10% Yield And 17 Straight Hikes From A Stable Business

The article below was prepared together with authors Philip Mause.

Sprague Resources, L.P. (SRLP) traded recently at $27.00. It pays a $2.67 distribution for a yield of 9.9%. This is a company with a stable business and a yield that is well covered. SRLP has increased its distribution for 17 quarters in a row.

The Business

SRLP has three primary businesses:

  1. The largest business is the transportation, storage, wholesaling and retailing of refined products. Although a substantial amount of gasoline is handled, a large portion of the business involves distillates which are used as heating oil in the areas that SRLP serves. SRLP takes title to the refined products, protects itself with hedges, and then sells into the wholesale or retail market. SRLP has strategically located terminals and other facilities in the Northeast U.S. (including New York City and Long Island) and in Quebec. This business generates some $164 million a year in gross margin.
  2. The second business is natural gas wholesale marketing. SRLP enters into contracts with suppliers and transporters and sells to distributors and large customers. This business generates some $67 million a year in gross margin.
  3. The third business is materials handling. SRLP receives and stores various materials – asphalt, coal, heavy equipment – in areas near its terminals. It does not take title to the materials but charges fees for storage and other services. This business generates some $51 million a year in gross margin.

Therefore, the business is fairly well diversified.

SRLP has a strong market power with key geographically strategic locations in major harbors, giving it a competitive advantage in this market. While the heating oil market is not growing, it’s also not attracting new entrants and SRLP’s strong market position gives it a “wide moat” in this business. In addition, even if the space could be found, it would be very difficult for a new entrant to obtain the environmental and other permits necessary to open large new terminal facilities in the key harbors which SRLP dominates.

SRLP also has been expanding by acquiring new storage and terminal facilities and diverse businesses. It recently acquired Coen Energy which provides fuel and delivery services to drillers in the Utica and Marcellus areas. This business tends to produce peak revenue in summer months which should tend to mitigate the winter situation, in case of a warm winter.

Understanding The Downstream Business

It’s important for investors to understand the advantages and disadvantages of what is often called the downstream business. SRLP’s natural gas and refined businesses are definitely a solid business for many reasons which include the fact that they are closer to the end user than they are to the producer.

SRLP’s businesses do not really depend upon the amount of drilling activity in the United States. If for some reason US drilling activity was to decline dramatically and US-produced oil was to be replaced by imports, SRLP’s refined products business would continue as before. The same is true of the natural gas business as long as US production satisfied demand. So if – for some reason, LNG exports were to decline due to world market conditions and that results in less drilling activity – it would not necessarily affect SRLP’s natural gas business.

On the other hand, downstream businesses are subject to year-to-year variation due to weather patterns. In a very warm winter, sales volumes (and prices) – which depend on the demand for heating oil – will almost inevitably decline. SRLP can hedge (although perhaps not perfectly) against price declines but it would still be subject to the impact of lower volumes.

Another factor to bear in mind is seasonal variation in financial performance. SRLP earns most of its money in the winter – the quarters ending December 31 and March 31. For that reason, quarterly numbers must be evaluated either on a year-over-year basis (YOY) or as part of a trailing twelve month (TTM) analysis. For example, SRLP actually had negative distributable cash flow (DCF) in the quarter ending June 30 but this was a slight improvement over the year-ago quarter and cannot be taken as a harbinger of gloom.

Another factor which affects some downstream operators is very important in an analysis of SRLP’s business – that factor is location advantage.

SRLP’s terminals – actually tank farms – are located in harbors and other locations that permit delivery by sea or other means to centers of demand. In the Northeast, siting restrictions are such that it’s very unlikely that a competitor could get approval to build a competing facility in the area. Thus, SRLP has an important “the only game in town” advantage which likely gives it pricing power and stability in volume. If SRLP were to abuse this advantage, regulatory action could – of course – result. But within a certain range, SRLP likely has some of the aspects of monopoly power.

Recent Results

We have calculated SRLP’s results for the 12-month trailing ending June 30, 2018. Net sales were $3.5 billion, net income was $45.3 million, and adjusted EBITDA was $121.0 million. DCF was $76.3 million. SRLP has a unit count of 22.7 million.

SRLP is projecting full-year results at an adjusted EBITDA of $120-140 million (the wide range illustrates the weather pattern variation discussed above). Using this range, we can estimate that DCF will be between $72 and $99 million, or $3.17-4.36 of DCF per unit. The most likely number is probably about $80-85 million or a bit above TTM DCF. Using just $80 million in projected DCF (or $3.52/share), SRLP is trading at a very attractive valuation of 7.6 times DCF.

Leverage

Because of its recent growth, SRLP has improved its debt/EBITDA leverage ratio to 3.1 from 3.2 a year ago. This is a relatively low ratio for the MLP space and limits the impact of interest rate hikes. SRLP does hold significant amounts of inventory in its storage facilities and terminals but it uses hedging strategies to minimize risk due to a sudden change in prices.

Distributions

Based on annualizing the most recent distribution, SRLP is generating annual distributions of $2.67 per unit, which provides a distribution coverage of 104% for the 9.9% yield.

On July 26, 2018, SRLP declared its new quarterly distribution of $0.6675 per unit ($2.67 per unit on an annualized basis) representing a 2% increase over the distribution declared for the previous quarter, and an increase of 10% over the second quarter of 2017, which is significant. SRLP has been increasing distributions every quarter for 17 straight quarters in a row.

Although readers should note that the magnitude of distribution hikes may slow down in the future because SRLP is now in high “Incentive Distribution Rights” (or IDR) territory. IDR’s start at 15% of distributions over 47.375 cents per quarter, increase to 15% of distributions over 51.5625 cents per quarter and top off at 50% of distributions over 61.875 cents per quarter. We are now in 50% territory so each additional penny per quarter will become more expensive. Still, the current distribution is close to 10%.

SRLP is providing full-year distribution coverage guidance in the 110% to 130% range (again a fairly wide range this late in the year) so there is probably some room for future increases in distribution over the next 12 to 24 months.

SRLP Is Still Opportunistic

We initially recommended SRLP on June 28, 2018, when it was trading at a price of $23.70/unit through a report posted here on Seeking Alpha entitled: Buy This 11% Yield Before It’s Too Late – Growth And 40% Upside Potential From This MLP.

Today, SRLP is trading at $27.00, or 14% higher, in addition to the juicy dividend yield of 11% that investor bought at the time. So is the price still opportunistic?

SRLP has to be viewed in the context of its business. It is not as subject to drilling risk as upstream MLPs but it is much more subject to “warm winter” risk. Over three to five years, SRLP has been a very stable generator of cash flow despite the fact that the weather has produced significant variation. Not only this, but it has been able to hike its distribution “non-stop” for the past 17 quarters in a row.

SRLP is currently trading at 7.6 times DCF which is very cheap for the industry and is opportunistic considering SRLP’s strong market position and solid growth track record. The discount from a more reasonable price level may be due to the fact that heating oil is considered a low or no growth business. It ignores the fact that SRLP has been able to grow by expansion within its core business and aggressive diversification into other adjacent businesses. It also ignores SRLP’s “wide moat” in the form of the premium value associated with its geographically strategic terminal locations. Given these strengths, SRLP should trade at a level of at least 10 times DCF per unit which would imply a price of $35.5 or 31% upside from the current level.

If SRLP hits the midpoint or higher on its range, it would likely trade up from here. At the current price, SRLP is still a bargain with unit holders being paid a relatively safe distribution to wait.

Recommendation

SRLP is a strong buy here. This is an especially attractive investment for investors who are heavily committed to upstream or midstream MLPs because its risks are not correlated with the risks of those MLPs. The stock still provides investors with the opportunity to lock in a very juicy yield of close to 10% and the potential to achieve solid capital gains.

A note about diversification: To achieve an overall yield of +9% and optimal level of diversification, at High Dividend Opportunities, we recommend a maximum allocation of 2-3% of the portfolio to individual high-yield stocks such as SRLP and a maximum of 5% allocation to high-yield exchange-traded products (such as ETF, ETNs, and CEFs). For investors who depend on the income, diversification usually results in more stable dividends, mitigates downside risk, and reduces the overall volatility of their portfolio.

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Source note: All tables and images are from the respective companies’ websites unless otherwise stated.

Disclosure: I am/we are long SRLP.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Cyber Saturday—China’s Chip Hack, Amazon and Apple’s Denials, Google’s Trust Reversal

Rope-a-dope. The U.S. Justice Department charged seven Russian military intelligence officers with a number of hacking-related crimes on Thursday. The Russian spies allegedly ran a disinformation campaign—including wire fraud, identity theft, and money laundering—that targeted hundreds of athletes and anti-doping officials in retaliation for the exposure of a Russian state-sponsored doping program. “All of this was done to undermine those organizations’ efforts to ensure the integrity of the Olympic and other games,” said Assistant Attorney General for the National Security Division John Demers at a news conference.

A piece of the puzzle. Jigsaw, an Alphabet unit that builds security, privacy, and anti-censorship tools, has released a new app called Intra. The app is designed to block DNS manipulation attacks, a censorship tactic that certain nation-states, like Venezuela and Turkey, have used to intercept and block or redirect website visits by their populations. Jigsaw said the tool will be embedded by default into the next version of Google’s mobile operating system, Android Pie.

No fly zone. Google CEO Sundar Pichai paid a quiet visit to the Pentagon following the tech giant’s decision not to renew a contract supplying AI tech to a military program, The Washington Post reports. Pichai supposedly sought to smooth over tensions after his company backed out of the defense deal, which involved analyzing video captured by drones. Thousands of employees had objected to the program, dubbed Project Maven.

Please re-enter password. California has signed into a law a bill that will require manufacturers of Internet-connected devices to create unique passwords for each device made or sold in the state. In other words, manufacturers of said devices can no longer use generic, pre-programmed passwords like “admin” or “password” to secure their products. If they do, customers have the right to sue for damages.

From masterpiece to master pieces.

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Nintendo Switch Update Rumors, and the Rest of the Week in Games

This week is all rumors and magic, as we unpack some unsurprising (if unfounded) news about Nintendo and some legitimately thrilling news from Warner Bros. For fans of legacy franchises, this week’s Replay will be exciting and maybe a little bit confusing. Let’s go!

The Nintendo Switch Might Be Getting an Update Next Year—Try To Act Surprised

Nintendo has a handheld habit, the same kind you see in modern cell phone developers: iteration. Once the company releases a new portable console, you can bet that in a year or two there’s going to be a new, sleek hotness—followed by a newer, sleeker hotness, with incremental upgrades continuing until the true next-generation device rolls around.

So it’s no surprise that the Switch—which is at least part handheld, and thrives on its cool-gadget vibe perhaps more than any other Nintendo product—might have an update coming. According to a report by the Wall Street Journal, Nintendo is planning an updated release as soon as next year, though any new features remain unclear.

Mega Man is Coming to Live Action Because … Reasons

The games-to-video beat continues to be a weird one. The latest news, from Capcom, is that Mega Man, the delightfully cartoonish series featuring a small blue robot boy shooting lasers, is going to get a live-action movie, directed by Henry Joost and Ariel Schulman, known for Paranormal Activity 3 and 4.

Mega Man, for those who aren’t exceptionally clued into the franchise, is a weird choice for live-action. An animated movie? Sure, I could see that. There have been a few cartoons, and while they weren’t necessarily good, they were at least sensical. It could be weirder: Capcom could also be working on a Monster Hunter movie. Oh, they are? Starring Milla Jovovich? Huh.

Harry Potter Fans Have Something to Look Forward To

Harry Potter fans have been dreaming of a finer gaming future for some time, and it looks like they might get it. According to leaks that several journalists are corroborating, Warner Bros. is working on an open-world Harry Potter role-playing game, dubbed Magic Awakened. The title, which leaked out via a focus group, ticks most of the usual boxes for fans: letting them create their own character, learn to be a wizard at Hogwarts, and presumably save the magical world from some sort of magic fascists.

The Boy Who Lived has had a rough history in games, with nothing really doing justice to the imaginative potential of the books and films. And with J.K. Rowling seemingly spending her time on Twitter explaining how Hermione is actually a flapper from the 1920s, games might be the great hope wizarding fans need.

Recommendation of the Week: Dishonored

While we’re talking magic, now’s a good time to revisit one of my favorite magic systems in games: the powers of the Void in Dishonored. These abilities, granted by trickster god/emo cutie The Outsider, serve an inventive, fascinating playstyle that makes Dishonored‘s Thief-style sneaking really sing. Teleport, possess your foes, freeze time. These powers, notably, can be used for both stealth and utter chaos, as the player desires. I always go stealth, but you might find chaos more fun. The Outsider certainly won’t mind.


More Great WIRED Stories

Cloud misconfiguration: The security threat too often overlooked

A survey of 300 IT professionals by Fugue, a cloud infrastructure security provider, reveals that most enterprises are vulnerable to security events caused by cloud misconfiguration, including data breaches and system downtime events.

From the report:

  • Nine in ten have real concerns about security risks due to misconfiguration, and less than a third continuously monitor for them.
  • Teams report a frequency of 50 or more misconfigurations each day, yet half of the teams only review alerts and remediate issues on a daily—or longer—timeframe, leading to dangerously long infrastructure vulnerability periods.

Of course, this report (like any vendor-sponsored report) is self-serving. But the message reflects something that I’m seeing a lot today in the real world—and it’s scaring the hell out of me.

Misconfiguration means that the public cloud server instances, such as storage and compute, are configured in such a way that they are vulnerable to breaches. For example, the National Security Agency recently had an embarrassing moment when someone was able to access secure documents from its Amazon S3 instance with just a browser. It was a classic example of misconfiguration, defeating the default configurations that are secure be default.

While this seems like a “duh, dummy” moment, the reality is that public cloud configuration is complex, takes specialized training, and if not done right means any security systems you layer on top of your cloud can’t stop hackers running away with your data.

So, what are you to do? Do these three things, in this order:

  1. Understand that configurations are part of security. It’s often not considered.   Indeed, I’ve had to explain the importance of these 20 times to clients in the last six months, which means that they have not been practicing holistic security.
  2. Use a third-party security tool that can look at configurations constantly. That way, you are not dependent on what native cloud native is telling it; instead, it provides a constant independent check and alerts you when things are misconfigured.
  3. Engage outside security testers to ensure that everything is configured correctly. I’ve often found that these audits do find things that a client missed.

The complexities of cloud computing, and the chance of human error, will bite you in the butt. So don’t skimp on security planning before deployment nor on security validation after deployment.

Lenovo shares tumble, investors fret over impact of chip hack report

HONG KONG (Reuters) – Shares in Lenovo Group Ltd and ZTE Corp plunged on Friday, hurt by concerns their sales could suffer in the wake of a Bloomberg report that U.S. companies’ systems had been infiltrated by malicious computer chips inserted by Chinese spies.

The Lenovo logo is seen in this illustration photo January 22, 2018. REUTERS/Thomas White/Illustration

Bloomberg Businessweek cited 17 unidentified sources from intelligence agencies and business that Chinese spies had placed computer chips inside equipment used by about 30 companies and multiple U.S. government agencies, which would give Beijing secret access to internal networks.

Apple Inc and Amazon.com Inc, cited as U.S. companies that had been subject to the attack, denied the report. Super Micro Computer Inc, which Bloomberg said was the supplier of server boards that contained the malicious chips, also denied the report.

The report did not say any Chinese tech firms were involved in the attack.

But Lenovo shares tumbled 18 percent while Hong Kong-listed shares of Chinese telecommunications equipment maker ZTE Corp fell 11 percent in what analysts and market participants said was response to fears that consumers and businesses may become reluctant to buy Chinese tech goods.

FILE PHOTO: The logo of Chinese telecommunications equipment maker ZTE is seen outside the ZTE R&D building in Shenzhen, China April 27, 2016. REUTERS/Bobby Yip/File Photo

Lenovo said in a statement: “SuperMicro is not a supplier to Lenovo in any capacity. Furthermore, as a global company we take extensive steps to protect the ongoing integrity of our supply chain.”

ZTE declined to comment.

“Lenovo has fallen more than others because the United States represents a significant chunk of their business,” said Linus Yip, chief strategist at First Shanghai Securities.

“The stock had also risen a lot in recent months… so the price is at a relative high point, the news of uncertainty may prompt some to sell and profit.”

The IT hardware sector subindex on the Hong Kong stock exchange was down 5.5 percent, underperforming a 0.4 percent dip in the benchmark Hang Seng index.

The Bloomberg report said that a unit of the Chinese People’s Liberation Army infiltrated the supply chain of Super Micro Computer to plant the malicious chips.

China’s Ministry of Foreign Affairs did not respond to a written request for comment. Beijing has previously denied allegations of orchestrating cyber attacks against Western companies.

Reporting by Sijia Jiang and Donny Kwok in HONG KONG and Yimou Lee and Jess Macy Yu in TAIPEI; Editing by Miyoung Kim and Edwina Gibbs

Cloudera, Hortonworks Stocks Soar as the Big-Data Rivals Announce a $5.2M Merger

Remember big data? The once unavoidable buzzword has become just another sector of the enterprise software industry that is already showing signs of maturing. Case in point, the $5.2 billion merger of Cloudera and Hortonworks.

The merger’s announcement put some needed life into the shares of both companies. Cloudera’s stock rose 26% in after-hours trading on the news, while Hortonworks rose 27%.

Both companies were pioneers in Hadoop, an open-source platform that could analyze data in ways that scaled up easily—a necessity during a time when the availability of data was increasing exponentially each year. Cloudera and Hortonworks were among the startups focused on Hadoop that found enough success early on to go public when the flow of tech IPOs had slowed down.

But while revenue from both companies have been growing—Cloudera’s 1,300 customers generated $411 million in the past year, while Hortonworks’ 1,400 clients brought in $309 million—losses at both have remained large.

Hortonworks debuted with an offering price of $16 a share in December 2014, while Cloudera went public at $15 a share in April 2017. Both stocks enjoyed initial rallies typical for tech IPOs as the trading desks of underwriters labor to ensure a smooth launch. But both have underperformed in 2018. At Wednesday’s close, Hortonworks up 4% this year and Cloudera down 2%, compared with a 15% gain in the Nasdaq Composite Index.

On a conference call to discuss the merger, Cloudera CFO Jim Frankola said the merged company will save $125 million in annual costs and generate more than $1 billion in revenue by the end of 2020. In addition, the companies said, the combined companies will be better positioned to serve their existing customers while competing for a bigger share of their market.

Cloudera shareholders will own about 60% of the merged company, while Hortonworks will own 40%. The combined value of the company as of Tuesday’s market close was $5.2 billion, they said.

U.S. judge says China's ZTE violates probation; extends monitor's term

(Reuters) – A U.S. federal judge on Wednesday issued an order finding that China’s ZTE Corp violated probation imposed in March 2017 when the company pleaded guilty to illegally shipping goods to Iran despite U.S. sanctions.

FILE PHOTO: The logo of China’s ZTE Corp is seen on a building in Nanjing, Jiangsu province, China, April 19, 2018. REUTERS/Stringer/File Photo

In his order, U.S. District Judge Ed Kinkeade in Dallas extended until 2022 the term of a monitor he appointed to assess the telecommunication equipment maker’s compliance with U.S. export control laws. The monitorship originally was scheduled to end in 2020.

The probation violation cited by the judge was the same conduct the U.S. Department of Commerce penalized in April by imposing a ban on U.S. companies selling goods to ZTE.

The Commerce Department said ZTE made false statements about disciplining 35 employees involved in the illegal shipping of U.S.-origin goods to Iran.

The ban was lifted in July after ZTE reached a settlement with Commerce.

Reporting by Karen Freifeld; editing by Bill Berkrot

Aurora Cannabis May Be About To Go Ballistic

source: Seeking Alpha

Aurora Cannabis (OTCQX:ACBFF) has a lot going for it as the macro elements in the industry are favorable to the company, even as its strategy is paying off for shareholders, evidenced by its latest quarter, where it produced some great numbers.

With its large production capacity, the upcoming legalization of cannabis in Canada, the announcement it will soon be listed on a major U.S. exchange, its improved performance, and growing interest from large companies outside the sector, I believe Aurora Cannabis could at least double by the end of 2018.

Latest numbers

Revenue in the 2018 fiscal fourth quarter came in at $19.1 million, up 19 percent sequentially, and 223 percent year-over-year, beating the $18 million in revenue generated for all of fiscal 2017.

Full-year revenue was reported at $55.2 million, up over 200 percent over 2017, with revenue from cannabis accounting for $42.8 million of that, a gain of 169 percent.

Medical cannabis gross margin jumped to 74 percent, up from the 58 percent in the same reporting period last year. The company attributed that to higher dried cannabis prices and a improved product mix that included more oil products that enjoy higher prices. Oils sales accounted for over 31 percent of revenue in the reporting period, up 20 percent from the prior quarter.

The average net selling price of dried cannabis per gram for full-year 2018 increased from $6.47 last year to $7.65 per gram.

Cash costs of sales and production fell by 11 percent year-over-year.

The number of active registered patients soared by 164 percent from fiscal 2017.

Although the numbers didn’t include MedReleaf because it was acquired near the latter part of July, the company did add them in to give an idea of what overall results really were. Including MedReleaf, revenue would have surpassed $33.1 million.

Taking into account those numbers and the boost coming from recreational pot sales in Canada starting on October 17, it’s obvious the first quarter of fiscal 2019 is going to be a huge one for Aurora.

Also significant is the fact the company is starting to scale production at the most opportune time. Management said it has adequately prepared to supply the growing demand for medical and recreational marijuana.

Improved gross margins, lower costs, and increased demand are all coming together at a time the company is adding production capacity.

Cost per gram

The cost per gram in the latest quarter was a mixed bag primarily because of the weak results coming from CanniMed, which has had efficiency problems before it was acquired by Aurora.

Consequently, in the fourth quarter cost per gram for dried cannabis was up by $0.17. Even with that, on “a standalone basis, Aurora’s cash cost per gram declined to $1.35 from $1.53 in the prior quarter.”

Since taking over CanniMed, the company has continue to make improvements, stating in the first fiscal quarter of 2019 it has already increased yield at CanniMed by 30 percent. That will drive down cost per gram going forward.

The major catalyst for overall improvement on a standalone basis was its Mountain facility, which experienced lower utility costs during the cold months while boosting productivity.

The company guided for cash costs to produce a gram to drop “well below $1” once Aurora Sky comes online and is operating at full-scale.

Implications of major listing and recreational pot

In the short term almost all Canadian-based cannabis stocks are going to enjoy the benefit of the upcoming legalization of pot in the country. In the case of Aurora Cannabis, not only will it be a good investment for traders in the short term, but even a better one for the long term when considering falling costs and increased production capacity.

Add in the expected listing on a major stock exchange in the near future, and that should further leverage the results of the company in anticipation of a lot more interest from investors.

One other factor that deserves mention is the reported interest by Coca Cola in the infused drinks market. While it’s probable these were nothing more than early exploratory talks, the most important thing to take into account is the growing interest in large companies outside the cannabis sector.

Of the many cannabis companies, I see Aurora Cannabis being one of the most desirable partners sought after when considering its future production capacity and its growing global footprint. In the long term its international sales will probably far surpass Canadian sales. This is huge when considering the drink, tobacco and big pharma companies are looking for new market sectors to take a position in. Very few offer what Aurora Cannabis does in regard to potential scale or reach.

Once it lands some partnerships with big businesses, it’ll be another huge catalyst that isn’t priced in at this time. I expect as demand cannabis demand climbs, Aurora Cannabis will be on the top list of companies looking to enter the market and secure deals with reliable partners that can deliver product consistently at scale.

Conclusion

When taking into account listing on a major exchange, sales from increased demand from recreational pot in Canada, expanding global footprint, improved gross margins, soaring sales, declining costs, and interest from large companies to enter into partnerships with them, I see Aurora Cannabis having a lot of room to boost its share price in the near and long term.

The key is it has been able to position itself about as good as it can to take advantage of the market conditions presenting themselves to the company. Considering it has been able to perform so well while growing organically and via significant acquisitions, it’s impressive to see the results it’s starting to produce; they’re going to get a lot better.

As good as the short-term outcome will be as a result of increased sales from recreational pot in Canada, the real value of Aurora Cannabis is its transition to high-margin products, medical cannabis, and its strong entry into important international markets.

With capacity being built out and costs dropping, it’s positioned to win in almost any circumstance that presents itself to the company. It could take on partners, land more deals outside of Canada, rapidly scale production at some of its facilities, or make some more strategic acquisitions.

With its expected upcoming listing, legalization of recreational pot in Canada, and supply that is ready to meet its obligations, I believe the company could double its share price by the end of the year. If it lands some big partnerships during that time, it could even surpass that lofty potential in the near term.

Even so, the value of Aurora Cannabis is its long-term potential. It’s one of the few cannabis stocks that could be bought and held in my opinion, without fears of it plummeting in value.

I believe publicly traded cannabis companies have a lot more room to run, and Aurora Cannabis is one of a few of those companies that should be able to do so sustainably.

For the reasons mentioned above, I think it’s time to get into Aurora Cannabis before it soars higher. In the not-too-distant future I see $10 per share being far in its rear view mirror.

Disclosure: I am/we are long ACBFF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

New cloud storage services for Microsoft Azure at Ignite 2018

At its Ignite 2018 conference, Microsoft announced Data Box hardware appliances that will allow cloud ingestion to tens or hundreds of TB, the availability of its Avere vFXT cloud NAS and cloud storage based on NVMe flash.

The first of these, Azure Data Box, allows migration of data in volume to the Microsoft cloud through a series of physical appliances. This is the Redmond giant’s response to Amazon Web Services’ (AWS) SnowBall Edge. It allows enterprises to dump large quantities of data into Azure without having to traverse the WAN.

The Data Box offering comprises two appliances deliverable by rapid courier service, dubbed Data Box and Data Box Heavy, with capacities of 80TB and 800TB useable respectively.

The appliances come ready to connect to the enterprise network by multiple Ethernet interfaces that range from 10Gbps to 40Gbps. The first comes in ruggedised server format while the second comes as a mini rack on wheels. The two appliances offer file access as well as via Microsoft’s Rest Azure Blob application programming interface (API).

Once Data Box hardware is connected to the network and configured, it is possible to transfer data in volume, including backups, archiving and unstructured data. When the transfers are completed the appliances are couriered back to Microsoft, which puts the content into Azure Blob or File.

Prices are €210 for the standard Data Box service and €1,686 for the Heavy version, with a credit of 10 and 20 days respectively for data transfer.

Every day on top of those 10 or 20 days used for filling the appliances is billed at €12.65 and €42.17 respectively. To this cost, delivery charges must be added (€95 for Data Box and €1,500 for Heavy).

The Data Box offer also includes two connected appliances – the Data Box Gateway and Edge. As the name suggests, the Gateway allows data transfer to Azure using protocols in use in the enterprise. It supports server message block (SMB) and network file system (NFS) as ingest protocols to Azure Blob Storage.

The Data Box Edge has similar functions to the Gateway device but is conceived of as a local cache for internet of things (IoT) applications. The appliance, which is in the form of a 1U Dell-produced server, has a small amount of local storage capacity to collect, for example, collected telemetry data and process it locally.

In this way, Microsoft aims to support Azure Machine Learning on the local device with specialised field-programmable gate array (FPGA) cards made available for Data Box Edge to support this.

The FPGA card is the outcome of developments in Microsoft’s Project Brainwave, whose mission is to allow real time machine learning functions. This is similar to Google’s tensor Processing Unit, which is also dedicated processing hardware for artificial intelligence (AI).

Microsoft has not explained if the card is the one based on Intel’s Stratix10 FPGA like the prototype it showed a year ago at the HotChips conference.

Avere vFXT available in Azure

At the event, Microsoft also presented a preview of its Avere vFXT service in Azure. Microsoft acquired the NAS acceleration specialist at the beginning of this year.

Avere vFXT allows for deployment of high performance NAS capability on-premise or in the cloud while leaning on Microsoft Azure Blob Storage at the back end.

Until now, the vFXT system has only been available for Google and Amazon’s object storage services. Microsoft has indicated it will continue to support the storage services of its competitors, which could be seen as a way of avoiding the errors made following its purchase of StorSimple’s gateways in 2012.

The Azure  version of vFXT will be generally available from 31 October. Microsoft’s principle selling point will be that – compared to offerings in AWS and Google Cloud Platform – the cost of vFXT nodes in Azure will be be zero, although capacity used will be charged for.

High performance storage options

Microsoft has also added more high performance options in Azure.

The first is Azure Ultra SSD Managed Disks, which is – for now – in pre-release. It is based on NVMe flash storage and allows for up to 160,000 IOPS per disk, with latency at less than a millisecond.

According to Microsoft, the product will be available in capacities that range from 4Tb to 64TB. The offer adds to the existing standard SSD managed disks, which is now generally available.

Microsoft has also announced the launch of Azure Premium Files, which is a file access service compatible with the SMB protocol and is intended to provide a level of performance higher than the existing Azure Files.

The number of NAS systems in Azure have multiplied in recent months. In addition to Azure Files and vFXT, Microsoft has announced the availability of Azure NetApp Files. This is based on NetApp’s OnTap operating system and is currently in public pre-release on a subscription basis.

This Startup Is Using AI to Help Nonprofits Raise More Money

Nonprofit organizations live on fundraising. Spreadsheets and CRM systems have helped fundraisers track, sort, and reach out to potential donors. But fundraising is a high-touch, people-intensive activity. 

Donor outreach may start out with mass mailings and email blasts, but effectively engaging with the biggest and most frequent donors usually requires a high degree of customization and personalization. For resource-constrained non-profit organizations, then, one of the biggest barriers to reaching out to more high-potential donors – and more frequently – is the need to tailor outreach. 

This is one lesson Adam Martel learned firsthand as a fundraiser for Babson College, widely considered one of the world’s leading institutions for the study of entrepreneurship. Martel’s quest to solve this issue for himself and his team eventually became the kernel of an idea for an entirely new business he founded while studying for his MBA, which he pursued part-time while he helped Babson build its endowment.

Gravyty Technologies, which he co-founded in 2016 with Babson classmate Rich Palmer, draws on the power of AI to make data-backed predictions about the giving potential of donors and even help automatically write first drafts of personalized outreach emails. 

Gravyty is acquiring new nonprofit customers, raising fresh funding, and earning accolades for its AI-based technology. Earlier this year, Gravyty successfully completed its second round of funding, raising $2 million by a group of investors led by Boston’s NXT Ventures and Launchpad Venture Group.

In 2017, The Chronicle of Philanthropy selected Gravyty as the first among fifteen “New Fundraising Ideas that Worked” for the role their artificial intelligence technology played in helping increase major donor retention for the Cure Alzheimer’s Fund. The Fund increased fundraising by 49 percent, or nearly $2 million, in the first year they used Gravyty’s applications.

I spoke with Adam recently about his advice for aspiring entrepreneurs. 

1. Find a partner.

“Be on the search for somebody you can go through the journey with. Being an entrepreneur alone is not very much fun. I’ve done it. Rich has done it. It’s too hard to do by yourself. Have the humility to understand and know that you need other people. Having a partner that you go through these journeys with, makes the journey more worthwhile….To have a co-founder that goes with the same speed and has the same passion…is unique.”

2. Be prepared for the highs and the lows.

“Every day, we have high highs and low lows. There’s not a day that’s gone by where I haven’t felt like I was on top of the world and haven’t felt like I was at the bottom of the ocean…We use the phrase ‘ride a flat rollercoaster.’ Don’t try to get too excited. Don’t try to get too down. Just try to do your job to the best of your ability every single day.”

3. Find something that you truly want to do.

“Find something that you truly want to do. Find a problem that you truly want to solve. I’m compelled to be an entrepreneur because I want to provide my family with the life that I want to live with them. Working at a job that I love makes me a better father and a better husband. I’ve tried to do other things and I can’t. What drives me to be an entrepreneur isn’t anxiety or anything other than the fact that I love doing it. I wake up every day excited to do it.”

4. Find investors who are also mentors.

“I think the best investors not only give money, but give time. Raymond Chang, our investor at NXT Ventures, didn’t just give us money –he sat down with me and spent hours with me, trying to explain things and work through challenges that I was facing. To have somebody that’s gone through this so many times, who is on your side and really mentoring you, is very useful.”

(Note: Gravyty Technologies is not a client of mine, nor do I have any other business dealings with the company.)

Real Advice for Real Money