Food for thought for investors. A young MBA student of my acquaintance summer-interning at Morgan Stanley has written about the “Seven Horsemen of the Apocalypse”. Being Jewish, she got the number of horsemen in the Book of Revelations wrong. Officially there are only four horsemen.

But her list reverberates and was recently quoted by Bloomberg:

1. Climate change;

2. Scarce water;

3. Disposal of vast amounts of urban waste;

4. Insecure food supplies;

5. Public health burdens;

6. Economic inequality; and

7. The demographic and pension cliff.

Her list of negatives can be used to try to find companies able to forestall these potential apocalyptic crises. Morgan Stanley listed ten large-cap US equities to buy, promising that they would offer “a positive return over a shorter time horizon”, like 12 to 18 months. Large cap means with a market cap of over $2 bn. And the positive return the brokerage is aiming for is 10% in the next 1-1.5 years.

I think that these issues will not be resolved fast, and that the 12 to 18 month investment horizon is way too short. If you invest to solve these problems, take a longer view.

Moreover, these problems are global in scale, rather than confined to the US, and require global investment. Only looking at US companies in these crisis areas is absurd: the list is of global problems.

Nor do I think there is any inherent advantage for large-cap players.

Bloomberg noted that the problems she cites are notorious, fuzzy, amorphous risks that belong to everyone and therefore no one, why unabashed leadership in the fight against them is so hard to come by in the civic sphere or private sector.”

“There problems seem infinite, and, what's worse, can be addressed only by infinitesimal measures. Why even bother?” The main reason is that the survival of everyone's economy and lifestyle depends on defeating the 7 horsemen.

The latest replacement for Siri (Apple's voice to answer questions) created by of artificial intelligence experts who set up on their own is called Viv. This according to Wired magazine. No relation!

*The brilliant Q2 was from Tencent which produced a 59% rise in net profit, beating even the consensus forecast (from Thomson-Reuters analyst polls) of 50%. China games and chat produced most of the profit of RMB 5.84 bn ($947 mn) at TCTZF. Revenues topped forecasts too, at RMB 19.75 bn, up 37% y/o/y.

Up 30% YTD, its market cap is equal to $159 bn. Tencent is now the most valuable listed Asian internet company, at least until Alibaba is ipo'd.

The two companies, both headed by men named Ma, are in battle mode. Tencent is pushing into e-commerce, most recently with its JD.com stake, while Alibaba is offering Laiwang to fight Tencent's dominance of instant message with WeChat and is also branching into video games.

In the conference call, Chief Strategy Officer James Mitchell forecast that H2 games sales will be flat, and the stock fell marginally in Hong Kong trading. It is up 2.3% in the US as I write.

*Meanwhile the debt of Tencent's largest shareholder, Naspers has been downrated to 'junk' by Fitch. Repayment will hurt NPSNY earnings, the rating agency says. Our expert, Harry Geisel says to view the South African global media group as “long-term people” developing a global emerging markets media empire. He says to use dollar-cost averaging if the stock suffers from the down-rating.

*Canada's CAE reported flat to lower metrics across the board hurt by weakness in one of its major businesses, military aviation simulators. Government orders were underfunded or delayed, hurting CAE's bottom line. Net income in its Q1 fell to C$43.8 mn from prior year Q1 level of C$44.7 mn, both 17 loony cents/sh). Operating profit margin rose thanks to civil aviation orders rising 32%, but this was not enough to offset the meh military side. Revenues were virtually flat at C$526.2 mn vs prior Q1 C$520.1 mn. Also hurting CAE were high Canadian taxes because a credit for simulator sales granted in 2013 was not repeated. Backlog at C$4.41 bn was modestly down from prior year Q1 at $4.71 bn.

CAE examined its business lines and opted to keep its healthcare simulation business (allowing surgeons to practice the way aircraft pilots do, without putting a plane or a patient at risk.) Here revenues were flat at a very modest level. However CAE has decided to sell its other new business, simulators for mining operations, but provided few details.

It raised its dividend to 7 loony cents from 6 in the prior quarter, payableSept. 30.

*The newly US-listed Performance Sports Group is successor to our CanadianBauer Performance Sports, PSG instead of BRRPF, a listed US company in place of a former private equity group in Canada, both producing sports equipment. The entities are not the same because of the takeover of Easton Baseball/Softball (AKA diamond sports) this spring. So with caveats, PSG reported Q4 revenues up 30% to $112.9 mn, and 35% in constant currencies (US$ rather than loonies). It uses aJune 30 fiscal year because ice hockey is a winter sport.

PSG reported adjusted gross profit up 22% to $43.8 mn and adjusted net income up 12% to $10.9 mn. Lacrosse revenues rose 29% but ice-hockey, our original motive for buying the BRRGF stock, grew only 9% (or 14% in constant currency.) However a new hockey-stick and uniform rollout appears to herald improvement.

The adjustments are because it gained $6 mn or 9 cents/sh from an intellectual property settlement with BRRGF net of expenses. The net/sh excluding the settlement and the impact of the diamond sports franchise was 23 cents/sh; without these it was 29 cents/sh.

Despite a secondary offing which raised $126.5 mn in June, the share is highly leveled, at 3.66x, with total debt at $523.1 mn mainly for the diamond sports acquisition.

For the full FY, revenues rose 12% to US$446.2 mn or 14% in constant currencies. Like for like revenues grew 6%. Adjusted net income for th year at $37.3 mn was $1/sh vs FY 2012-3 levels of $35.7 mn or 98 cents/sh.

*Abengoa produced non-comparable results too after the Spanish energy and environmental firm spun out a yield arm in June. Its H1 revenues of euros 3.405 bn were flat but operating results (earnings before interest, taxes, depreciation and amortization, EBITDA) rose 31% to euros 695 mn. Net income was also flat, at euros 69 mn. By sector sales were down in its largest line, engineering and construction, but margins rose to 17.7% and the result was a 16% rise in new bookings (sales?) to euros 2.942 bn plus a boost to the pipeline of a further euros 165 bn. The sales drop was partly attributable to completed projects like the 280 megaWatt solar plant Solana (in Arizona.)

Infrastructure revenues (concessions)

rose 46% to euros 346 mn and EBITDA smashed up 74% to euros 244 mn along with a rise in the backlog of eruos 40.5 bn. Industrial production and bioenergy revenues were flot at eruos 991 mn but EBITDA more than doubled to euros 84 mn mostly thanks to Brazil making up for low sales in Europe. It did not report quarterly results.

*Vale is down today on China news of slowing growth as iron ore falls to an 8-wk low in price. But it may ghoulishly fall further on the death of the 3^rdranking presidential candidate Eduardo Campos in a plane crash. This will apparently add votes to Dilma Rousseff and boost her chances of winning re-election. VALE needs a break in its taxes which a more pro-business government might allow. Cowen today reiterated its neutral rating of VALE.

*Allana Potash engaged AMEC of Saskatoon (SASK) to design and do front end engineering at its Danaskhil project in Ethiopia pending receipt of project financing. The project is for 6 months and ALLRF did not give the price-tag. The stock is up on the news because it shows seriousness.

*Novartis sub Sandoz presented the first biosimilar application to the US FDA in July for Neupogen, for which it won support from the maker of the patented drug, Amgen. It boosts white blood cells for chemotherapy patients. It hs now been followed by another biosimilar application from South Korean Celltron. NVS is our most recent pharma and generics stock pick.

*Royal Bank of Canada analysts think that the problems of Russian sanctions faced by Schlumberger will have less impact on its bottom line than the instability in Iraq. SLB reported that it expected a 3 cents/sh drop in earnings in the current quarter from sanctions but did not quantify the impact of Iraq (because how can you?)

*One clear benefit of the Wall Street Journal's publication today of results of its investigation of Banco Espirito Santo has been a partial lifting of the fog of uncertainty about Portugal Telecom, a barely related Portuguese company. PT is up 3.75% today. More to come and meanwhile you get an 8% yield.

Fund notes:

*Eduardo Garcia reported in www.sentidocomun.co.mx today that Fibra Uno has shown rising volume of trading, but barely any move in price. FBASF is a REIT which is betting the farm on quick expansion. While I like the notion of adding retail, factory, and office properties to benefit from what I call “the new Mexican Revolution” I also lightened my exposure to the firm recently.

*After its disappointing results (hit by the Ghanaian Cedi devaluation), Africa Opportunity Partners is up 4% today on second thoughts. AROFF.

*All my plans to balance tax gains and losses have been thrown into disarray by my son the CFA deciding I should bail out of Kinder Morgan Energy Partners, KMP, in my USA self-managed portfolio before it gets merged into its parent. But these will be standard capital gains rather than complex gains taxed at my statuatory rates. The analyst at his firm says that the eventual Kinder Morgan C-corp is over-leveraged.

If readers want a dedicated US investment manager I can recommend my son to you privately.