CTL OMIBs and reality vs finance +3

17:35 16-Mar-20

There were two further OMIBs of 25,000 and 10,000 shares by CenturyLink Directors on Thursday and Friday at $9.64 and $9.77, respectively.  Although I don't think these transaction will make much short-term difference, I do think they will wind up being quite profitable.  In fact, all recent OMIBs are at least technically profitable at today's closing price.

CenturyLink is amongst the many telecommunications providers that have promised not to terminate service and waive late fees for those whose payments are disrupted over the next two months.  It may the right thing to do for a society rendered fragile by bad monetary policy, but there is no mention of government support for these companies in this potentially costly effort so far.  As already mentioned, that may still be forthcoming from Washington.

There's also another OMIB of 25K shares from the CFO of eMagin.  However, at 24 cents each, the move isn't compelling, especially in the face of new and direct military competition from Vuzix.  That press release also lacks immediate impact, since it contains no amounts on the payments being made over the next six months.

On 3/13/20 9:39 AM, Esekla wrote:

CenturyLink's CFO and its Lead Independent Director bought 30,000 and 10,000 shares at $9.00 and $9.25, respectively, on the open market yesterday.  That increases the Director's stake by almost 11%, but due to the C-suite share grab that I've railed against, it's only 4% for the CFO.  Despite that, I think these are smart buys and CTL looks excellently positioned for the market rebound that will follow forced liquidations yesterday.

That's a good segue for my thoughts on the broader market and world, which are still have significant areas of disconnection.  There is every indication that COVID-19 will continue to spread in both Europe and America, but the responses are very different.  Lagarde's response drew criticism, but my view is that Europe will have to allow some short-term national market pain (and hopefully reform) if the euro is to become the world's new reserve currency.  My actuary reader notes that Italy's high death toll seems to be due to its large elderly demographic, where ~1 in 10 cases result in death.  Despite the short term hit to business, there is a potential long-term benefit to national debt and pension finances.  We should see by next week whether or not American measures are similarly real-world or mostly economic and market-focused, but its healthcare system almost certainly means that the debt situation will grow even worse.

Regardless of the long-term implications, and despite today's rebound, my opinion is that investors should remain wary through next week.  High quality companies like Shell certainly have the means to weather this storm, but there is also no doubt that they will see sustained impact.  Covanta is trickier, given its commodity exposure, but natural gas held up much better than oil, only briefly dipping below $1.70 at the start of all this, and now back up to $1.95.  I continue to expect that Europe's focus on sustainability will gradually spread throughout the world and that Covanta will be a beneficiary.  I know I plan to be a beneficiary of the dividend at the end of the month.