Quick Update & Explanation on What Happened to $ZIM AFTER the $17 per Share Dividend Payday on April 4th

Hey Subscriber, 

So yea, I have done the investment newsletter/mutual fund and hedge fund management and individually managed accounts thang since 2000...been associated for/working for Wall Street firms since 1979--and the $ZIM meltdown was something I have never seen.

In our early ChangeWave Research days, we owned Canadian Royalty Trusts that had a 10% dividend withhold clause--but you could email a form to the royalty trust, and they would release the dividends because of the US/Canadian tax treaty adopted in 2004. It was a slight pain but no whoop.

And then, like now, you could always write off the withheld dividend as a tax credit against your taxable income.

In other words, "when a foreign tax is withheld on dividend payments, you're entitled to a tax credit or deduction if the same dividend income is taxable by the U.S. You get back the amount withheld by the foreign government when you claim a credit equal to the foreign tax on your U.S. income tax return."

BUT--Isreal? Really? Gotta say--never heard of Isreal withholding dividends paid by Israeli companies listed on the NYSE to American shareholders--until we got our $17 dividend deposited into our master managed account on April 4 that was 25% light of $17.

Anyhoo...apologize for missing that little detail! 

But, with the pullback from $76 to $56 in a few days, I was not the only one to miss this little detail (grrrr). 

The only good news here is that 

1) Obviously many retail investors (and some hedge funds I am sure) saw the $17 Q4 2021 "catch up" regular dividend and said "OK...I'll buy shares one day before ex-dividend (March 22), own it to the day of record (March 23), and many sold the shares EVEN though it was not a "special dividend" but a regular one. 

On March 24, it sold off a bit but not much. 

But when the $17 dollar dividend hit on  April 4 minus 25%, a whole bunch of sell stops must have hit PLUS confused investors (like your truly) who had protective sell stops hit and put options hit too. 

The chart tells the story--the $17 divvy date of record (the date you had to have it in your account), the ex-dividend date (the date the latest dividend would NOT be paid), and the shock and awe day April 4th

What to do?

Well..since the CEO pledged to maintain paying out 50% of their annual cash flow for the foreseeable future in a dividend (with a 4th quarter "catch up" big divvy to hit the 50% quota), and since this is the low season for container shipping (QTR 3 and 4 are the Christmas Season heavy shipping season), I'd LOVE to buy ZIM shares at the 100-day moving average (which has been the strong support for 6-9 months) in TAXABLE accounts. 

Let's see what the stock Gods give us over the next few days--BUT with $39.93 or earnings per SHARE and P/E of 1.48--- and Shanghai soon to get out of lockdown (Shanghai is a big port for $ZIM), I'd buy SOME tomorrow at the open if it rises--but I would buy an entire "unit" (unit is the $ amount of your average position--with a $500,000 portfolio we do 2% as our "unit" base case and 4% overweight for opportunities we are REALLY excited about) if it still falls.

Net Net: Anywhere near the $52 100-day moving average would be a gift from the stock gods--they traditionally pay $2.50 in quarterly dividends and then they pay the BIG one for Q4 2022--in Q4 2021 it was $17.

Let's just spitball here and say Q4 2022 is $12.50--add $7.50 and that is $20 a year in dividends. Say you get it at $55--that is 36% in dividends--dude that is buying $USAC at $6 type dividends (the $5 withheld pays part of your tax bill...that is cash money).

Needless to say--the ONLY way to buy $ZIM is in a taxable account--otherwise the dividend withholding is not deductible as far as we can tell--I am getting tax attorney advice on that issue. 

Risk? In the short term not much. 

Our Macro Market Timing Index IS close to calling a US recession in 2023...if we move below 15 on our index for 4 weeks, that will mean recession coming in 4-6 months...aka 2023.

BUT--know that we know how to play the $ZIM game--we can use put options to fix our downside and sell call options to generate more income (yet another reason I want ACTIVE investors in the All-Access Discord room--just today, $1000 in our $SQQQ options short the QQQ from yesterday paid 2 years of the subscription...our 2X short $RSX Russia play was 11X our $1k investment). 

The Fed

Look the WORLD and the stock market have been bi-polar waiting for the Fed's forecast and Ukraine news.

NOW we have the Fed's plan-- and now our MacroMarket index says we have at least a 75% chance of a recession in the United States by Q1-2 2023--and 100% chance in Europe right now. 

On the All-Access blog today I posted about the trench warfare that is the equity and bond markets for the foreseeable future have become (think the 1917 movie!)

"Close the SQQQ call option (short the QQQ going into Fed Day) and take the 110% profit...hold the $ARKK put option as it is rolling over after its bear market rally off WAY oversold conditions.

Now let me be as clear as I can--with what the Fed's uber hawking statement today, $90 BILLION of their balance sheet will be sold every month for--I don't know--until the white of the eyes of a recession in 2023 is staring at JayPO.

In the meantime, we are up 40%+ in our 75% UI and 25% Ultra Growth portfolio allocation--and prolly more by the time we add up the dividends that hit our accounts in Q1.

Action to Take: We will be likely taking profits in Ultra Growth stocks--stay tuned.  

ALL UI and UG spreadsheets are updated with Buy Under prices...thanks Gary!


But make no mistake--HERE IS WHERE WE ARE in the market of stocks.


1) We will be Short QQQ/ARKK options from time to time and LONG low p/e high dividends nat gas + coal + tankers and bulk shipping+ food staples + LNG+ fertilizers all working.

2) The Fed told us today they are raising the cost of money 10X (.25% to 2.50%) over the next 10 meetings--ie a massive negative Macro S-Curve-- and at the same time SELLING $1.2 TRILLION in Treasuries and Mortgage Bonds over the next 12 months--something that needless to say has NEVER EVER been done in macroeconomic history.

Together, these rearguard/WAY too late monetary moves combined are THE strongest negative macroeconomic S-Curve transformation since--well ever (WWII Bonds were NOT OWNED by the Fed) means avoiding a US recession would be an economic miracle.  

ON the other hand, the "Screw Russia Trade aka SRT" IS the MOST rapidly growing demand S-Curve transformation I have ever witnessed. While the stock market indexes melt, our SRT portfolio (LNG, Oil Tankers, Bulk Shippers, Natural Gas Infrastructure) and soon some other SRT plays (food commodities and other SRT beneficiaries). 

Key Point: The "SRT" trade is reordering the global business of oil/nat gas/ coal/LNG /wheat /corn/oats/fertilizer

3) The Fed "Put," ie,  their active protection of the US stock market is gone. The declining stock market indexes and 10X higher borrowing costs (5.25% 30-year mortgage rate today with 45% LESS refinances in Q1) reduce consumer demand for houses and cars and other big discretionary purchases which are big drivers of 7% inflation (and the 9% inflation print we expect for March). 

3) NOW the next chip to fall is the beginning of the earnings calls and outlooks--is the market prepared?

"High Octane" tech has blown up-- "OG Low Octane" tech is strong ergo in the coming 10X higher interest rate world and removal of $6-7 TRILLION of $$$ from the monetary system-- thus ABSOLUTE VALUATIONS MATTER Absolutely.

My Take: After 12 years of economic fluffing, WE have transitioned into a "Back to The Future" stock market.

Dividends historically deliver 55% of total stocks return. In the era of $9 trillion of new "free" money injected into the US economy from 2010-2021--valuations did NOT matter, and high secular growth was highly valued--and we made rediculous 30X times the average 10% stock market returns--30 times the normal stock market returns (and now 25X higher cash of cash dividends from our UI portfolio vs. 10-year bonds now LOSING 25% of their value.)

So again --we are NOT in the "every tech stock/IPO/SPAC works" market--that market died in June 2021.

For the foreseeable future, we are in the  "Back To The Future" investing environment, i.e., a monetary transformation where what has NOT worked for 12 years NOW WORKS...and in a world where we now have a literal absolute reverse monetary environment where $5-$6 trillion of more on monetary stimulus is being REMOVED from the monetary system instead of being blown in every day.

At the same time, "no risk" investments like 10-year bond value are being crushed (the most since the '70s).

 BOOM--SO if high growth is not working, and 100% safe (bonds held to term) is not working (getting crushed)...and business valuations now MATTER because the discount of future earnings is now 10X HIGHER (.25 to 2.50 and higher)...

THEN below market P/E stocks with STRONG earnings growth and HIGH DIVIDENDS are the ONLY GAME in town or "the most attractive girl at the Wall Street "beauty pageant."

Welcome to the Back to the Future + Massive Russian Economic Sanctions investment world

We are up 40% ish in 2022 (including dividends) while the SP is down 6% and QQQ 11%.

Of that performance, we are very proud. 

But enough about me--when do we bottom?

A) When the Fed has proven they have landed our 8 engine economy on just one engine (aka "soft landing)
B) The Russian invasion of Ukraine ends (good luck on that--not to be Debbie Downer but Mr. Putin does not need the love of the Western World--he is living out his dream for the last 20 years that the Western World appeasing global goobers enabled)

Our MacroMarket Timing Index Is BELOW our 15 reading which since 1989 means recession coming in 4-6 months 

Now because the model we built/licensed from the London School of Economics was not built with data from a $6 trillion Fed stimulus reduction/10X Fed funds rate increase and oh yea 7%+ inflation that will get to 9% plus when March data is included from a friggin war in Europe . . .

. . .  I am just going to take a leap here and say IF America does not have two consecutive quarts of negative GDP in 2023 (bearing in mind Europe is already in recession, Russia is cruising to a 20% contraction/economic depression and China has a $3 trillion real estate development industry in depression)-- then I am turning in my macroeconomic forecasting beanie cap (bearing in mind our system called 2000, 2008, and 2020 bear markets).

Unless there is a SERIOUS change in global macroeconomics, I am calling the 2023 US recession as, if I have not made it clear, the likelihood of the US Fed to orchestrate a "soft landing/no recession" after what they announced today is about as likely as me NOT pouring a very big Gin martini after banging out this update.

In other words, avoiding a US economic recession is virtually impossible unless peace is declared tomorrow and somebody discovers $10 trillion of new oil/gas deposits that we can start to tap tomorrow. 

And we will continue to make very nice profits from our SRT portfolio!

Have a good night!

PS--we will update you on how our INVUP is trading on the OTC--at a $25 bid btw--and how to register your INVUP at your broker-dealer.

Also, have a call with the really impressive new CEO and the team at INVU getting scheduled...my old buddy Anthony Scaramucci made an intro today--the new INVU CEO was one of the principals of his $10 billion SkyBridge Captial hedge fund for a decade...he brings a TON of Street credit to INVU and access to capital.

Enough for one day! 

Toby

Tobin Smith