Tricky Transition
Boyd investors may be facing some bad news—come the company’s transition from an income trust to a corporation in January 2020, unitholders could be met with massive capital gains taxes.
In September, Winnipeg, Manitoba-based Boyd Income Group announced its proposed plan to transition from an income trust to a corporation structure effective January 1, 2020, saying it had “outgrown” the income trust model. If the transition is approved, unit holders will receive one publicly traded common share of the new corporation for each unit they hold and the Boyd Income Group will become Boyd Group Services.
However, if Boyd unit holders hold their units in a non-registered account, they could be facing hefty capital gains taxes when the company’s conversion takes place. The exchange of the income trust units for the corporation’s common shares will be treated for tax purposes as if the holder had sold the units.
The good news is that, according to the company, the transaction will fall in the 2020 tax year, meaning investors who exchange their units for new shares will not have to report their capital gains until they file their 2020 tax returns in 2021.
The exact conversion price—and the capital gain that unit holders will report—will not be known until the transaction is finalized. Given the company’s performance in recent years, some investors will surely be paying Canada’s capital a hefty fee.
The proposed plan is subject to unit holder approval at Boyd’s special meeting of unit holders on December 2, 2019. To be approved, it must receive two-thirds of approval votes cast by unitholders of the company and class A shareholders of subsidiary Boyd Group Holdings Inc. It will also require regulatory, stock exchange and Manitoba Court of Queen’s Bench approvals.
Boyd’s transition from an income trust to a corporation is not the only change set to rock the company in the new year. Effective Jan. 1, Tim O’Day will succeed long-time CEO Brock Bulbuck, the company announced in August.
Uber Still Under
Uber’s stocks are still uber-low, now down 32 percent from its $45 initial public offering (IPO) price.
When Uber went live on the NYSE in May with shares priced at $45. Since August, the ridesharing company has seen a fairly steady decrease in prices. On Oct. 19, Uber closed at 32.06. Aug. 8 was the last time Uber shares saw prices above $40 when it closed at 42.97.
Despite the decrease in value, both interested and existing investors are tempted to think that things can only get better for the brand—but Uber is losing money faster than many expected. In 2019’s second quarter, the company reported a net loss of about US$5.24 billion. The company’s net loss for the same period in 2018 was significantly smaller at $878 million.
The current fiscal year has not been gentle with tech IPOs. Uber and rival ridesharing app Lyft were expected to become the next big thing on the market, even recently making a shortlist of top growth stocks. Regardless, market analysts say those titles must be earned by the brands, both of which have yet to prove profitability.
Uber reached its value zenith in late June when it traded at around $46.38.
Axalta’s Assets
Market analysts are suggesting investments in Axalta Coating Systems’ company shares after the stock demonstrated positive momentum last week, clocking in with gains of -0.86 percent.
Looking at Axalta’s recent performance on the NYSE, the company’s shares have gained -7.49 percent in the past four weeks, 4.27 percent in the last six months and 11.81 percent over the past full year. In the past year, Axalta stock has gained 9.38 percent of its value, leading to excitement from some investors on the company’s short-term performance.
However, it appears some are still hesitant about the chances of the shares. When it comes to consensus ratings, Axalta sits at 2.4–a fairly neutral number. Market analysts rating the company a one or two rating indicate a buy recommendation, while analysts rating the company four or five indicate a sell suggestion. Analysts rating the company a three suggest holding company shares for the time being.
Axalta has received five buy recommendations and five hold recommendations among market analysts. With its 2.4 rating, analysts suggest that potential or existing investors buy new shares or keep a firm grasp on their existing units.
