The Diary

May 22, 2021

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Has Elon Gone too Far?

Good morning. In our last issue of The Diary we pointed out that Bitcoin uses more energy per year than a small country.

Elon Musk must be a subscriber, because he tweeted about this exact same subject almost two weeks later, announcing Tesla would be cutting ties with the cryptocurrency due to its massive energy consumption, mainly powered by fossil fuels.

What happened next is no surprise: the tweet went viral and the price of Bitcoin went into a tailspin.

Elon has since received plenty of backlash, with many cryptocurrency enthusiasts calling him a hypocrite. After all, electric vehicles charge their batteries by connecting to the power grid, and the majority of electrical energy supplied by power grids comes from fossil fuels…mainly coal. (Tesla has been saying for years that it plans to pivot to 100% renewable energy-powered charging stations, but so far it hasn’t delivered on this promise).

Well folks, we don’t want to sound like a broken record – but the transition to EVs and renewable energy sources can’t happen without mining more of the metals needed to build the necessary parts and infrastructure, and there is no denying mining is an emissions-intensive industry.

Yet things are slowly improving. In fact, last week Dear Retail spoke with the CEOs of Ivanhoe Mines, Josemaria Resources and Millennial Lithium, to find out how they are incorporating renewable energy sources and other strategies into mining projects to lessen their environmental impact (Read it here).

In this issue we’ll also be sharing our tips for investing in what is perhaps the most important metal of all in the shift to a greener future – copper. You can read about that in “Sector Moves”, below.

Plus – did you know Shaq was an early investor in Google? We take a closer look at the NBA Hall of Famer’s winning investment portfolio, after it was announced he will be taking a majority equity stake in Alkaline Water Co (NASDAQ: WTER).

In this issue:

Spotlight: How to invest in what is perhaps the most important metal of all in the shift to a greener future – copper.
Star Portfolio: Did you know Shaquille O’Neal was an early investor in Google? We take a closer look at the NBA Hall of Famer’s winning investment strategy, after it was announced he will be taking a majority equity stake in Alkaline Water Co (NASDAQ: WTER).
M&A Roundup: Why major miners are taking a savvy approach to M&A this cycle.

Spotlight

There’s No Green Revolution Without Copper

What do California, Quebec and Great Britain have in common?

They’ve all banned the sale of new gas-powered cars.

While the bans don’t take effect until 2030 in Great Britain, and 2035 in Quebec and California, the trend is clear – the days of the internal combustion engine are numbered.

Read more here.

5-22-21

Star Portfolio: Shaquille O’Neal

Shaq’s Wealth-Generating Strategy? Invest in the Products you Love

It’s not just any water bottle that can stand up to Shaq’s impressively large mitts.

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Now, the Basketball Hall of Famer has taken the matter of teeny tiny water bottles into his own hands, having recently joined the Advisory Board of Alkaline Water Co (NASDAQ: WTER) and becoming brand ambassador for the company’s Alkaline88 water line, which achieves an ideal PH of 8.8 by combining all-natural purified water and pink Himalayan rock salt. Alkaline Water Co is one of the only bottled water companies to offer ‘Shaq-size’ 1-gallon and 3-litre sizes that use less plastic and allow consumers to refill their reusable cups and bottles.

Alkaline88 is also the first national water brand to introduce 100% recyclable aluminum bottles. Shaq’s role as a brand ambassador will aim to help the company increase Alkaline88’s market presence both domestically and internationally, as the company intends to expand sales of its products overseas in the near future.

Shaq also happens to really, really like the product, commenting:

“My partners at AGB [Authentic Brands Group] and I have been fortunate enough to build a portfolio of some of the most recognizable brands globally. Water is one of the biggest categories for food and beverage on the planet, but we had not found a water company we felt represented what I wanted until Alkaline88 was introduced to us. Alkaline88 is without a doubt the best tasting water I have ever had.” 

As part of the deal, Shaq will receive an equity stake of 7 million common shares in Alkaline Water Co over a three-year period, which equals to a stake of about 5%-6% on a fully diluted basis, Alkaline’s Chairman Aaron Keay told Bloomberg News.

The deal is just one of many savvy investments made by Shaq since the end of his NBA career. Reportedly, he earned around US $292 million total during his career as a professional basketball player, but he now brings in more per year from his investing activities than he did as a professional athlete.

Although Shaq plays the stock market – he bought shares of Google shortly after the company first went public, and he reportedly enjoys trading penny stocks – he is also notoriously good at picking the right brands to endorse and own a piece of.

Shaq has previously struck endorser-owner deals with companies including Lyft, Vitaminwater, and Muscle Milk, and in the process he’s built an impressive franchise empire that includes 155 Five Guys locations (more than 10% of the company’s franchises), 17 Auntie Anne’s pretzel stands, 9 Papa John’s locations, 1 Krispy Kreme franchise, and 40 24 Hour Fitness locations.

He has also lent his name to brands including Reebok, Icy Hot pain-relief patches, Burger King, Kraft Foods, Pepsi, Comcast, Radio Shack, The General Auto Insurance, and Taco Bell.

Notably, one of Shaq’s key investing strategies is to only endorse products he actually uses himself. He has reportedly turned down a number of high-profile endorsement deals in the past, including from Starbucks and Wheaties, because of this rule.

Recent M&A

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Majors Taking Savvy Approach to M&A this Cycle

Making headlines in M&A in the past couple of weeks:

  • Coeur Mining (NYSE: CDE) invests C$146M into Victoria Gold (TSX: VGCX) as that Company nears commercial production
  • AngloGold (NYSE: AU) ratchets up interest in Corvus Gold (TSX: KOR) with a $20M loan, secures pole position for negotiating an acquisition
  • Rio Tinto Canada invests C$25.6M into Western Copper and Gold (TSX: WRN; NYSE-AM: WRN) as that Company nears a construction decision at its Casino copper-gold project

Breaking it down:

What we are seeing here is a trend in which major miners are taking strategic equity positions or ‘Toe Holds’ that often come with board positions and front-row seats to the development of these projects, prior to cutting 9- or 10-figure cheques.

It also tells us they have the luxury to do this and that the competition for assets has not reached a fever pitch yet. It’s when that competition peaks that we’ll see the Billion dollar acquisitions.

Read more here.

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