Hemp Shiv: facts from Tradical draft

Ecoshakes in Ontario


hemp org



hemp strawe bale house


straw inside and hemp coating


hemp house on saltspring

hemp is hard to cut


unusual houses


Practical Information from Tradical


Hemp Agronomy 1 Hectare = 2.5 Acres

  • 1 Hectare will produce up to 10Te of hemp (UK average is 8T)e
    60% of the processed hemp crop is shiv
    1Te of shiv is approx. 50 bales
    1 bale of Tradical® HF (hemp shiv) contains 200 litres when uncompressed
    1 Hectare will produce 5 to 6Te of shiv (250 to 300 bales)
    1 Hectare will produce enough shiv to build a small house

Carbon Dioxide

  • 1 Hectare of hemp will absorb up to 18Te of CO2 as it grows (total crop – shiv, fibre and dust)
    The shiv from 1 hectare contains about 10 to 11Te CO2
    Tradical® Hemcrete® Standard Wall mix captures 130kg CO2/m3 (at a density of 275kg/m3)

Walls of Houses

  • A small semi detached house of 48 m2 GFA with 300 mm thick walls, contains 33 m3 of Tradical® Hemcrete®
    For the Standard Mix this is 165 bales of Tradical® HF and 5.4Te of Tradical® HB.
    This will lock up 4.2Te of CO2 in the walls
    A small detached house of 52 m2 GFA with 300mm thick walls, contains 49 m3 of Tradical® Hemcrete®
    For the Standard Mix this is 245 bales of Tradical® HF and 8.1Te of Tradical® HB.
    This will lock up 6.3Te of CO2 in the walls
  • A larger detached house of 100 m2 GFA with 300 mm thick walls, contains 72 m3 of Tradical® Hemcrete®
    For the Standard Mix this is 360 bales of Tradical® HF and 11.9Te of Tradical® HB.
    This will lock up 9.3Te of CO2 in the walls

Thermal Performance – U-Values
300 mm Standard wall mix gives U value of 0.19 W/m2.K

High humidity levels and low temperatures can inhibit drying of Tradical® Hemcrete®

Careful planning and preparation is required to minimise drying times through provision of proper protection to drying Tradical® Hemcrete®from rain and frost.  It can be appropriate to use air movers, heaters and dehumidifiers to shorten drying times during wet weather, cold periods, winter conditions or when building in exposed locations.



Mediterranean Diet

Med diet is southern mediterranean. Not Milan.

The Mediterranean diet is a modern nutritional recommendation inspired by the traditional dietary patterns of southern Italy, Greece, and Spain[1][2] The principal aspects of this diet include proportionally high consumption of olive oil, legumes, unrefined cereals, fruits and vegetables, moderate to high consumption of fish, moderate consumption of dairy products (mostly as cheese and yogurt), moderate wine consumption, and low consumption of meat and meat products.[3]

But moderate does not mean non-existent.

Duck Breast

Ingredients: serves 4
  • – 1 lb (450g) duck breast
  • – 1 tbsp (15ml) balsamic vinegar
  • – 1 onion
  • – 2 carrots
  • – 2 zucchine
  • – 1 tbsp (15ml) extra virgin olive oil
  • – salt and pepper

On November 17, 2010, UNESCO recognized this diet pattern as an Intangible Cultural Heritage of Italy, Greece, Spain and Morocco.[4]

Despite its name, this diet is not typical of all Mediterranean cuisine. In Northern Italy, for instance, lard and butter are commonly used in cooking, and olive oil is reserved for dressing salads and cooked vegetables.[5] In North Africa, wine is traditionally avoided by Muslims. In both North Africa and the Middle East, sheep’s tail fat and rendered butter (samna) are the traditional staple fats, with some exceptions.[6]


A Sicilian Mediterranean Diet example:

  • A brioche or croissant for breakfast OR 1 slice of bread, toast, or cereals for breakfast with honey or jam
  • A portion of fruit 2 times per day (as snacks)
  • A portion of vegetables 2 times per day
  • A portion of fish 3 times a week
  • No more than 2 eggs per week
  • No Fast food
  • Eat legumes more than once a week
  • Eat pasta or rice at least 5 times a week – only for lunch (not allowed for dinner)
  • Use olive oil as dressing (to replace saturated fats)
  • Do not consume too much alcohol
  • Eat less than 150g of meat two times in a week

The most commonly understood version of the Mediterranean diet was presented, amongst others, by Dr Walter Willett of Harvard University‘s School of Public Health from the mid-1990s on.[7][8][9][10][11][12] Based on “food patterns typical of Crete, much of the rest of Greece, and southern Italy in the early 1960s”, this diet, in addition to “regular physical activity,” emphasizes “abundant plant foods, fresh fruit as the typical daily dessert, olive oil as the principal source of fat, dairy products (principally cheese and yogurt), and fish and poultry consumed in low to moderate amounts, zero to four eggs consumed weekly, red meat consumed in low amounts, and wine consumed in low to moderate amounts”. Total fat in this diet is 25% to 35% of calories, with saturated fat at 8% or less of calories.[13]

Olive oil is particularly characteristic of the Mediterranean diet. It contains a very high level of monounsaturated fats, most notably oleic acid, which epidemiological studies suggest may be linked to a reduction in coronary heart disease risk.[14] There is also evidence that the antioxidants in olive oil improve cholesterol regulation and LDL cholesterol reduction, and that it has other anti-inflammatory and anti-hypertensive effects.[15]

Cook books. Sicily.

The Heart of Sicily: Recipes and Reminiscences of Regaleali, a Country Estate by Anna Tasca Lanza. Photography by Franco Zecchin. Many cookbooks tempt, inform, and inspire. A few capture the essence of a place, but rarely does a cookbook communicate the very soul of a place. In more than 200 pages and over 100 photographs, the late Anna Tasca Lanza’s telling of life at Regaleali, the vast country estate that has belonged to her family since 1830, is so vivid that you feel her sitting next to you, talking and turning the pages as if it were a photo album. Read more.

Gangivecchio’s Sicilian Kitchen (La Cucina Siciliana di Gangivecchio) by Wanda Tornabene, Giovanna Tornabene and Michele Evans. So much has been written, produced, and marketed in recent years about the glories of northern Italian cooking that people have ignored the accomplishments of the cooks of southern Italy, especially those of the island of Sicily. Giovanna Tornabene opened a restaurant in her home in the scenic Madonie Mountains of Sicily in 1978 because it seemed the only way to hold on to her family’s centuries-old estate. Read more.

Hemp: Decorticator etcetra

  Hemp has great potential as an industrial raw material.

france-hemp block

Hemp is one of the faster growing biomasses known,[4] producing up to 25 tonnes of dry matter per hectare per year.[5] A typical average yield in large scale modern agriculture is about 2.5–3.5 t/ac (air dry stem yields of dry, retted stalks per acre at 12% moisture). Approximately one tonne of bast fiber and 2–3 tonnes of core material can be decorticated from 3–4 tonnes of good quality, dry retted straw.[6][7]

Hempcrete is made from the hurds (inner portion).

Hemp is perhaps best known for its Omega-3 and -6 fatty acids that make it a great addition to a healthy diet, and as a cotton substitute in ecologically-sound clothing and bedding. But it is also a versatile, environmentally-sound building material.

A hemp crop can be grown without the use of herbicides or insecticides and produces up to four tonnes of material per acre per year. Hemp is categorized as a bast fiber crop. It has a stem consisting of an outer skin containing long, strong fibers and a hollow wood-like core or pith. Processing the stems results in two materials: hurds and fibers, both of which have properties that make them extremely useful in building construction.

A variety of wood-like products, such as fiberboard, roofing tiles, wallboard, paneling, insulation and bricks, can be made from the compressed hurds. The fibers can also be used like straw in bale wall construction or with mud in a sort of modified cob style of building.

Foundations can be made out of hemp hurds (shiv). A hemp plywood frame is filled with a hemp hurds combined with lime, sand, plaster, some cement and enough water to dampen, and then let to set for a day and to harden for a week. A sixth century hemp-reinforced bridge in France is testimony to the stone-like strength and durability of this material, which has come to be known as “hempcrete”.

Hemp building boosters claim that hempcrete foundation walls are up to seven times stronger than other walls.

Low-impact Living has a good summary. http://www.lowimpact.org/factsheet_hemp_building.htm

it’s very versatile – it can be  used as a replacement for bricks and mortar, plaster or plasterboard; it can be  used as a breathable solid floor; as solid walls that can be internally clad or  plastered; a solid roof / loft insulation; or as a plaster. English Heritage  recommend it for old timber frame infills. It has mainly been used in  historical building restoration, but it is increasingly being used in new builds

Germany is doing a good job of showing that modern industrialproduction is practical.

Hempflax is a major player, with about 6,000 acres in production. It has designed and patented its own machines.

See:  http://hempflax.com/en/dealer-locator

Manitoba has a new plant, capable of processing 5,000 acres.


What happened in North America. DRUGS!!!

  In 1917, the world was battling World War I. In this country, industrialists, just beset with the minimum wage and graduated income tax, were sent into a tailspin. Progressive ideals were lost as the United States took its place on the world stage in the struggle for commercial supremacy.

    It is against this backdrop that the first 20th Century hemp drama was played.

    The story begins soon after the release of Bulletin 404 (see Bulletin 404). Near San Diego, California, a 50-year-old German immigrant named George Schlichten had been working on a simple yet brilliant invention. Schlichten had spent 18 years and $400,000 on the decorticator, a machine that could strip the fiber from nearly any plant, leaving the pulp behind. To build it, he had developed an encyclopedic knowledge of fibers and paper making. His desire was to stop the felling of forests for paper, which he believed to be a crime. His native Germany was well advanced in forestry and Schlichten knew that destroying forests meant destroying needed watersheds.

    Henry Timken, a wealth industrialist and inventor of the roller bearing, got wind of Schlichten’s invention and went to meet the inventor in February of 1917. Timken saw the decorticator as a revolutionary discovery that would improve conditions for mankind. Timken offered Schlichten to grow 100 acres of hemp on his ranch in the fertile farmlands of Imperial Valley, California, just east of San Diego, so that Schlichten could test his invention.

    Shortly thereafter, Timken met with the newspaper giant E.W. Scripps, and his long-time associate Milton McRae, at Miramar, Scripps’ home in San Diego. Scripps, then 63, had accumulated the largest chain of newspapers in the country. Timken hoped to interest Scripps in making newsprint from hemp hurds.

    Turn-of-the-century newspaper barons needed huge amounts of paper to deliver their swelling circulations. Nearly 30 percent of the four million tons of paper manufactured in 1909 was newsprint; by 1914 the circulation of daily newspapers had increased by 17% over 1909 figures to more than 28 million copies.1

    1. World Almanac, 1914, p. 235; 1917

    By 1917, the price of newsprint was rapidly rising, and McRae, who had been investigating owning a paper mill since 1904,2 was concerned.

    2. Forty Years in Newspaperdom, Milton McRae, 1924, Bretano’s NY

    In May, after further meetings with Timken, Scripps asked McRae to investigate the possibility of using the decorticator in the manufacture of newsprint.

    McRae quickly became excited about the plan. He called the decorticator “a great invention…[which] will not only render great service to this country, but it will be very profitable financially…[it] may revolutionize existing conditions.” On August 3rd, as harvest time neared, a meeting was arranged between Schlichten, McRae, and newspaper manager Ed Chase.

    Without Schlichten’s knowledge, McRae had his secretary record the three-hour meeting stenographically. The resulting document, the only record of Schlichten’s voluminous knowledge found to date, is reprinted fully in Appendix I of the paper version of this book.

    Schlichten had thoroughly studied many kinds of plants for paper, among them corn, cotton, yucca, and Espana baccata. Hemp seemed to be his favorite:

    “The hemp hurd is a practical success and will make paper of a higher quality than ordinary news stock,” he said.

    His hemp paper was even better than that produced for USDA Bulletin 404, he claimed, because the decorticator eliminated the retting process, leaving behind short fibers and a natural glue that held the paper together.

    At 1917 levels of hemp production Schlichten anticipated making 50,000 tons of paper yearly at a retail price of $25 a ton. This was less than 50% of the price of newsprint at the time! And every acre of hemp turned to paper, Schlichten added, would preserve five acres of forest.

    McRae was very impressed by Schlichten. The man who dined with presidents and captains of industry wrote to Timken, “I was to say without equivocation that Mr. Schlichten impressed me as being a man of great intellectuality and ability; and so far as I can see, he has created and constructed a wonderful machine.” He assigned Chase to spend as much time as he could with Schlichten and prepare a report.

    By August, after only three months of growth, Timken’s hemp crop had grown to its full height—14 feet!—and he was highly optimistic about its prospects. He hoped to travel to California to watch the crop being decorticated, seeing himself as a benefactor to mankind who would enable people to work shorter hours and have more time for “spiritual development.”

    Scripps, on the other hand, was not in an optimistic frame of mind. He had lost faith in a government that he believed was leading the country to financial ruin over the war, and that would take 40% of his profits in income tax. In an August 14 letter to his sister, Ellen, he said:

    “When Mr. McRae was talking to me about the increase in the price of white paper that was pending, I told him I was just fool enough not to be worried about a thing of that kind.” The price of paper was expected to rise 50%, costing Scripps his entire year’s profit of $1,125,00! Rather than develop a new technology, he took the easy way out: The Penny Press Lord simply planned to raise the price of his papers from one cent to two cents.

    On August 28, Ed Chase sent his full report to Scripps and McRae. The younger man also was taken with the process: “I have seen a wonderful, yet simple, invention. I believe it will revolutionize many of the processes of feeding, clothing, and supplying other wants of mankind.”

    Chase witnessed the decorticator produce seven tons of hemp hurds in two days. At full production, Schlichten anticipated each machine would produce five tons per day. Chase figured hemp could easily supply Scripps’ west coast papers, with leftover pulp for side businesses. He estimated the newsprint would cost between $25 an $35 a ton, and proposed asking an east-coast paper mill to experiment for them.

An early hemp processing machine, c. 1930. Its many fluted rollers crushed the stalks separating the hemp fiber from the woody portion of the plants.

hemp machine

    McRae, however, seems to have gotten the message that his boss was no longer very interested in making paper from hemp. His response to Chase’s report is cautions: “Much will be determined as to the practicability by the cost of transportation, manufacture, etc., etc., which we cannot ascertain without due investigation.” Perhaps when his ideals met with the hard work of developing them, the semi-retired McRae backed off.

    By September, Timken’s crop was producing one ton of fibre and four tons of hurds per acre, and he was trying to interest Scripps in opening a paper mill in San Diego. McRae and Chase traveled to Cleveland and spent two hours convincing Timken that, while hemp hurds were usable for other types of paper, they could not be made into newsprint cheaply enough. Perhaps the eastern mill at which they experimented wasn’t encouraging-after all, they were set up to make wood pulp paper.

    By this time Timken, too, was hurt by the wartime economy. He expected to pay 54% income tax and was trying to borrow $2 million at 10% interest to retool for war machines. The man who a few weeks earlier could not wait to get to California no longer expected to go West at all that winter. He told McRae, “I think I will be too damn busy in this section of the country looking after business.”

    The decorticator resurfaced in the thirties, when it was touted as the machine that would make hemp a “Billion Dollar Crop” in articles in Mechanical Engineering and Popular Mechanics.* (Until the ninth edition of The Emperor, the decorticator was believed to be a new discovery at that time.) Once again, the burgeoning hemp industry was halted, this time by the Marijuana Tax Act of 1937.


1995 summary article from Ontario.


includes lots of cost analysis.  Bahmer Company are going into operation in June, each having an hourly
processing capacity of two tonnes of flax and/or hemp fibre. Two of the lines
are intended to process flax into a fine short fibre for the textile industry,
but will likely also process hemp. The third unit is combined with a detergent
processing step which produces a very fine, cotton-like flax fibre

1998 article from Oregon.


Net Projected Return



Hempflax: German Company

In production. http://hempflax.com/en/about-hempflax

Optimum use of this renewable resource
Today HempFlax harvests and processes 2400 hectares (5930 acres) of fibre hemp per annum. The crop is converted into a flexible combination of products. The processing, manufacturing, application and marketing chain is aimed at optimizing the application of this sustainable resource. Hemp wood is used as stable litter and in small pets’ cages. Hemp fibre serves as a raw material in the production of special paper. The automobile industry uses the fibre in its pressed form for manufacturing parts such as door panels and dash boards. Together, hemp fibre and hemp wood are turned into paper and construction material. All these products can be re-used several times and/or composted after use. Dust, a residual product, is already being used as compost and has great prospects as a plastic granules filler. In future the complete hemp plant may be utilized as biomass.

Another very through summary: with lots of historical references.


Good harvesting images from Romania.


Old mill but making silky hemp. Very complex.


AAPL: Ray Mertola. Good study of basics.


Apple, Inc. (AAPL) currently sports a trailing twelve-month P/E of 10X. Based upon the discounted cash flow principles underpinning the concept of the Price/Earnings multiple, this makes little sense unless one believes the company no longer has an ability to generate incremental earnings and cash.

This article will explore the thesis in four parts:

  • How the P/E ratio relates to Discounted Cash Flow methodology
  • What P/E multiple relates to a “no growth” stock versus a growing enterprise
  • How the Apple stock P/E has decoupled itself from past and projected earnings metrics
  • A summary and concluding thoughts as to what’s going on

****  Continue reading

Les Ainsie & Small Cap Strategy


Lee Ainslie’s Top Stock Picks Include Apple Inc. (AAPL)

By Matt Doiron in Hedge Funds
Published: February 27, 2013 at 11:41 am
Page 1 of 2

We have been going through our database of 13F filings for the fourth quarter of 2012. These filings disclose many long equity positions held by a hedge fund or other major investor at the end of a quarter and can be of multiple uses to investors. For one, the most popular small cap stocks among hedge funds have outperformed the S&P 500 by an average of 18 percentage points per year according to our research. Read more about our small cap strategy. It’s also potentially helpful to use 13Fs as an initial source of ideas for further research. Maverick Capital was founded by Lee Ainslie after a short stint at legendary investor Julian Robertson’s Tiger Management. Read on for our quick take on Maverick’s five largest holdings by market value at the end of December according to the 13F or see the full list of Ainslie’s stock picks.

The fund owned 7.5 million shares of Macy’s, Inc. (NYSE:M) at the beginning of 2013. The retailer recently reported decently higher earnings per share for the fiscal quarter ending in January compared to the same period in the previous fiscal year, with results beating analyst expectations. Consensus among the sell-side is that Macy’s is a good value, with the stock trading at 9 times expected earnings for the fiscal year ending in January 2014 and a five-year PEG ratio of 0.8. Cliff Asness’s AQR Capital Management liked Macy’s in the fourth quarter, increasing its stake by 38% (check out more stocks AQR was buying).

Number Cruncher

McGugan does good work at times.


Number Cruncher

15 low-volatility stocks for the jittery investor

Ian McGugan

The Globe and Mail

Published Tuesday, Feb. 26 2013, 8:04 PM EST

Last updated Tuesday, Feb. 26 2013, 8:04 PM EST

Stocks for the nervous.

Low-volatility funds have soared in popularity recently as anxiety-prone investors seek portfolios that won’t dip and dive with every ripple in the market. Most of these funds, though, focus on a single measure of volatility.

With the co-operation of Craig McGee, senior consultant at Morningstar Canada, we went looking for Canadian stocks that are steady performers on a number of key metrics.

How we did it Mr. McGee used the CPMS Canadian database to search for stocks with low volatility in three vital areas: share price, past earnings and future earnings. Specifically, he screened for the top 15 stocks based on:

-A three-year beta less than 1 (beta is used to measure a stock’s volatility; a stock with a beta under 1 tends to move less than the overall market);

-A CPMS grade between A+ and C+ for absolute price volatility (this grade measures the standard deviation of daily returns over the past year; an A+ grade indicates the stocks with lowest volatility);

-A CPMS grade between A+ and C+ for the standard deviation of earnings per share over the past five years;

-A CPMS grade between A+ and C+ for the spread in current year EPS estimates (an A+ grade on this score indicates a low spread);

-A CPMS grade between A+ and C+ for the spread in next year’s EPS estimates.

To ensure adequate diversification, Mr. McGee permitted no more than three stocks from any single sector.
What we found

Mr. McGee looked at how this strategy would have fared from January, 1999, to the end of 2012, assuming the stocks in the portfolio were reselected each year.

He found that the low volatility strategy would have produced an annualized total return of 10.7 per cent, compared with 6.9 per cent for the S&P/TSX Composite Total Return Index.

“This type of strategy is geared more toward downside protection so it would be likely to underperform when riskier assets are in favour,” says Mr. McGee.

For safety seeking investors, though, it’s definitely worth a look.

Canadian low-volatility stocks

Rank Company Symbol Market Cap
1 National Bank NA-T 12,637
2 Shoppers Drug Mart SC-T 8,697
3 Toronto-Dominion Bank TD-T 77,472
4 Bank of Nova Scotia BNS-T 71,626
5 Tim Hortons Inc. THI-T 7,623
6 Emera Inc. EMA-T 4,647
7 Cdn. National Railway CNR-T 42,867
8 Cdn. Utilities Ltd., A CU-T 9,886
9 Enbridge Inc. ENB-T 36,132
10 Jean Coutu Group, A PJC.A-T 1,586

Grades relative to 732 stocks in CPMS Canadian Database (A = good, E = poor). Source: Morningstar Canada


Download table as a CSV file

View full table

  • NA-T
  • SC-T
  • TD-T
  • BNS-T
  • THI-T
  • EMA-T
  • CNR-T
  • CU-T
  • ENB-T
  • PJC.A-T
  • MRU-T
  • ACO.X-T
  • BA-T
Live Discussion of NA on StockTwits
More Discussion on NA-T

AAPL: Basics. Schauber. 2013.

Before selecting a stock, there are a number of things that you need to consider in order to ensure that you are buying the stock of a high-quality company whose shares are poised to grow in value over time. Some of these concerns include what the company does, its competitive advantages, valuation, dividend payouts and sustainability, and earnings consistency.

Another important thing that you need to consider is the financial condition of the company in question. You want to know if the company is able to continue paying its bills, and how much debt it carries. The balance sheet is one of the most effective tools that you can use to evaluate a company’s financial condition. In this article, I will discuss the balance sheet of Apple (AAPL), in order to get some clues as to how well this company is doing.

I will go through the balance sheet, reviewing the most important items, in order to assess Apple’s financial condition. The information that I am using for this article comes from Apple’s website here.

Note that this article is not a comprehensive review as to whether Apple should be bought or sold, but rather, just an important piece of the puzzle when doing the proper due diligence.

Before I go any further, I should mention that not everyone is going to derive a benefit from this article. Many of you who are already familiar with the workings of Apple might say that this article has about the same effect as saying that Michael Jordan was a good basketball player. That’s fine. However, for those who aren’t that familiar with Apple and are starting to consider it as an investment given the stock’s recent downturn, and new investors who are trying to formulate an approach toward researching stocks in general, this article may help them understand some of the things that they need to look for before making a final decision.


Apple designs, manufactures, and sells mobile communication devices, personal computing products, portable digital music players, and software around the world. Their communication devices include the iPhone, which combines the functionality of a cell phone, an iPod, and an internet connection. They produce and sell desktop computers, like the iMac, and portable computers, like the MacBook Pro. The iPod is a very popular portable music and media player. Their software offerings include the iOS and OS X operating system software.

Apple has a market capitalization of $416B and has recorded over $165B in sales over the last 12 months. 56% of its sales in the last quarter came from the iPhone, while the iPad accounted for 20% of revenues.

Cash and Cash Equivalents

The first line in the Assets column of the balance sheet is for the amount of cash and cash equivalents that the company has in its possession. Generally speaking, the more cash the better, as a company with a lot of cash can invest more in acquisitions, repurchase stock, pay down debt, and pay out dividends. Some people also value stocks according to their cash positions. Some of the larger and more mature companies tend not to carry a lot of cash on their balance sheets, as they might be more inclined to buy back stock with it, or pay out dividends.

As of Dec. 29, 2012, Apple had $39.9B in cash and short-term investments, which can be easily converted into cash. This is a substantial amount of cash for a company that has a market cap of $416B. This means that the company is trading for a little over ten times its cash position, which can be very attractive for value-oriented investors.

In fiscal year 2012, Apple paid out $2.5B in dividends, which are well-supported by its 2012 free cash flow of $42.6B. This is the company’s first year of paying out dividends since 1995. Going forward, Apple plans on paying a regular quarterly dividend of $2.65 per share. The company has also authorized a share repurchase program, under which the company can buy back up to $10B worth of common stock, starting in 2013.

Net Receivables

Receivables constitute money that is owed to a company for products or services that have already been provided. Of course, the risk with having a lot of receivables is that some of your customers might end up not paying. For this reason, you usually like to see net receivables making up a relatively small percentage of the company’s sales.

In its most recent 10-Q filing, Apple reported a total of $11.6B in net trade receivables on its balance sheet, which represents approximately 7% of its trailing 12-month sales of $165B. For fiscal 2012, which ended on Sept. 29, 2012, 7% of its sales were booked as receivables, while that percentage was at 5% for fiscal 2011.

Given that trade receivables are accounting for only 7% of the company’s total revenue, and the fact that that figure is fairly consistent with what the company has reported in the past, I see nothing to worry about here.

Current Ratio

Another factor that I like to look at is the current ratio. This helps to provide an idea as to whether or not the company can meet its short-term financial obligations in the event of a disruption of its operations. To calculate this ratio, you need the amount of current assets and the amount of current liabilities. Current assets are the assets of a company that are either cash or assets that can be converted into cash within the fiscal year. In addition to cash and short-term investments, some of these assets include inventory, accounts receivable, and prepaid expenses. Current liabilities are expenses that the company will have to pay within the fiscal year. These might include short-term debt and long-term debt that is maturing within the year, as well as accounts payable (money owed to suppliers and others in the normal course of business). Once you have these two figures, simply divide the amount of current assets by the amount of current liabilities to get your current ratio.

If a company’s operations are disrupted due to a labor strike or a natural disaster, then the current assets will need to be used to pay for the current liabilities until the company’s operations can get going again. For this reason, you generally like to see a current ratio of at least 1.0, although some like to see it as high as 1.5.

The current ratio of Apple is 1.54, which is outstanding.

Property, Plant, and Equipment

Manufacturing, like any other industry, requires a certain amount of capital expenditure. Land has to be bought, factories have to be built, machinery has to be purchased, and so on. However, less may be more when it comes to outlays for property, plant, and equipment, as companies that constantly have to upgrade and change its facilities to keep up with competition may be at a bit of a disadvantage. However, another way of looking at it is that large amounts of money invested in this area may present a large barrier-to-entry for competitors.

Right now, Apple has $15.4B worth of property, plant, and equipment on its balance sheet. Apple reported in its 10-Q filing that most of this is in machinery, equipment, and internal-use software.


Goodwill is the price paid for an acquisition that’s in excess of the acquired company’s book value. The problem with a lot of goodwill on the balance sheet is that if the acquisition doesn’t produce the value that was originally expected, then some of that goodwill might come off of the balance sheet, which could, in turn lead to the stock going downhill. Then again, acquisitions have to be judged on a case by case basis, as good companies are rarely purchased at or below book value.

For the reason discussed above, I generally don’t like to see goodwill account for more than 20% of a company’s total assets. Apple has $1.38B worth of goodwill on its most recent balance sheet. Given that this represents less than 1% of the company’s total assets of $196B, I don’t see anything to worry about on this end.

Intangible Assets

Intangible assets that are listed on the balance sheet include items such as licensed technology, patents, brand names, copyrights, and trademarks that have been purchased from someone else. They are listed on the balance sheet at their fair market values. Internally-developed intangible assets do not go on the balance sheet in order to keep companies from artificially inflating their net worth by slapping any old fantasy valuation onto their assets. Many intangible assets like patents have finite lives, over which their values are amortized. This amortization goes as annual subtractions from assets on the balance sheet and as charges to the income statement. If the company that you are researching has intangible assets, with finite lives, that represent a very large part of its total asset base, then you need to be aware that with time, those assets are going to go away, resulting in a reduction in net worth, which may result in a reduction in share price, unless those intangible assets are replaced with other assets.

Apple currently has $4.46B worth of intangible assets on its balance sheet. Virtually all of these assets have finite lives that range between 3 and 7 years, and consist mostly of patents and licenses. As of the end of fiscal 2012, the remaining weighted-average amortization period for these assets was 5.2 years.

While the amortization of $4.46B worth of intangible assets over the next 5 years isn’t a good thing for the balance sheet, I am not too concerned about it, as these assets account for less than 3% of the company’s total assets.

Return on Assets

The return on assets is simply a measure of the efficiency in which management is using the company’s assets. It tells you how much earnings management is generating for every dollar of assets at its disposal. For the most part, the higher, the better, although lower returns due to large asset totals can serve as effective barriers to entry for would-be competitors. The formula for calculating return on assets looks like this:

Return on Assets = (Net Income) / (Total Assets).

For Apple, the return on assets would be $41.7B in core earnings over the last 12 months, divided by $196B in total assets. This gives a return on assets for the trailing twelve months of about 21.3%, which is really strong, especially when considering that a huge asset base of $196B serves as a good barrier-to-entry. I also calculated Apple’s returns on assets over fiscal years 2012, 2011, and 2010 for comparative purposes. This can be seen in the table below.

Symbol ttm 2012 2011 2010
AAPL 21.3% 23.7% 22.3% 18.6%

Table 1: Nice Returns On Assets From Apple

These are really good returns on assets that are fairly consistent, although the trailing 12-month figure is lower than what was reported just 3 months before, at the end of fiscal 2012. This is due to the fact that earnings for the first quarter of fiscal 2013 were flat when compared to the same quarter a year ago due to declining gross margins, and also due to the fact that the asset base expanded by $20B, due largely to increases in cash and long-term investments.

The gross margin for the quarter was about 39% versus 45% in the same quarter a year ago, and according to Apple, this decline is due to the introduction of new versions of existing products with higher costs and flat or reduced pricing. For instance, the iPad mini has a lower gross margin than what has been average for the company. There have also been price reductions on some of their other products. Management expects 2013 gross margins to be lower than in 2012, ranging between 37.5% and 38.5%.

This will have a negative effect on returns on assets and returns on equity going forward, but for the time being, the company is still in pretty good shape. Investors, however, will need to keep an eye on this figure in the years and quarters to come.

Short-Term Debt Versus Long-Term Debt

In general, you don’t want to invest in a company that has a large amount of short-term debt when compared to the company’s long-term debt. If the company in question has an exorbitant amount of debt due in the coming year, then there may be questions as to whether the company is prepared to handle it.

However, this is not a problem at all for Apple, as the company doesn’t have any short-term borrowings.

Long-Term Debt

Long-term debt is debt on borrowed money that is due more than a year from now. However, an excessive amount of it can be crippling in some cases. For this reason, the less of it, the better. Companies that have sustainable competitive advantages in their fields usually don’t need much debt in order to finance their operations. Their earnings are usually enough to take care of that. A company should generally be able to pay off its long-term debt with 3-4 years’ worth of earnings.

Right now, Apple doesn’t carry any long-term borrowings. So, when it comes to long-term debt, Apple has nothing to worry about at the moment.

Debt-To-Equity Ratio

The debt-to-equity ratio is simply the total liabilities divided by the amount of shareholder equity. The lower this number, the better. Companies with sustainable competitive advantages can finance most of their operations with their earnings power rather than by debt, giving many of them a lower debt-to-equity ratio. I usually like to see companies with this ratio below 1.0, although some raise the bar (or lower the bar if you’re playing limbo) with a maximum of 0.8. Let’s see how Microsoft stacks up here.

Debt-To-Equity Ratio = Total Liabilities / Shareholder Equity

For Apple, it looks like this: $68.7B / $127B = 0.54

Apple’s debt-to-equity ratio looks pretty decent. Remember that while the company doesn’t have any short or long-term borrowings, it still does have liabilities such as accounts payable and deferred taxes that need to be taken into account. When calculated this way, the debt-to-equity ratio does that. To see how this figure has changed over time, I have included it from the ends of the last three fiscal years in the table below.

Symbol 12/29/2012 2012 2011 2010
AAPL 0.54 0.49 0.52 0.57

Table 2: Debt-To-Equity Ratios Of Apple

From the looks of this table, the debt-to-equity ratio of Apple has been consistently good. So, from a debt-to-equity standpoint, I don’t see anything to be worried about at the moment.

Return On Equity

Like the return on assets, the return on equity helps to give you an idea as to how efficient management is with the assets that it has at its disposal. It is calculated by using this formula.

Return On Equity = Net Income / Shareholder Equity

Generally speaking, the higher this figure, the better. However, it can be misleading, as management can juice this figure by taking on lots of debt, reducing the equity. This is why the return on equity should be used in conjunction with other metrics when determining whether a stock makes a good investment. Also, it should be mentioned that some companies are so profitable that they don’t need to retain their earnings, so they buy back stock, reducing the equity, making the return on equity higher than it really should be. Some of these companies even have negative equity on account of buybacks. However, Apple is not one of these companies.

So, the return on equity for Apple is as follows:

$41.7B / $127B = 32.8%

This is a pretty solid return on equity. In the table below, you can see how the return on equity has fared over the past three years.

Symbol ttm 2012 2011 2010
AAPL 32.8% 35.3% 33.8% 29.3%

Table 3: Returns On Equity At Apple

The return on equity has been really strong over the last three years. We see a drop in the trailing 12-month period versus fiscal 2012 due to the gross margin decline in the first quarter of fiscal 2013 mentioned above. The $9B increase in Apple’s equity position also contributed to this small decline.

Retained Earnings

Retained earnings are earnings that management chooses to reinvest into the company as opposed to paying it out to shareholders through dividends or buybacks. It is simply calculated as:

Retained Earnings = Net Income – Dividend Payments – Stock Buybacks

On the balance sheet, retained earnings is an accumulated number, as it adds up the retained earnings from every year. Growth in this area means that the net worth of the company is growing. You generally want to see a strong growth rate in this area, especially if you’re dealing with a growth stock that doesn’t pay much in dividends or buybacks. More mature companies, however, tend to have lower growth rates in this area, as they are more likely to pay out higher dividends. In the table below, you can see how retained earnings have fared at Apple. It shows the retained earnings at the end of the first quarter of fiscal 2013, compared with the ends of the three previous fiscal years.

Symbol Q1 2013 2012 2011 2010
AAPL $110B $101B $62.8B $37.2B

Table 4: Retained Earnings At Apple

From the end of 2010, retained earnings have grown by 195%, nearly tripling. Needless to say, this is outstanding growth.


After reviewing the most recent balance sheet, it can be concluded that there is much to like about the financial condition of Apple. It has a large amount of cash and short-term investments that can be used for acquisitions, dividends, and share repurchases, in addition to a strong level of free cash flow. An excellent current ratio shows that the company can meet its short-term financial obligations, even in the event of an unlikely disruption of its operations. Apple doesn’t have any short or long-term borrowings that it needs to service. The company has shown very good returns on assets and returns on equity, along with exceptionally good growth in retained earnings over the last three years that the company can invest for future growth.

The only possible weakness that I see with regard to Apple’s financial condition is the risk to the company’s returns on assets and equity if gross margins continue to drop. However, I don’t think that the company is financially-distressed in any way.

While this is not a comprehensive review as to whether Apple should be bought or sold, it can certainly be said that Apple is in excellent financial condition.

To learn more about how I analyze financial statements, please visit my new website at this link. It’s a new site that I created just for fun, as well as for the purpose of helping others make good financial decisions.

Thanks for reading and I look forward to your comments!

AAPL: Caisse is a big investor. Over $1 billion. 2-27-13 Split Coming?

Canadian pension fund manager Caisse de dépôt et placement du Québec has significantly raised its bet on Apple Inc., holding a stake in the California technology giant worth more than $1-billion as it hunts for fewer but more quality investments in the years ahead.


Documents filed with the U.S. SEC show Caisse doubled its position in Apple in its latest quarter ended Dec.31, to two million shares from one million shares three months earlier.

Documents filed with the U.S. Securities and Exchange Commission show the Montreal-based pension fund doubled its position in Apple in its latest quarter ended Dec.31, to two million shares from one million shares three months earlier.

The value of that stock at the end of the year was $1.07-billion, placing Apple among the Caisse’s largest U.S.-traded investments. Only its stakes in Enbridge Inc. and CGI Group Inc. are larger.

Shares in the iPhone and iPad maker have sunk steadily since hitting a 52-week high of $705.07 on Sept.21 to $448.97 on Tuesday on the Nasdaq. It wasn’t clear at what price the Caisse increased its position.

Caisse chief executive Michael Sabia is steering a new path for the pension fund that will see it trim its activity in traditional index investing by focusing instead on fewer assets it understands more deeply. Chief investment officer Roland Lescure has said he’s looking for companies with strong management, predictable returns and decent liquidity levels.

Apple, the world’s most valuable company by market capitalization, has accumulated US$137.1-billion in cash over the past five years as sales growth soared. The liquidity is so high that it has become the subject of an organized effort by its investors to return the money to them.


Are they hoping for a split? Oracle Investments says it is coming.

The solution to Apple Inc.’s recent share price woes is a 10-for-1 stock split, says Laurence Balter, chief market strategist at Oracle Investment Research.

“Mathematically it does nothing except make for a low price,” he said in a note to clients this week.

“Valuation-wise it’s neutral. Financially, it saves the company from having to dole out billions it needs to fend off its competition from ever getting a stranglehold. More importantly however, psychologically it’s everything.”


Mr. Balter said institutional investors continue to buy Apple shares based on cheap price/earnings multiples, but retail investors not so much.

“The problem is that the average American retail investor doesn’t buy P/E ratios. They buy (or sell) share price action,” he wrote.

Mr. Balter believes the average retail shareholder will be attracted to a reachable and cheaper share price, adding that downside to a stock split is negligible and fully reversible if it doesn’t work out.

“Apple can continue to increase its dividends at a comfortable rate and buybacks can continue at the board’s discretion,” he wrote.

So rather than pay out more of its US$137-billion cash pile as hedge fund manager David Einhorn and others are proposing, a stock split wouldn’t cost Apple anything.

AAPL: splits, calls and puts. Feb 27-2013

Efficent Alpha. 


Shares of Apple (AAPL) jumped after a rumor spread on the Twitterverse about a possible stock split and special dividend. While the short answer is that a split should not matter to a company’s intrinsic value, there is a strong case for an increase in the shares and the options market could allow for more flexibility.

Gnomes and Apple’s shareholder meeting

Hedge fund manager Doug Kass tweeted his position on Apple and that his source was talking about a possible stock split at the Cupertino behemoth. The shares had been lagging the S&P 500, shown in the chart below, by 0.8% until the news. After the news, volume spiked and the shares jumped to beat the market by 1.7% on the day.

Kass’ tweet from his account @DougKass read,

High above the Alps my Gnome is hearing a rumor that Apple will announce a stock split at tomorrow’s shareholder meeting. $AAPL.

(click to enlarge)Apple stock split rumor

While Kass later downplayed the rumor, the idea of a stock split for the triple-digit shares is not a new one. The shares have split three times in their almost three-decade history; in 1987, 2000, and 2005. The February 2005 2-for-1 split; when the shares were trading at $44.86 after the split, saw the price back up to $80 within a year.

Does a split really matter?

The quick response by analysts and academics is that a stock split should not result in an increase in value for the shares. The price-earnings ratio, the favorite measure of a stock’s worth, does not change. While some will argue psychological effects drive a stock’s value higher after a split, this really is not a factor for institutional investors which own 64% of the shares. In fact, a split will actually increase the costs for these institutional investors because they must now buy more shares to invest the same amount of money.

Proponents of a share split often cite a 2010 study of stocks on the Nairobi Stock Exchange (pdf) showing positive average abnormal returns around the split announcement. The study also found a positive market reaction in the form of an increase in volume and trading activity, consistent with the signaling hypothesis. Researchers at Yale in 2004 (pdf) found less evidence of an effect on returns but confirmed a shift in investor clientele as individual investors increase their holdings while institutional investors sell.

My own feeling is that a split will not usually matter over the longer-term for most stocks. Once the media fervor and enthusiasm by retail investors subsides, the valuation for the shares should adjust to their pre-split level.

But there is a good reason this might not be the case for Apple.

At very high prices, there are some significant hurdles for retail investors in shares of Apple. At almost $500 per share, many of the option strategies that I use for risk management are prohibitively expensive. Even without options strategies, putting down a couple of thousand dollars for a few shares of Apple may not be possible for smaller investors and a diversified portfolio.

For example, I am bullish on shares of Apple and believe it to be a good value play. I am not quite as bullish on the general economy and the market’s valuation. Nor am I entirely sure that Apple can fend off competitors like Samsung Electronics (SSNLF.PK) or BlackBerry (BBRY) to maintain its high margins. While BlackBerry has been written off by most of the investing public, the company is reporting increased interest in its new Z10 smartphone and could make a comeback in the States. While Google (GOOG) has recently announced that it has no plans for retail stores, the company is presenting an ever-evolving competitive threat to Apple through its growing product line including Chromebooks, Nexus and Motorola smartphones and tablets, Google TV, and Google Glass.

For most investments with this conflicting thesis, I would buy a long position in the shares with a covered call strategy in the options. With an outlook skewed to the bullish side, I may buy 300 shares in the stock and sell 2 call contracts in the long-dated options. While limiting the upside on 200 shares of the stock, the strategy gives me some downside protection.

But this is not really possible for investors in Apple. Since option contracts are only sold on blocks of 100 shares, an investor needs to put down a minimum of almost $50,000 to use a covered call strategy. This scale of investment is just not possible for most, even with the premium on the $500 strike January 2014 calls offsetting the price by $28.05 per share.

After a rumored 10-to-1 stock split though, a 100 share block of Apple would only cost $4,489 before collecting the premium on the covered calls.

Other popular options strategies would also be available after a stock split, including put writing. In this strategy, an investor sells put options on a stock instead of an immediate long position. If the shares close above the strike price, the investor keeps the premium paid and takes no position. If the shares close below the strike price, the investor buys the shares for the strike and keeps the premium. The cost basis for the shares becomes the strike price minus the premium collected, giving the investor some downside risk management.

I currently have a bull spread on 2015 Apple calls at the $450 and $460 strike prices. Investors with a bullish outlook on the shares may consider call options ahead of any split or dividend announcement to participate in the upside potential. After the announcement, a wider range of options strategies could become available.

aapl: Activations

Good Technology’s Q4 2012 Device Activation Report Shows Apple Continues to Dominate the Enterprise


iOS Activations Capture 77 Percent of all Activations while Android Makes Notable Gains in Tablet Activations

Sunnyvale, CA — Feb 25, 2013 Good Technology™, the leader in secure enterprise mobility, today released its Q4 2012 Device Activation Report. The report details smartphone and tablet devices activated amongst Good’s enterprise customers, which include half of the FORTUNE 100™. The full report, which can be viewed in PDF or Roambi Flow, provides a breakdown of smartphone and tablet activations among Good’s enterprise customers to uncover notable changes and trends in device and mobile operating system preference and usage within corporations1.

graphThis quarter’s report showed a clear preference for iOS devices, which accounted for 77 percent of all activations and captured eight of the top ten spots on the most popular device list this quarter. While Android activations dropped 6.3 percent as compared to Q4 2011, they still accounted for 22.7 percent of all activations for the quarter, which were primarily driven by Android tablets.  Windows Phone devices came in a distant third for the quarter, capturing just 0.5 percent of overall activations.

“CIOs today are able to realize increased productivity by supporting a diverse set of mobile products, while retaining security and control, and still provide their employee consumers with product choice,” said Christy Wyatt, CEO and President, Good Technology.  “We continue to see more enterprise customers extending the accessibility of mobile applications to a broader employee population within their organizations.”

Additional report findings include:

  • iOS platform activations rose 8.5 percent year-over-year, growing from 71 percent in Q4 of 2011 to 77 percent in Q4 2012.
  • The iPhone 5 was the most popular device in Q4 of 2012, representing 32 percent of all activations for the quarter.
  • Although the iPad continues to lead tablet activations with 93.2 percent, Android tablets are gaining momentum. Android jumped from 2.7 percent to 6.8 percent of all tablet activations over the course of 2012.
  • When looking at types of devices activated, Android smartphones slightly outpaced iPads in October and finished the quarter only a fraction behind at 21 percent of all activations in Q4 2012.
  • The most popular Android tablets amongst Good’s enterprise customers included the Samsung Galaxy Tab, followed by the Motorola Droid Xyboard, Samsung Galaxy Note, Asus Transformer, Kindle Fire and Motorola Xoom.
  • The Samsung Galaxy SIII was the most popular Android device, capturing six percent of total device activations for the quarter.
  • The financial services industry led enterprise device activations during the quarter, followed by business and professional services. Together, these two industries made up more than half of the activations reported in Q4.
  • Wholesale & retail, manufacturing and energy & utilities all moved up in the rankings for overall activations by sector, as well as iPad activations over last year. 


As demonstrated by Good’s most recent State of BYOD report, many of the largest, most security-conscious and highly regulated companies are already adopting BYOD, while the number of organizations that have no plans to support BYOD is rapidly shrinking. Therefore, Good believes the number and types of devices that corporations enable for use at work will grow as IT organizations look to reduce costs and increase employee productivity by allowing employees to use the mobile devices and applications they prefer in order to work smarter.

About the Good Device Activation Report
The more than 4,000 customers represented in this survey include bellwether companies – from financial services, healthcare, manufacturing, energy & utilities, legal, government, and high tech –making this data report a benchmark for enterprise mobility adoption. The metrics cited in this report are generated directly from Good’s internal data, as aggregated from all devices activated across Good’s worldwide customer base.

About Good Technology
Good Technology transforms enterprises by mobilizing employees through secure, collaborative workflows. We also empower IT to protect and manage mobile apps, devices, and enterprise data.
Good’s Secure Collaboration solutions include Good’s applications for email, PIM, browser, file sharing, instant messaging, as well as a broad ecosystem of third party applications. Good’s Enterprise Mobility Management Platform allows enterprises and ISVs to build, manage, analyze and secure mobile applications. Good Technology’s customers include more than 4,000 organizations worldwide, including half of the FORTUNE 100™, eight of the top 10 financial services, five of the top 10 healthcare, and leaders in retail, telecommunications, manufacturing, legal, and government.  Learn more at www.good.com.