Opportunities Down Under
01/05/2007 12:00 am EST
Global investor Neil George crosses the ocean, to Australia, for his latest picks. There, he finds three inter-related companies, each with specific U.S. ties that offer compelling reasons--both dividends and appreciation--to attract investors' dollars...
"Sydney, Australia, may not come to the forefront of your mind when you think of our nation's roadways and airports, as well as much of the world's other essentials, including water. But that's where most of the capital is being pooled together to quietly gobble up deal after deal.
"Macquarie Bank cut its teeth on financing and investing in several projects in its own backyard for years before taking its deal-making skills on the road. From minerals and other land development financing to roadways, the bank has been amassing a talent pool that not only understands the economic vitality of infrastructure but also the best means to grab more of it for its investors.
"We recently added one of its subsidiaries to the Growth Portfolio Cash Cows. Macquarie Infrastructure Company Trust (MIC NYSE) acquires and runs a collection of infrastructure facilities, primarily in the U.S. The assets include roadways, airport facilities and parking garages, on top of energy distribution and storage facilities.
"It was originally structured as a pass-through trust, so its dividends come as a combination of our cut of the profits as well as our share of the capital depreciation, otherwise known as return of capital. This takes a bite out of the ordinary income tax rates, which will be broken down by the company for investors and the IRS. In addition, the trust plans to make next year's dividend flows fully qualified.
"The cash flow is generous, with a current dividend rate exceeding 6.5%, which should continue to advance. Macquarie Infrastructure Company Trust is a perfect Cash Cow play and a buy up to $37.
"We're also adding two other parts of the increasingly powerful Macquarie machine to the Growth Portfolio. The broader global company, Macquarie Infrastructure Group. (MIG Australia; MCQRF OTC), will add to our collection of US roadways and other resources of the more domestic-focused trust and will pay us nearly as well, more than 6.1%. Buy Maquarie Infrastructure Group up to USD3. Note in Australia many blue chip stocks trade at penny stock prices.
"It's not just the facilities we want, but the dealmakers, too. We're also adding Macquarie Bank (MBL Australia; MQBKF OTC) to the Long Haulers. It's the parent bank responsible for putting together the trusts and financing for other deals with the likes of Texas Pacific, Carlyle and other majors of the private equity world. Buy Macquarie Bank up to USD65."