI is an Albanian woman and she is just crushing it. Um, and she's like one of the lead inventors who wrote the algorithm and, uh, yeah, she, she's crushing it. All right, let's get into it here. We got some, some news, uh, some stuff hot off the press and, uh, yeah, I think it's lots of good news. And then

we'll round it out here with, of course, more banking information here with the Credit Suisse acquisition or merger. You know what's funny? I don't know if you caught this, but Credit Suisse press release called it a merger and UBS's press release called it an acquisition. Yeah, I'm going to go with UBS on that one and I'll explain why. I agree. Yeah, KG Swiss is not really in a position to be merging with anyone. I'll just say that. Exactly.

All right, let's start it off with Mint Mobile. They sold to T-Mobile. Last episode, you and I talked about Ryan Reynolds. Mint Mobile is his company. He owned it, reported 25% stake in it. He did all the commercials, all the media, advertising, bringing his influence to the business. And they're being acquired for 1.35 billion. The wild part here is he had also sold his stake in the aviation gin company just a few years ago, which by the way, is really good.

I feel like celebrity alcohols are usually hit and miss. His is really good. So, hey, Ryan, mr reynolds nice work uh you are not on the dirt and ramen diet that uh i'm on for quite some time now i said congratulations on being ridiculously rich the vancouver native is now completing side quests at this point like he's just he's just chalking up side quests um do you think he's gonna buy the senators i think i don't know but i know he's in one of the bids so there's several groups and i think they're moving to the next stage now um i know my wife would be delighted

for him to buy the sense because she's a she's a big fan and obviously he'd be in ottawa more often if he owned them i'm sure he'd be, you know, check out the games a bit more. So it's interesting. I mean, obviously, he'd be able to, you know, pony up a bit of money, especially with that sell of Mint Mobile to Mint Mobile to T-Mobile or T-Mobile. Yeah. Mobile, mobile, mobile. Yeah, exactly.

You know that maybe that's his next side quest for the for the actor uh is to just own a hockey team that's just the ultimate canadian side quest um speaking of news here this is this is a big one uh take it away yeah so last week overshadowed by a few banking issues down south and globally, regulators approved the CP acquisition of Kansas City Southern. Now, I'll just give a little bit of a background here, just so people who are new to the podcast and maybe are not very familiar with this. So the Surface and Transportation Board, STBb was the regulatory body in question here they approved that sale subject to certain conditions it was in a trust side had been in a trust for like over a year at this point because these type of acquisitions they are reviewed mostly from a competition perspective to make sure that the merger will not reduce options from shippers

in general that's kind of what they're looking at but they looked at all different kind of things the merger will make and they were referring to cpkc here so i'll probably talk about the new company this way as the first company to have a single line railway connecting the U.S., Mexico and Canada. So that's a very big thing. The STB stated that the transaction would provide several benefits including taking approximately 64,000 truckloads off the roads annually. Adding over 800 new unionized jobs in the U.S. It could improve efficiency as well since now it's a single line service. It could foster new national railroad passenger opportunities, help produce

costs for shippers, increase competition with other class one carriers. A class one carrier is a carrier earning more than $500 million in annual revenues. So I don't know how many there are that are not class one to me are pretty much all the publicly traded one would fall in that category including canadian national rail now some of the conditions of approval very focused on the competition aspects so they will allow shippers to challenge cpkC if there are price increases that are imposed beyond the rate of inflation. CPKC will need to continue providing reciprocal switching access for shipper facility as they have today. So no change there.

Conditions to ensure that shippers have options and they are not reduced because of the merger there are also environmental requirement including the stipulation that trains cannot block public crossing by more than 10 minutes essentially that is imposing a limit on the length of the trains which has been a big concern from communities especially if you live close to a railway you probably don't want the trains to be never ending. And I remember the first time I went to Banff, that's when I realized how long these trains can be. Like we had a railroad crossing. It must have been like 10 minutes, just never ending. And the trick is always turn the car off

because it is going to be longer than you think. Yeah, exactly. Put it in park, turn the car off and, you know, hang out for a bit. That's it. And the last two are more, the last one actually here, it's establishing community liaison roles for Chicago and Houston for a period of at least seven years. And that seven-year period is actually the period that the STB

will have oversight on the merger operations. So they're definitely going to be keeping a close eye on it. I don't know what the repercussions would be within that seven-year period if CP Casey actually, you know, breaches some of these agreements. I'm sure there's going to be negotiations and making sure they get back in line. But some big news, the acquisition or the decision is effective April 14, 2023. So there is a period where they can allow people to, I guess, voice their discontent or request appeals, I think, until then. This is a once in a lifetime acquisition, merger, whatever you want to call it. Maybe consult with Credit Suisse and UBS on the terms there. It's a once in a lifetime deal. I think this is absolutely massive for this new entity. The rails are obviously incredible businesses and consolidation at this

stage is very difficult given their size and the regulatory concerns of anti-competitive natures of it. And the fact that this went through is pretty incredible. I think CP and KCS are in really good shape here to just have such a dominant force with an extensive network, goes from Canada, the US and into Mexico. It is truly kind of a once in a lifetime type deal. Another thing is that I think is funny here is like you mentioned it with the with these rails if you sometimes you know if you catch the beginning of it and you're sitting there in the car for a while you're like wow the economy moves a lot of stuff dude just like this is just stuff endless amounts of stuff it is uh it's pretty incredible if you never have taken the time or been unfortunate to take the time of watching one go through.

No, exactly. I mean, I think I've said it before. I think if you're looking at CP here, it's probably going to be more growth than Canadian National Rail. Canadian National Rail will offer better return of capital to a shareholder. Their network is nothing to sniff at either. It's basically Canada coast to coast and all the way to the Gulf of Mexico. The main difference is doesn't connect to Mexico as well. But we still have two very impressive railroads here based in Canada. As do-it-yourself investors, we want to keep our fees low. That's why Simone

and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit

questrade.com for details. That is questrade.com. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning Duolingo style education lessons that are completely free.

You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you, go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Blossom Social in the App Store, and I'll see you there. Now we'll move on to our third topic here uh for those who are under 18 just make sure you put your earmuffs on earmuffs on earmuffs on this is a family show so i'll keep it family show um but i'm bringing it up because it's canadian

news uh if you're not familiar with one of the most visited websites on the internet, it, uh, the beginning rhymes with horn and the second part rhymes with cub. And it was sold to private equity company named ethical capital partners. I am not making this up. We are truly living in a simulation. Capital Partners. I am not making this up. We are truly living in a simulation. So the owner of said website, adult website, is from Montreal, from a company named MindGeek. And they were sold now to a Canadian, so Canadian company sold to a Canadian private equity firm named Ethical Capital Partners. This is pretty funny timing as this website has been under a lot of attack through the years for human rights violations, human trafficking. There was a Netflix documentary that just recently came out that's on the cover of netflix when i went on last night and i have not seen it yet but i i can assume what it's about and uh this is chalk this up into the the vegan etf with uh

ironic names yeah yeah no and i mean we're halfway through my wife and i through the documentary so far it's good i think they do a a good job of trying to look at all the different perspective um so all the different viewpoints um so it is definitely interesting it's funny that that happened because we had like started watching i think a day before so i don't know i guess i don't know if they didn't want a bad press or what it was they just decided to sell it so yeah next you know ethical capital partners is gonna buy up um they're gonna roll up strip clubs uh maybe some tobacco companies and who knows what's next uh hard drugs roll roll it all up into the ethical capital partners and then bundle it into that nice vegan etf and we have

truly me we've truly hit maximum esg compliance uh so you know a little bit of irony here you know i don't really know what to say to this but we are truly living in a simulation uh moving on we got um us cpi yeah yeah and canadian and canadian that was today i think right yeah yeah that was today exactly so i i originally i forgot it was coming out today so i originally just uh did the us because we had missed it and the important obviously of the us and the economy and then canadian one came out so i'll break down both i'm actually going to focus a little more on the u.s part just because of the implication with what we've seen with svb and the regional banks you know as

a whole struggling in the u.s now for canada cpi came in at 5.2 percent that's a headline number year over year which is actually lower than what economists were predicting at 5.4 percent food remained high unfortunately at 9.7 percent i keep saying it but it impacts lower household income a lot more because there's a higher proportion of their budget that actually goes to food and shelter and shelter also remained high at 6.1 percent energy was one of the few areas that declined it declined by 0.6 percent and year over year everything was actually up except energy obviously the increases are slightly less than they were month over month everything was up with the exception of transportation energy once more and the three core cpi metrics used by the Bank of Canada were also down slightly versus January, which is good because it's continuing to trend down from late in 2022.

So that's one of the things that they're keeping a close eye on. So maybe, you know, maybe TIFF was on to something with pausing the rates. We'll see. We'll see how it goes. But overall, I think some pretty good news there before uh any comments before i move on to the u.s data no uh if we've gotten a lot of new listeners to the show uh and if you're new listeners to the show we appreciate you welcome aboard this this train ain't stopping we we're always here and we are always growing so maybe we should rewind a little bit. It's elementary,

but if you're new to the show, CPI just means the good old consumer price index, which is what the government uses to quantify inflation. And I'm actually in my next segment going to talk more about CPI and some alternative measures that are coming out. But that's my only comment. Yeah, exactly. And CPI will also be typically used for indexing various, for example, like pensions. So if you're looking at a pension that's fully indexed inflation, usually they'll be gauging that on the CPI data. And I believe as well, CPP is also indexed, which uses CPI data. So just something to keep in mind. It does have some real world implications.

Now, for the US, for the last 18 months, the US CPI data was always a big point of focus, obviously, for the financial markets and for obvious reasons because we're seeing everything kind of increase in price so headline inflation there was six percent course cpi came in at 5.5 month over month the overall inflation was 0.4 percent food also stayed high at 9.5 percent shelter remained high as well at eight point one percent used cars continue their trend downwards being down thirteen point six percent energy was actually i think energy was up five point two percent here i'll have to double check i feel like i miss uh i may have made a mistake here in my notes but that's okay most things are still trending month over month, with the exception of energy use cars and medical care services.

It will be interesting to see what the Fed decides to do this week based on the data, especially because of the old, you few things, financial system stability, inflation, and also employment, which, by the way, job numbers came in strong a few weeks ago for the U.S. at 311,000. Although these are notoriously revised, so don't be surprised if it's revised a few months down the line. And like I said, the Fed is in a tough spot here. Really, I think they have three options. They continue raising rates aggressively to quell inflation, but potentially causing even more financial stability problems, even as far as a severe recession. That could be one of the outcomes here to stop rate hikes and potentially even lower them later this year because the stability of the financial system is at risk or three which i think it's probably the most likely slow down rate increases so maybe a few smaller rate hikes in the next meeting than a pause like bank of canada is

doing just as they gauge inflation and make sure that nothing else is blowing up on uh on the banking side it is uh an interesting situation right now because of the situation that the u.s is now in that they were not in two weeks ago ish like you know what i mean he's like oh, the direction that everything was headed, it is now just feels so different. And I have no idea how these people sleep at night. Like, this job, dude. This job. I hate, I, thank goodness me. I count my lucky stars every morning that I don't have this stupid job

working at the Fed. So you think the most likely is a slowdown in hikes. That's probably consensus at this point. Yeah. Yeah, I think so. I haven't looked at the Fed watch tool, but that's probably what it's looking at. I mean, the markets, the bond market has slashed the expectations for interest rates. I talked about that a few episodes ago. So as SVB, just before the collapse, the five-year U.S. Treasury was 5.34%. Since then, it's gone down all the way to 3.56%.

Wow. And it went way, way down within just a few days following the fallout. It's actually up slightly, 10 basis point in the past couple of days. But I think that shows you what the bond market is actually kind of longer, medium, longer term. I think they're projecting that the Fed will have no choice,

but slowing down and potentially even, well, they're saying they're going to have to cut at some point sooner than later. Have you seen Truflation? That's what I was hinting at before. Truflation. Not until this morning when I was doing my notes and I saw your notes. So I went on the website and had a look. So I'll give my take after that okay cool um i i thought you might have seen it because i know it's popular with bitcoiners because i you know bitcoiners are the first to look at the cpi numbers and call bs like it's kind of in their it's in their nature it's in their blood it's in their like the way they see the world um and they're probably right

that it's mostly bs and so people have been coming out with these alternative data sets for what they think the true inflation number is, or at least a more accurate and more complete view of what the inflation number is. And I've seen it attempted in a few different ways, but this one looks quite interesting. And I'll give a disclaimer here. I have not looked through the data sources hand combed like with completeness, but they say here that they use over 40 plus data sources and vendors and over 10 million data points. And it's updated daily compared to, you know to monthly with CPI. And they say it's very unbiased and whatever. Now, there's no secret that there's a lot of problems with the government-reported consumer price index for reporting inflation.

There's many knocks on the methodology. It seems kind of biased. Now, this is the alternative data set. And what I find quite fascinating is that it actually appears to me that they don't have an agenda, which I like, because in Q2 of last year, they said that inflation was much higher than the reported number. They said that it was at over 12% year over year in April of 2022. And that's kind of like where you and I thought it might be, like low double digits, which was higher than the CPI reported number. But now it's actually saying that it's lower

than the government reported CPI number saying that inflation is actually cooler than what the government's reporting. And so that's very interesting, right? Because it's not just elevated with this data set all the time above the CPI number. It's actually saying that inflation is running cooler than what the CPI is reporting. But back last year, it was running way hotter than what the CPI number was reporting. And I just thought that that was an interesting data point. Now that you have looked through it very briefly, what are your thoughts? Yeah, I was just looking because there's a section on their methodology and what weighting they provide for each area. So just for comparison here, so they give about 15% weighting to food and non-alcoholic beverage,

whereas Canada, I'm just going to look at Canada here, it's around right in line. I think it's around 15-16%. It's just a graph here. And then housing is one of the bigger differences. They give 23%, whereas the government of Canada is closer to 30%. So that's one of the bigger differences here. Overall, my thought, I mean, it's interesting. I think there's issues with both this one and this official CPI. And the issue is they're just using a average consumer perspective. But if you're high up on these, you know, the spectrum, you're really wealthy. Clearly, like food's going to be a tiny, tiny percentage of all your expenses, because, you know, if you're a multi multi millionaire, I mean, you're not eating proportionally, right? Like you're,

yeah, you may buy some more expensive food to restaurants and stuff like that. But it's still not going to be the 15% that they're saying here. And vice versa, if you're a really low income household, then the food component will probably be higher than that 15 percent that both sides have so i think you know there's always going to be issues with whichever perfect number perennially exactly that's it because people look at it and then they just think oh my god but you really need to look at it from a personal basis to see what the true impact of inflation is on you. It may be higher than this. It may be lower, but that's my take on it. Yeah. It is a perennially imperfect number that has flaws in many ways.

One thing I will say is I haven't played around with it, but it looks cool on their site. What you can do is you can adjust the weightings. You can build your own inflation number based on adjusting the weightings of housing, of food, of transportation, based on what you are experiencing. So say you know what your budget is, you export that little view that you get from your bank that shows what you're spending on your credit card as it categorizes your expenses. And you could come up with your own CPI number. That's an interesting tool. I don't know how useful it is, but it's at least kind of fun. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them,

you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there

and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Let's move on to our first bit of earnings here. Is it the only earnings? I earnings i think i think it is the only one let's hear it yeah yeah okay so this one um alimentation couche-tard they had their earnings and some pretty major news that happened last week so alimentation couche-tard has agreed to buy 20 well let's just round it up 22 2,200 gas stations from French energy giant Total Energies for a total of 3.1 billion euros.

Manimattation Cochart expects to finance this with a combination of available cash, existing credit facility, U.S. commercial paper, and U-Term loans. The stations are primarily located in Germany, the Netherlands, and there are some in Belgium and Luxembourg as well. Yeah. Any thoughts on this? I mean, it's really seems like they're doubling down on the gas station. This is this is their bread and butter, man. The gas stations are their bread and butter.

I was filling up gas at Circle K, which is, flagship brand here in the US and now in Canada. And I was filling it up and it stings. And I was paying in US dollars because I'm in the States. And it stings a little more knowing I sold the stock too early. Looking at the pump, I'm like, oh, this is expensive when you put it into canadian dollars and then i looked up and uh oh no i sold the stock so early like a hundred percent ago look the reality is is um this management team has been unstoppable it's bouchard right bouchard oh what's his name i think it's first i think it is yeah is it on a yeah yeah it's a they're all they're all in all the canadian okay french canadian capital allocators they're all in no lane bouchard not uh not badard not to be not to

be confused um they are really good at these deals. They have shown it time and time again. I have no reason to doubt them. I have not looked into this deal extensively, but I have absolute confidence that they know what they're doing. And you're right. They're continuing to double down on the gas stations, which is kind of the bare case.

But last time I checked, these internal combustion engine cars aren't going away tomorrow so i i guess it's an existential risk but we'll see yeah exactly and their q3 earnings was i think okay um i'll just go over the the highlights here so total revenues were up eight percent to 20 billion merchandise revenue was up 3.5%, whereas transportation fuels revenues were up 9% to $14.7 billion. Now total gross profits were up 4.3%. The operating margins were actually down 40 basis points and net earning were down 1.2% to $737 million. EPS was up 4.3% to $0.73 a share. Clearly, overall, I think it was okay numbers. The issue I have with some of their numbers is there's still expenses that are quite high. And you're seeing here here revenues are going up 8% but the net earnings are actually down.

So what that tells you is that, you know, between the top line and the bottom line, there's a lot of stuff going on that's going up. So that's probably the easiest way to put it there. And transportation fuel is fine. It's just, you know, it's highly volatile and the margins will actually vary quite a bit on there. And keep in mind here that SG&A expenses have increased 6.4% for the quarter and 7.9% for the first three quarters of fiscal year 2023. So overall, good. But I mean, clearly, we're still transitioning towards a more EV world. Governments are pushing that agenda quite a bit i know we saw the announcement that volkswagen will open a battery ev plant in saint

thomas ontario so that's just an example of it as well so if you go on to stratosphere and you type in i'm going to test on kush tired atdTO. There's a total return thing you can put on the chart to see, you know, after dividends, how this thing has compounded. So, if you go all the way out, 26 years of data, the CAGR on this stock, take a wild guess. I'd say probably around 20%. 25.3% CAGR total return after dividend. It was a good guess. I mean, it's a high number. And 25 is an even higher number. That is bonkers. it in the the hall of fame of stock returns here in canada that's unbelievable and it keeps marching higher these guys are on to something here yeah i think my biggest thing with them and i i mentioned it before is just you know it's kind of

you know it's an awesome track record but the issue is going forward the dynamics are way different clearly i mean they're they i don't know how many what percentage of current convenience store they own in north america and europe but it's it's a very high percentage so i think there's going to be more limited opportunities to grow and they're going to have, I mean, a decade down the line, they're going to have to find some alternatives to those gas station or convert them into EV stations. I don't know. Right. So that's the biggest kind of bear case for them. Funny you should ask. We track these wonderful metrics over time. And right now they have 14,332 sites owned in their network about 2,000 of them are leased and another 12,000 are actually owned and operated uh this is adding on what almost

yeah just a little over 2,000 sites yeah like 15 percent yeah they have experimented with all kinds of stuff including this pilot there in norway where they have the most population of electric vehicles in the world and they have said with their pilots of being like an EV first recharging station, that the results are actually really, really good. And the business is sustainable and reasons X, Y, and Z, this works. I have my doubts. I got to be honest. I have my doubts. For work, I used to drive this plug-in hybrid, and I would go from Toronto to Pickering to the nuclear plant and back. And I would get there and back on just the plug-in electric. It had another like 350 kilometers of gas, but I would go there and back 90 kilometers just with the electric battery. And then I'd go back,

I'd basically be running out of the electricity right when I park, but I just made it. And then I'd plug it, not use a lick of gas. And I made it pretty far, like a reasonably long commute there and back, 90 clicks. And I just thought to myself, if I had this car and I had no fully electric car or a plug-in hybrid and the pump, aka fuel, aka electricity is in my garage, I ain't going to a station, man. It's way, way cheaper and way more convenient to charge at home like if you had a gas pump in your garage would you ever go to the gas station unless you're on like a really long trip probably not yeah and if you're a long trip then the question comes in like how quickly does it charge right so you want something that's convenient You don't want to be sitting 45 minutes to an hour, you know, on your way to Toronto from Ottawa, adding an hour extra to your trip or whatever it is.

Like, I don't know how quickly they charge. That's probably the that's my other question here, because that would be discouraging for people for sure. They're pretty quick because the superchargers like the high voltage ones you can get like 150 kilowatts of power and they you can charge it like under 20 minutes from like 20 all the way to 80 because you never really go all the way up to 100 on the battery um so you can go like you know pretty pretty empty to pretty full in like 20, 25 minutes allegedly. Um, and so it's, it's reasonable, it's workable, but the majority of people just aren't doing those trips. You might be exposed to it more. If you live in like rural Canada,

you have like a really long commute to work. You might think, oh, no, that's not going to work for me or it's too cold. Like in Canada, like I would drive this Mitsubishi EV up in Thunder Bay for work and like driving to these hydro plants and the battery's capacity would be terrible. Like it's like. Yeah, it's affected by a cold, huh? Yeah, exactly. It's like minus 25 and frigid up there. And the battery's capacity would be severely hit, like 40, 50%. And so for those use cases, it's probably not great.

And so for those use cases, it's probably not great. But don't extrapolate those use cases as what the broader population globally is going to be doing. Because most people are not traveling those extensive distances or in those remote, more cold locations. I think looking long term, I have no ability to be confident that this is going to work for them. And that's why I exited the stock. But many people have conviction the other way, and they've done exceptionally well. Yeah, no, well put. Now to finish off with a small bank merger acquisition, however we want to call it. So UBS, like you mentioned,

is going to buy. I'm going to say UBS will buy. That makes the most sense to me. Will buy Crédit Suisse for 3.2 billion US dollars. That's the equivalent, but it was in Swiss francs. So I think it's worth slightly more than the US dollar on a conversion basis. Now, it's another big move here because these are two GSIBs banks, so globally systemically important banks. For those unaware, KZ Swiss is primarily an investment bank, whereas UBS offers a bit more services. They also offer investment banking, but they also offer personal commercial banking, wealth management, other services. The $3.2 billion, though, is definitely misleading as a headline figure. So it's actually a much bigger deal than that. So the Swiss government will provide $9 billion to cover foreseeable losses and $100 billion in liquidity provision from the Swiss central bank and that's actually

up from last week we had talked or I think it was released this week about the SVP fallout and I think I mentioned a little bit of about Credit Suisse is the Swiss central banks that actually offered 50 a bit more than 50 billion in additional liquidity so there's clearly you know there was something going on that the swiss government and swiss rental bank and i'm sure they had a lot of discussions with you know bank of canada the central the fed obviously in the u.s and all the central banks in the world so it feels like they didn't really have a choice here and the rumor is that the Saudis which had a big stake I think just around 10% in Kidzi Swiss were actually had a competing offer but the government the Swiss government didn't want to go ahead with that so

what will happen is Kidzi Swiss shareholders will take a 60% hit and some bondholders will be completely wiped out. And like I mentioned in the SVB episode, CritsiSwiss, and I alluded here, is one of 30 G-SIP banks. UBS is also one of those, just like the major U.S. banks, RBC and TD in Canada. And this is essentially the first time a G-SIP bank has failed. TD in Canada. And this is essentially the first time a G-SIV bank has failed. Whether they want to admit or not that it's failed, I think just their actions, it's clear that the bank was going to fail if there was no action. When you have a central bank that's providing $100 billion in liquidity, clearly something is not right with this bank. And it's never been right since the financial crisis they they

were really impacted by that and in the last few years it was just getting worse and worse and worse and i actually went to their annual report just to show how things that kind of shifted in the last few years so in terms of an investment bank or we talked about it with um kathy wood with arc invest right so you can tell whether a consumers or investors are confident in a bank or you know a certain investment product depending on how the money is going in or out so in 2019 there was 85 billion in inflow in kd swiss 2020 45 billion 2021 34 billion and then in 2022 133 billion outflow and then as the news of svb happened there's a report saying that they were seeing outflows of up to 10 billion a day last week yeah so that just kind of shows you that's a ton you know yeah that's a ton and it shows the urgency of what was happening and why the swiss government

had to intervene um whether there's gonna be some repercussions i really don't know your guess is as good as mine but this is a pretty big thing. And there is more to the number than just the $3.2 billion headline figure. For a while now, it has felt like I'm surprised to see those inflows in 2021 even. Yeah, but I think that was also a byproduct probably of just the easy money and everyone was yeah cheap money so um yeah yeah because we have to me they've always like their credit suisse's balance sheet has looked like swiss cheese um like it's just so questionable and this has been how long have we talked about that last time we talked about them like a year and a half ago, you had your concerns.

I remember that. I remember it very clearly. And so the writing's been on the wall here for a little bit. And it was just, same with SVB. Just once the dominoes fall, like the first domino falls, or like a catalyst. There's a catalyst for that first domino falls or like a catalyst there's a there's a catalyst for that first domino to fall and then oh my god it's like you know one thing leads to a next and and anyone

who was kind of on the ropes who was you know had a bit of a short leash got punished and this is exactly why this happened yeah exactly and i'd been reading and apparently they also had like quite a significant brain drain out from kids is which is an issue because a lot of these investment banking it's all about relationships so if you're someone that you know has a lot of clients and you leave the clients will tend to follow you and i think they i don't know but I remember hearing that I think they also slashed some of the bonuses for the employees. So clearly this is a type of industry where bonuses are a big, big thing.

So things were, you know, were not going great and they were trying to, they had been trying to restructure the business for at least a year now, if not more. So we'll see. I mean, I guess with things are how things are going, maybe we'll have additional news of something else happening next week. I don't know. It feels like there's banking news every single day from, you know, one form or another. Good point on talent. Right.

Because it's kind of like tech. These companies, it is a segment where you need to have the best people. Now, what I will say is Credit Suisse has, I don't read much sell-side research reports. I really don't read much sell side. But I love their sell side reports, especially they do an annual payments. They do an annual payments report. It's about 200 slides on this deck, which sounds ridiculous, but it's fairly digestible. And you probably only need about 15 page of it, which is really the guts of this report. And it's brilliant. It breaks down kind of all the players, all the unit economics and payments, which is a space I've been particularly interested, shows how the merchants and the acquirers and the visas and the master cards and the exchanges and how all of that works. And it's fascinating so i hope i hope they continue to do that because they have this annual payments report and it is brilliant so i will give a shout out to them for that yeah yeah no i think uh i mean we'll see i guess maybe ubs will be

putting those reports out but uh anyways i think it was still despite us not having that many earnings to talk about i think it was still like an eventful week or so where's dollarama when you need them huh soon enough it's coming where's dollarama's quarterly report i think we've already had 17 in 2023 um thanks so much for listening to the podcast. We appreciate you folks. If you're new to the show, make sure you're subscribed to the podcast on the podcast player. There's a little button on Spotify to press follow and subscribe on Apple Podcasts. Wherever you're listening, whether it's Google or some of the other ones, there is a subscribe button. And then you have it in your feed. And every time we have an episode Mondays and Thursdays, it's in your feed. So go ahead and

do that. If you have not checked out stratosphere.io, a lot of the data we're talking about here, a lot of data I've talked about on the show here today, we pull directly from and you can take 15% off a paid plan with code TCI. We'll see you in a few days. Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or

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