Over the past couple of days I have carefully avoided commenting on a deep embarrassment with my husband's family firm, the John Lewis Partnership, operator of department stores and supermarkets mainly in Britain.

Cousin Spedham

A cousin once removed of my father-in-law, the late John Spedham Lewis, son of the founder, gave the store to its employees shortly after the end of World War II. The store since then has been run as a partnership, a model for management to allign its interests with the workers (and in case you were wondering, not with relatives of the founder.) His motives are hard to figure out. But he would be appalled at the latest news.

That does not make the Partnership any less pro-business or anti-Socialist. Its managing director, corresponding to the CEO, Briton Andrew Street, last week announced publicly that in his opinion France “is finished.” Just to make sure that his reasons were clear, he added that France under its Socialist Party government is “scelerotic, hopeless, and downbeat.”

He went on:“I have never been to a country more ill at ease. Nothing works and worse, nobody cares about it.”

He then spoke of the Eurostar train between Paris and London. “You get on Eurostar from the squalor pit of Europe, [the] Gare du Nord, and you get off at a modern, forward-looking station” [St. Pancras].

Mr Street believes that the French economy is stalled, with unemployment high, and growth hampered by excessive government intervention and distribution. Too little work is being done thanks to the 35-hour week and the month of annual vacation workers get as a matter of course. Meanwhile the French government has only just decided that next year it will no longer apply a 75% income tax on those earning salaries of more than euros 1 million .

Mr. Street's public comments, written up by The (London) Times drew a furore in response. For whatever it is worth, my husband's relative, Spedham Lewis, would never in a million years engaged in political commentary. But his reasons for giving the workers in the stores ownership of it were colored by the fear of socialism, both of the right (fascism) or the left (the Labour Government running Britain when the company shares were given to employees.)

Scelerotic Partnership

Initially, by the way, the Partnership was also sclerotic and nobody cared about it. Until about 18 years ago, shoppers at John Lewis, Peter Jones, and Waitrose, the three main brands of the John Lewis firm, were not able to pay with credit cards. The reason appears to have been that this reduced profits that were to be shared out, if marginally, and because they were not used in 1948 when the outfit started.

More recently, the Partnership pension plan which had funded an on-line grocery delivery chain called Ocado, rather than building on this potential new business, panicked. Ocado was spun off prematurely and required to stand on its own infant feet way to early.

So I think Mr Street may have blamed the government for a natural tendency by human beings, be they French officials running a railroad station to British executives fulfilling a generous mandate from a half century earlier, to fear the unknown.

Of course as members however distant of the clan, we are embarrassed indeed by the uproar, as we lived in Paris for over 15 years and put up with some of the silliness there just as we put up with paying cash when we shopped in the family stores.

*Our new Irish share pick is CRH, formerly Cements Roadstone Holdings, which gives you an idea of its business. It is suffering from the anti-deficit orthodoxy of US and Euroland governments, which have failed to invest in desperately needed infrastructure to help lift economies out of the morass they fill into during the Global Financial Crisis.

A Stock for Keynesians

However irritating François Hollande's Socialist theology (and his ghastly sex life) he is right about this. Deficit spending is what the world needs, and the way to do it is by repairing the Autobahnen in Germany and the bridges of all our Madison Counties, funding railroads and road on both sides of the Pond. That is what you do to take an economy out of recession efficiently. It is called Keynesiansim in polite society.

CRH is Irish and huge, with a $17 bn market cap. It has 6 business lines, 3 each for the US and Europe for: materials, products, and distribution. The company makes and distributes and sells primary materials: cement, aggegates, concrete, asphalt-bitumen, and lime (used in contruction as well as in agriculture and chemical production.) It does some business with Israel and Turkey, and also India and China which count as part of the Europe side.

In 2013 on a mere 1% drop in sales to euros 18 billion, CRH fell into the red to the tune of euros 296 mn, vs a profit of euros 538 mn in 2012. Given our neo-conservative orthodoxy, it is worth noting that sales in the Americas rose 6% thanks to more distribution, despite the fall in materials sales of 3%. That is a harbinger of what has now spread to Europe. If demand picks up so will gross and operating margins at CRH.

Meanwhile the co. is loaded, with plenty of cash and lots of liabilities it can call in from its customers. It kept its dividend at 60 eurocents for 2013 (down from 62 cents in 2012) despite the profit loss and the fact that it didn't earn the payout. (It lost 54 eurocents/sh according to Reuters.) Even after the dividend it has euros 2.54 bn in cash and short term investments plus accouhts receivable of another 2.06 bn and invetory of 2.25 bn. It has euros 4.58 bn in long-term debt and other liabilities of 964 mn plus euros 1.166 bn of deferred Irish taxes.

And it has a new broom Irish management. In Jan. Albert Manifold became the new CEO after a 32 year veteran CRH head, Myles Lee, retired. He began a strategic review to work out what to divest from the CRH panoply, aiming to raise euros 1.5 to 2 bn. But he also got into M&A adding euros 130 mn of new operations

Analysts hate the stock which is rated hold, equivalent of sell in the real world. Institutions also boycott CRH, with less than 10% of the shares outstanding in their coffers at the close of 2013, but probably higher now.

In H1 there was plenty of evidence of a turnaround. Sales rose 4%, up 7% in Europe and again up 1% in the Americas. This produced earnings before interest, taxes, depreciation, and amortization (EBITDA) up 27% over H1 2013, that lousy year thanks to strong operating leverage. Without the new operations, sales were still up 5% overall on a life-for-like basis. Manifold also set a target of in-house cost savings of euros 100 mn for this year, and in H1 achieved 45 mn of the total target.

Net profit came in at euros 61 mn vs a loss of 71 mn the year before. Of the total new profits, euros 17 mn only came from disposals.

CEO Manifold forecast that “economic indicators continue to be positive in the Americans while in Europe we have seen some easing of trends” downward. He said that without major weather messes or “market dislocations” H2 2014 would beat last year's level of EBITDA of euros 1.08 bn.

Yesterday CRH set out to sell its clay brickwork division to merging Lafarge-Holcim, in a mega-merger which the European Union and Switzerland will not permit without divestitures. This pending deal is the first under CRH's new mangement. CRH wants to buy their subs in Canada and Brazil, plus Lafarge Tarmac, of Britain. The valuation of the brickworks is about euros 750 mn and the total of assets on the block form LH are about euros 5 bn. CRH will share them out with other companies from Latin America or Turkey likeVotarantim, Argos and Sabanci.

CRH also landed an option to acquire the majority of its 21% French partner Samse, a “builders' merchant” which is a very profitable listed company. Both these deals may well require funding beyond what even CRH has in house. That means the company itself is now looking for a private equity partners, not necessarily or even likely to be Irish.

US Powerhouse

In the US, CRH is in 44 states, with greater prowess in the east (nearer Ireland). It sells to roofing and siding contractors in the private sector, wnich depends on housing construction, which is where being supplier of choice may soon pay off.

It is one of the few vertically integrated firms in US aggregates, from quarry to market. It also is a leader in highway repair (with asphalt and readymixed concrete.) The sector here is very diffuse and only 30% of aggregates market, only a quarter of asphalt, and under 20% of concrete comes from the top 10 in the US. One of them is CRH.

Americas also includes Argentina and Chile, which I have little hope for. I like CRH for the USA.

In Euroland it is cement top dog in Finalnd, Ukraine (oy), the Basque country, Aegean Turkey, north east China (oy). Cement is a local business. But I expect the deals with Lafarge-Holcim to fill in some gaps.

The stock is widely held by retail investors in this country and Canada who own 40% of the shares out; Irish investors own 4%. Most of the rest is owned by Europeans and British.

CRH will update on Nov. 11 with an H2 interim.

*First the good news. A billionaire, Patrick Drahi (not Draghi; that's the central banker) wants to buy enough shares of Portugal Telecom SGPS to break up the deal for PT to take over Oi in Brazil, to combine its Lusitanian operations with his own Altice SA cable-telco business in Portugal. At issue according to the wire services (which seem to have met the same talkative source) is how much PT will still owe for the breakup. PT is a prime creditor for the bankrupt Rioforte Investment Luxembourg arm of former Banco Espirito Santowhich owes PT euros 897 mn. If a Portuguese national rather than a Brazilian company are the creditors, and moreover one run by a British-educated Muslim from Mozambique originally, the Portuguese Central Bank will try harder.

Drahi Not Draghi

Senhor Drahi wants to merge PT with Cabovisão, a cable TV network offering quadruple play (TV, Internet, land and cell phone, and data), and Oni Telecomunicações, both Portuguese companies. Altice has been on a spending spree making offers for SFR in France to merge it with Numericable, another cable TF firm. This was protested by other French mobile firms, but the Paris govt let it go through. (A commentary on French good senses, despite Mr. Street's rant quoted above.)

Unwinding the PT-Oi deal would also allow Oi to get into the acquisition game in Brazil which it has been excluded from because of the impact of the PT cash shortfall. It would like to figure out how to buy into TIM Telecomunicações (no. 2 in Brazil) which Telecom Italia wants to divest.

Altice stock is up today in Luxembourg, where it is HQ'd while PT is up also. For the bidder stock to rise is contrary to what normally happens where there are hints of a deal.

Altice makes sales in France, Portugal, the Dominican Republic, Israel, and French overseas territories (DOM-TOM) but it doesn't actually have profits. This matters because Senhor Drahi likes to buy telcos with Altice shares. Altice has no ADRs and doesn't trade in Portugal or France, but it does trade on the wide-open Amsterdam exchange as ATC. It lost euros 220 mn in Q2 on sales of euros 837 mn. Sales were nearly triple prior year levels, but after tax losses at 41.4b mn were up 25-fold mainly because of huge asset purchases.

This guy makes John Malone, another contender in Euroland, look safe.

*Some bad news. Shellshocked by the impossibility of continuing to track or trade our Chinese AIM shares, I won't buy new illiquid stocks. So the first idea considered, a Norwegian fund investing in renewable energy, was vetoed by me. It was recommended by our Austrian friend Max Deml, in Oeko-Invest, a newslerter with which we trade ideas. Scatec Solar AS was ipo'd on the Oslo stock market where it trades as SSO only on Oct 2. But we cannot buy it as there is no ADR at all, and it doesn't trade on accessible European markets. The only way to buy in would be via its Tokyo-listed minority shareowner, Itochu,which is a very large company with lots of other businesses, but does have an ADR, ITOCY (cusip 4657171-6).

*Things are barely better with Martin Ferera's stock tip, Ag Growth International, which trades in Toronto as AFN, where it listed 4 years ago. It is not a fund, but also operates a bit like one as it has grown by buying into grain handling equipment since it was founded a decade ago. Acquisitions have ranged from conveyor belt makers to aeration equipment, from bins to livestock management, from grain-drying to augers (whatever that may mean.) Again the issue hardly trades Stateside, but more importantly, the portable temporary storage facilities which attracted Martin to the share in the first place are only a small part of the conglomerated businesses. Moreover the manufacturing arm of Ag, Franklin, is likely to have to invest in 3D production systems to keep its edge in making loading systems for farmers and grain storage firms. There is a US version of AFN, AGGZF, which traded under 800 shares (worth US$24,000) on average in the last 10 days. It pays 40 loony cents/yr in dividends and is covered by S&P Capital IQ but not rated by it.

*For whatever it is worth, my former AIM stocks from London have been moved to my US account at E-trade but daily price changes are not yet showing, if indeed they ever will. In Singapore, Global Logistics Properties was one of the few shares to rise in a Hong Kong-related selloff, an argument for logistics stocks like China Chaintek, one of the ones we can no longer trade, CTEK:AIM.

Where's Modi?

*Nokia is down 3% today because its Chennai plant is being shuttered Nov. 1 because an Indian tax dispute could not be settled and an asset freeze kept NOK from selling the plant. The tax dispute dates from before all other NOK cellphone manufacturing assets were transferred to Microsoft. Foreign investors do not expect Narendra Modi to make India more business friendly in practice, if not in rhetoric.

*Another insider at Irish Alkermes, Shane Cooke, its president, has acquired 19,000 shares, the 2^nd to buy heavily in the last week, according to a filing with the Dublin Stock Exchange. The value is ~$750,000. While insiders sell for many reasons, they buy for only one: to make gains.

*Focus on bribery by Sanofi has taken the heat off GlaxoSmithKline. SNY reported to US stock regulators that it is under investigation for corruption in Kenya and East Africa drug selling as well as lesser sins than GSK's in China.

*BNS analysts like Veresen's buy of the Ruby pipeline more than its “past deals” as it feeds into Jordan Cove. This despite FCGYF having paid 14.2x EV/EBITDA (enterprise value divided by EBITDA), which the analyst reduces to 12x for the tenure of the contract and longer.

“In an era where it is more and more difficult to build anaything greenfield, the value of existing infrastructure keeps rising. The value of Ruby in 2021 will likely be higher than it is today if it follows the trend [of] other long-haul gas pipelines in the US.” So “despite the expensive headline mutliple, in our view Ruby does not detract from shareholder value and could add to it if Jordan Cove moves ahead.” Jordan Cove is in Oregon and it would export LNG to Asia markets, fed by pipelines like Ruby. The sell-side analyst has a 1-yr price target for the Canadian share of C$19. It is about C$14 now, depending on the loony exchange rate.

*CAE signed a historic flight crew training contract with Japan Airlines which will operate a 50:50 jv all over nothern Asia on behalf of its own and other airline pilots and crews, excluding ones for China airlines. To begin operation next April, the initial contract will involve 12 CAE simulators.

*Cameco and its strikers have reached an agreement for a 4-yr contract covering the McArthur River and Key Lake mines which United Steelworkers (union) members approved. It will up wages by 12% over the period at the uranium mines. CCJ is down on the news.

I Don't Want To Be Alone

*Gen Joe Shaefer in The Investor's Edge revealed that the fund he manages, Standord Wealth Mgm, has also invested in Allianz Versicherung. AZSEY, a giant German insurer supposedly suffering from life-threatening exits from its Pimco fund sub in the US.

Fund news:

*Writing in Loomis Sayles' new LandScape blog, Bianca Taylor notes that in Mexico last year “5 constitutional reforms were implemented: labor reform,e ducational reform, teleocmmunications reform, political reform, and energy reform.” “In addition, 3 other important reforms were made under ordinary law: bankruptcy reform, financial services reform, and fiscal reform.” So the fund manager firm is “positive about Mexico's progress” and it has become”one of our top foreign holdings.” Ours too. We own two Mexico funds, Mexican Equity and Income, MXE, and Fibra Uno, a REIT, FBASF. Plus one stock, Mexichem, MXCHY.

She warns that implementation still is a risk.

*Ms Taylor also credits Brazil with “a Modi moment.” I think she is wrong both in her assumption regarding round II of the Brazil poll and in her assessment of Narendra Modi, who is all hat and no cattle (sacred cows.)

*New Ireland Fund has too much money in Ryanair which managed to break the wings of two planes taxiing this morning in Dublin. IRL.

*Mongolia Growth Fund is up over 6% today despite the trouble getting the government and Rio Tinto to agree on the terms for expanding the country's Oyo Tolgu mine