Carlton Fowler, the co-founder and managing partner of venture capital firm Goat Rodeo Capital, doesn’t like to take himself too seriously.
A photo of Fowler dressed in a Hugh Hefner-style smoking robe and holding a bottle of Miller High Life was my introduction to the marketer turned money manager. But don’t let the cozy comfort wear fool you: He doesn’t mess around when it comes to placing bets on up-and-coming beverage and cannabis ventures.
Fowler and business partner James Pelligrini worked together at E. & J. Gallo Winery before launching the first Goat Rodeo fund in mid-2019. Since, the pair has made more than a half-dozen investments into early-stage companies.
“Our hard and fast rule is that you won’t see us investing in brand only,” Fowler said of Goat Rodeo’s thesis. “There needs to be something in there. Ideally that’s a piece of true IP, either liquid or package, or a unique go-to-market model that bypasses one of the tiers.”
Goat Rodeo’s portfolio includes investments in emerging beverages such as DRNXMYTH, which makes cold-pressed RTD craft cocktails that are sold directly to consumers, and One Hope Wine, a Napa Valley winery that has a multilevel marketing twist to its business model.
Meanwhile, in the cannabis space, Goat Rodeo has backed Vertosa, a leading cannabis technology company that is helping pioneer an emerging category of THC and CBD-infused drinks.
I recently caught up with Fowler and Pelligrini to learn more about their investment strategy, and to understand what they look for in potential partners. We also discussed what’s on the horizon for Goat Rodeo in 2021.
Our conversation has been condensed and lightly edited for clarity.
Chris Furnari: How did you go from working at a wine and spirits company to investing in them?
Carlton Fowler: We were working in the spirits division for E. & J. Gallo and were largely responsible for building out their new brands. Over the course of like five years, we put out a bunch of successful products, and as we were going through that process, we realized we were building a team to maximize value for a large supplier. So we started thinking about what would happen if you had a blank sheet of paper. What kind of systems would you build and how would you go to market if there weren’t any legacy aspects of a major supplier. That drove us to start a consultancy and eventually raise a fund to start putting a lot of the things that we’d learned and dreamed up into practice.
Furnari: Where are you guys sourcing capital for your investments?
Fowler: There are a lot of high-net-worth individuals who are interested in this space. We provide diversification as well as industry insider insights. We understand how stuff should go to market and how to unlock a lot of value. The other primary source of capital comes from family offices. We feel we can be some of the smartest money in the space and drive really good valuations as a function of that.
Furnari: And you’re mostly participating in seed investment rounds?
Fowler: Primarily. And to some degree it’s a function of circumstance. We wanted to write meaningful checks and have enough of a corporate governance role, which almost forced us to participate in seed rounds. As the fund went along, however, we found that our counsel was so useful to the CEOs and the board that companies as far along as a series C would approach us and make us massive discount offers just to get our counsel. They didn’t need our capital; they wanted our point of view.
Furnari: And how large was your first fund?
Fowler: When you include the follow-on vehicles, it was around $9 million.
Furnari: You’ve got a pretty diverse portfolio of investments, everything from a direct-to-consumer wine brand, to a nonalcoholic lemon water and even a cannabis tech play. You must see dozens of pitch decks. How do you determine where to invest?
Fowler: We’ve seen enough new product launches to know how incredibly capital intensive they are. Our hard and fast rule is that you won’t see us investing in brand only. There needs to be something in there. Ideally that’s a piece of true IP, either liquid or package, or a unique go-to-market model that bypasses one of the tiers. Take Vertosa — we believe in cannabis beverage and the “share of buzz” thesis, but Vertosa isn’t any one B2C company. It’s a bet that will rise as cannabis beverage rises because of its IP. Take One Wine Company — that business doesn’t require distribution through the traditional wholesale tier at all. In fact, it’s trying to become the Amway of wines and move to market that way. Take DRNXMYTH — there’s an actual patent on that package, which allows us to generate enough demand digitally that we’ve been successful minimizing the role of the middle tier. That’s our overall thesis. How do you get to market more efficiently without primarily using the middle tier and the on-premise.
Furnari: What’s next for Goat Rodeo Capital?
Fowler: We are targeting $30 million or more for fund II, and we have two anchor investors that have come forward with eight-figure checks. We’re still very bullish on cannabis, but Goat Rodeo Fund II will not include cannabis. We’ll either continue to build special purpose vehicles or raise a separate fund. We want to keep those streams separate.
James Pelligrini: One of our competitive advantages in that traditional funds typically have some morality clause. It turns out that a lot of high-net-worth individuals have clauses in their contracts around where they can invest their capital. In the past, we’ve had people who are interested in the fund, but couldn’t participate because of its exposure to cannabis. So, I think we will primarily look at alcoholic beverage, and larger traditional beverage. There will also be a portion of this that will be earmarked for nonalcoholic alternative beverages.
Furnari: And where do you see the alcohol alternative category going?
Fowler: I think people want to reevaluate the role of alcohol in their lives. And I think the short-term — and kind of obvious — win is something like Seedlip. It solves a problem for some of the tiers. The distributor can sell it for a very good margin, and the on- and off-premise accounts can sell it for a very good margin. If you solve some problems for some people in the value chain you’re going to do well. But I don’t know if that product fully solves the problem for the end user. We tend to get a lot more excited about something that fulfills the consumer’s alcohol occasion but isn’t a direct analog. An example would be Hoplark HopTea. Not only do you see people rigorously replacing their beer occasions with it, but they’re also replacing the coffee occasion, and the afternoon pick-me-up occasion with it. It’s an entirely new category that also handles the alcohol occasion. That’s something that can probably grow much bigger over time and has a bigger total addressable market.
Furnari: What about cannabis drinks?
Fowler: I can’t tell you how many times we start a cannabis beverage pitch — whether it’s CBD or THC — by establishing that cannabis beverage is going to be a “thing.” We stipulate that over time, the incremental consumer market is going to be potentially larger than the base consumer. None of that will impress us, now tell us how you’re going to actually be an alcohol replacement. Show us your distribution plan that is going to get you into 10,000 accounts. And I would say a vast majority of them, the pitch stops at that water’s edge. We’ve been in this distribution system for a long time. Why don’t you tell us how you’re gonna master it.
Furnari: So what’s the Goat Rodeo name all about?
Fowler: It’s chaos behind the scenes at every startup. It doesn’t seem like it because they are putting on a face for the rest of the world, but it is a goat rodeo behind the scenes. We tend to be really good at helping herd the goats, advising founders on what they should focus on and what they shouldn’t care about.
Genesis Investment Management, LLP Buys TAL Education Group, Sells NetEase Inc, New Oriental … – Yahoo Finance
Watching the markets with an eye to the main chance, Raymond James strategist Tavis McCourt sees both risk and opportunity in current market conditions. The opportunity, in his opinion, stems from the obvious factors: the Democrats won both Georgia Senate seats in the recent runoff vote, giving the incoming Biden Administration majority support in both Houses of Congress – and increasing the odds of meaningful fiscal support getting signed into law in the near term. More importantly, the coronavirus vaccination program is proceeding, and reports are showing that Pfizer’s vaccine, one of two approved in the US, is effective against the new strain of the virus. A successful vaccination program will speed up the economic recovery, allowing states to loosen lockdown regulations – and get people back to work. The risks are also coming from the political and public health realms. The House Democrats have passed articles of impeachment against President Trump, despite the imminent natural closure of his term of office, and that passage reduces the chances of political reconciliation in a heavily polarized environment. And while the COVID strain is matched by current vaccines, there is still a risk that a new strain will develop that is not covered by existing vaccinations – which could restart the cycle of lockdowns and economic decline. Another risk McCourt sees, beyond those two, would be a sharp rise in inflation. He doesn’t discount that, but sees it as unlikely to happen soon. “…product/service inflation is only really a possibility AFTER re-openings, so the market feels a bit bullet proof in the very near term, and thus the continued rally, with Dems winning the GA races just adding fuel to the stimulus fire,” McCourt noted. Some of McCourt’s colleagues among the Raymond James analyst cadre are keeping these risks in mind, and putting their imprimatur on strong dividend stocks. We’ve looked into Raymond James’ recent calls, and using the TipRanks database, we’ve chosen two stocks with high-yield dividends. These Buy-rated tickers bring a dividend yield of 7%, a strong attraction for investors interested in using the current good times to set up a defensive firewall should the risks materialize. Enterprise Products Partners (EPD) We’ll start in the energy sector, a business segment long known for both high cash flows and high dividends. Enterprise Products Partners is a midstream company, part of the network that moves hydrocarbon products from the wellheads to the storage farms, refineries, and distribution points. Enterprise controls over 50,000 miles worth of pipelines, shipping terminals on Texas’ Gulf coast, and storage facilities for 160 million barrels oil and 14 billion cubic feet of natural gas. The company was hurt by low prices and low demand in 1H20, but partially recovered in the second half. Revenues turned around, growing 27% sequentially to reach $6.9 billion in Q3. That number was down year-over-year, slipping 5.4%, but came in more than 6% above the Q3 forecast. Q3 earnings, at 48 cents per share, were just under the forecast, but were up 4% year-over-year and 2% sequentially. EPD has recently declared its 4Q20 dividend distribution, at 45 cents per common share. This is up from the previous payment of 44 cents, and marks the first increase in two years. At $1.80 annualized, the payment yields 7.9%. Among the bulls is Raymond James’ Justin Jenkins, who rates EPD a Strong Buy. The analyst gives the stock a $26 price target, which implies a 15% upside from current levels. (To watch Jenkins’ track record, click here) Backing his bullish stance, Jenkins noted, “In our view, EPD’s unique combination of integration, balance sheet strength, and ROIC track record remains best in class. We see EPD as arguably best positioned to withstand the volatile landscape… With EPD’s footprint, demand gains, project growth, and contracted ramps should more than offset supply headwinds and lower y/y marketing results…” It’s not often that the analysts all agree on a stock, so when it does happen, take note. EPD’s Strong Buy consensus rating is based on a unanimous 9 Buys. The stock’s $24.63 average price target suggests an upside of 9% from the current share price of $22.65. (See EPD stock analysis on TipRanks) AT&T, Inc. (T) AT&T is one of the market’s instantly recognizable stock. The company is a member in long standing of the S&P 500, and it has reputation as one of the stock market’s best dividend payers. AT&T is a true large-cap industry giant, with a market cap of $208 billion and the largest network of mobile and landline phone services in the US. Its acquisition of TimeWarner (now WarnerMedia), in a process running between 2016 and 2018, has given the company a large stake in the mobile content streaming business. AT&T saw revenues and earnings decline in 2020, under pressure from the corona pandemic – but the decline was modest, as that same pandemic also put a premium on telecom and networking systems, which tended to support AT&T’s business. Revenues in 3Q20 were $42.3 billion, 5% below the year-ago quarter. On positive notes, free cash flow rose yoy from $11.4 billion to $12.1 billion, and the company reported a net gain of 5.5 million new subscribers. The subscriber growth was driven by the new 5G network rollout – and by premium content services. The company held up its reputation as a dividend champ, and has made its most recent dividend declaration for payment in February 2021. The payment, at 52 per common share, is the fifth in a row at current level and annualizes to $2.08, giving a yield of 7.2%. For comparison, the average dividend among tech sector peer companies is only 0.9%. AT&T has kept its dividend strong for the past 12 years. Raymond James analyst Frank Louthan sees AT&T as a classic defensive value stock, and describes T’s current state as one with the bad news ‘baked in.’ “[We] believe there is more that can go right during the next 12 months than can get worse for AT&T. Throw in the fact that shares are heavily shorted, and we believe this is a recipe for upside. Large cap value names are hard to come by, and we think investors who can wait a few months for a mean reversion while locking in a 7% yield should be rewarded for buying AT&T at current levels,” Louthan opined. In line with these comments, Louthan rates T an Outperform (i.e. Buy), and his $32 price target implies room for 10% growth from current levels. (To watch Louthan’s track record, click here) What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 7 Buy ratings, 6 Holds and 2 Sells add up to a Moderate Buy consensus. In addition, the $31.54 average price target indicates ~9% upside potential. (See AT&T stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Alternative investments proved their worth through a rocky 2020 – The Globe and Mail
Harking back through all the fog that the Covid-19 pandemic has wrought on our lives, February and March 2020 surely tops the list of most vivid moments for investors. Witnessing global capital markets and portfolios in free fall is not easily wiped from one’s eyes or memory.
Some investors prepared for risks of volatility and declining capital markets by including an allocation in portfolios to alternative investments: those strategies which are not linked directly to the movements of stock and bond markets. These investors understood the power of diversity and had effectively modernized their investment portfolios.
The burgeoning alternative investment sector provided both portfolio protection and generated meaningful growth through to year-end.
Included in modernized portfolios are strategies involved in private debt and mortgages, private real estate and equity, defensively managed credit and equity strategies, arbitrage funds and other opportunistic, agile growth seeking strategies. They can provide value with much less, and in certain cases, no dependence on broader market direction.
Formerly only available to large institutions and wealthy investors, Canadian securities regulators provided broad access to certain non-traditional strategies starting in 2019 to all Canadian investors. This followed many years of study and consultation, concluding that access to more complex investment strategies for private individual investors would be of benefit to their savings and retirement goals.
By allocating at least some capital to an increasingly wide selection of available strategies, styles and objectives, a portfolio can be more insulated from risks of interest rates rising, equity market volatility and macro issues. The Canada Pension Plan Investment Board (CPPIB) expanded their portfolio beyond stocks and bonds starting 20 years ago. The CPPIB now holds over 60% in alternative assets, earning income and growth in this allocation from a variety of investment styles complementing their traditional holdings.
As an indication for how some of these strategies panned out in the spring of 2020, we can look at the Scotiabank Hedge Fund Index – Asset Weighted, a composite of various non-traditional strategies. It was down 7.50% through February and March, compared with global markets falling 20% or more, with the TSX Composite losing 37% at its lowest point. When federal governments opened the fiscal stimulus taps, broad market indices staged a sharp and sustained rally into the year end. By the end of November, the SHFI-AW had increased by 8.20% year to date, posting a return in line with an average year on the stock markets without the pain and volatility, and which compares very favourably to the TSX Composite return last year of 2.2%. Investors thinking differently about how to position their portfolios were far less impacted by sudden declines and earned strong returns through the year. The enhanced diversity worked well.
The key to including other types of investments is to determine what purpose you want served from each; in other words, to assess what you are trying to achieve. You may be seeking higher income potential, increased stability in capital, outsized returns or opportunities unavailable in traditional stock and bond holdings. Conversely, you need to be comfortable with what you may be giving up in return whether immediate liquidity, upside potential or insulation from other risks, and whether alternative investments are right for you at all.
To paraphrase Warren Buffett, investing is simple in theory but difficult in practice. The goal of the CPPIB is uncomplicated and one which we can all relate to: to maximize returns over the long term without undue risks. No gain is had without accepting risk – being comfortable with the risks you are embracing is as critical as is reducing these risks as much as possible while still positioned to meet your goals. Investing is a long and evolving journey which must be experienced in real time – in tangible terms, this implies more comfort and peace of mind with less mistakes made along the way.
As investors, we can be assured that at some stage interest rates will rise thereby decreasing bond principal, equity markets will experience bouts of volatility that are extreme at times and that macro events beyond anticipation or control will all impact our hard-earned savings. Investors with more tools in their bag are better positioned regardless of market forecasts.
Modern Portfolio Theory established in 1952, defining optimal diversity by way of the appropriate mix of cash, bonds and stocks for a chosen risk profile earned Harry Markowitz a Nobel Prize. This ground- breaking theory has worked well for many years. However, in practice MPT has been challenged by issues of practicality including historically low cash and bond yields, as well as increased equity market volatility and and intermarket correlations. In addition, his theory does not account for investors who desire a degree of protection on their savings during times of market turmoil, seeking short-term protection to ensure comfort through the long term. To be fair, at the time Mr. Markowitz did not have access to various alternative strategies in order to properly diversify an investment portfolio. If he had, I suspect he would have included some private real estate and maybe a hedged equity strategy or perhaps an arbitrage fund. In the more-modern portfolio, it is now possible for you to reap such benefits.
Craig Machel, FMA, CIM, is director of Wealth Management, Investment Advisor and Portfolio Manager with The Machel Group of Richardson Wealth Ltd.
Cominar Real Estate Investment Trust Announces January 2021 Monthly Distribution – Canada NewsWire
QUÉBEC CITY, Jan. 15, 2021 /CNW Telbec/ – Cominar Real Estate Investment Trust (“Cominar”) (TSX: CUF.UN) announced today a distribution of 3.00 cents per unit to unitholders of record as at January 29, 2021, payable on February 15, 2021.
PROFILE AS AT JANUARY 15, 2021
Cominar is one of the largest diversified real estate investment trusts in Canada and is the largest commercial property owner in the Province of Québec. Our portfolio consists of 313 high-quality office, retail and industrial properties, totalling 35.7 million square feet located in the Montreal, Québec City and Ottawa areas. Cominar’s primary objective is to maximize total return to unitholders by way of tax-efficient distributions and maximizing the unit value through the proactive management of our portfolio.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST
For further information: Analysts and Investors: Sylvain Cossette, President and Chief Executive Officer, [email protected]; Antoine Tronquoy, Executive Vice President and Chief Financial Officer, [email protected], Tel: (418) 681-8151; Media: Sandra Lécuyer, Vice President, Talent and organisation, [email protected]
Stocks Could Have a Muted Year, Even if the Economy Booms – Barron's
B.C. faces tough choices as near-term Pfizer vaccine shipments cut in half – Global News
Easy to point at goalie, defence, but Leafs’ offence yet to find high gear – Sportsnet.ca
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Galaxy M31 July 2020 security update brings Glance, a content-driven lockscreen wallpaper service
Economy9 hours ago
Canadian dollar drops, posts weekly decline on greenback short-covering
Tech23 hours ago
2021 MacBook Pro will ditch the Touch Bar and bring back MagSafe, say reports
News23 hours ago
CBC wrong to fire reporter who told news site he was forced to delete tweet critical of Don Cherry: arbitrator
Health12 hours ago
Two new COVID cases announced in Nova Scotia, Strang says people are lying to contact tracers – Halifax Examiner
News15 hours ago
New COVID-19 modelling shows pandemic resurgence in Canada rapidly worsening – CTV News
News22 hours ago
1,500 flights and rising as Canadians seek sunny escapes despite surging COVID-19 crisis – CBC.ca
Science23 hours ago
Meet NASA Astronaut & Artemis Team Member Victor Glover [Video] – SciTechDaily
Health23 hours ago
Quebec to allow 90-day delay before second vaccine doses, more than double what national panel advises – CTV News Montreal