It is always good to read a guide to the perplexed about buying foreign shares. In general, American Depositary Receipts or ADRs exist to make it easier for individual investors (not necessarily Americans) to buy foreign stocks.

Charles A. Carlson CFA writes in the October DRIP Investor:

A portion of dividends paid on ADRs may be withheld for foreign tax although investors can recoup the money by filing for a foreign tax credit when they file their taxes. The foreign dividend tax issue may seem complicated. However, I have foreign dividend-paying stocks and can assure you that the tax implications of owning them are no big deal.

He then goes on to recommend one of our shares.

Withholding Tax Recovery

One area needs far more work by newsletters, the brokerage community, custodians and depositaries, fund managers, and accountants is withholding taxes. When you get a dividend from across the water (but not from or to Canada), withholding taxes often are deducted from the dividend. This means you should not hold foreign stocks for yield in a tax-advantaged account like an Individual Retirement Account or a similar vehicle. The withholding tax cannot be offset against other taxes which would be owing from a tax-sheltered account because there are no other taxes to pay.

In a regular.y taxed brokerage account, the withholding tax you paid can be used to offset taxes you would otherwise owe on other dividends from domestic shares you received in the same tax year.

The Goal Group, a specialist in withholding tax reclamation, today published a report that says as much as $22.4 bn of investors' returns on cross-border holdings of stocks, bonds, and funds was “lost” last year because of unclaimed withholding tax refunds.

It also claimed that US taxpayers failed to reclaim $2.77 bn in withholding taxes paid. British taxpayers forfeited $1.15 bn in cross-border withholding taxes. Goal says that just under a quarter of all recoverable withholding tax goes unclaimed.

There are also other reasons why withholding may be unclaimed, for example if an account holds shares on behalf of an insider or a tax-evader who doesn't want to file and call attention to himself.

I am not sure how they correct these numbers, based on overall tax deductions at source, for IRA and similar accounts. Tax recovery services like Goal are offering high-tech help in retrieval thanks to a full database of how foreign portfolio investment is taxed in different jurisdictions using different rules and different timing. More transparency is not only in the interest of investors; it also helps funds and custodians improve their results.

Blarney Stone Sell

*We recommend selling half your Paddy Power Plc stake because UK betting shop and Internet operators have opted to back the government program to ban their TV adds appearing on football and sports programs. Although Irish, PDYPF depends on UK betting. Its cheeky ads not only draw in bets, but also generate lots of free press. Losing its Blarney Stone edge will hurt Paddy more than its rivals.

*We also think the time has come to sell half our Yandex, YNDX. This Dutch company, cleverly anticipating that the Russian parliament would crack down to keep out information displeasing to the regime, should gain by being more Russian than rivals like google. Actually Sergei Mikhailovich Brin is Russian-born too. And I figure that it will be hard to leaveYNDX out of a Chinese-style great wall internet blockage.

*The ADR Mr. Carlson in www.dripinvestor.com tipped was Novo Nordisk, NVO, recently added to our portfolio. It is Danish.

I'm Not a Doctor; I'm Only Practicing

*While NVO is raising its dividends, the key for DRIP accounts, I personally prefer to recommend CAE which raised its divvie by 16.7% to 28 loony cents in its Q1 despite a particularly onerous Canadian income tax bill which offet a prior year credit. Despite the taxes, CAE pre-tax earnings came to C$55.2 mn, up 24% from prior year in loonies. While the loony is at an awful low, the rise in business is offsetting this. CAE is getting out of the mining simulation business, it will continue to build out its healthcare simulation lines, which is how Patti the biotech maven got lured into recommending CAE in the first place (along with her son being a pilot.) Healthcare simulation is not yet very profitable and has low margins. It has just launched a program called CAE Replay which is an audiovisual post-simulation debriefing system. It is show and tell for doctors, surgeons, and healthcare professionals on clinical events without putting patients at risk of errors as they learn the ropes. With the population aging, we need more and more medical and surgical interventions, preferably from trained people. I'm not a doctor; I'm only practicing.

*Harry Geisel takes up his role as insurance expert over our Allianz buy yesterday and writes:

“As an insurance company, AZSEY is slow and steady. It has a huge unique presence in Germany. As I've written before, most insurance policies are pretty generic.

“Morningstar reported that Allianz's return on equity (ROE) last year was 11.3% vs the overall industry's 8.3%. AZSEY trailing operating margin (TOM) was only 9.7% while the industry made 14.3%. Debt was a comfortable 40%.

“Allianz assets are primarily bonds, mostly European sovereign debt. Some analysts worry about how safe Italian government bonds are. Having lived in Italy, I'm not concerned. Italians have lived through innumberable economic 'crisi' since World War II.

“Bottom line: there are better and worse insurance operations. Buy Allianz or sell it based on your prognosis for its huge Pimco asset management business.”

Citi just reiterated its buy on Allianz despite the havoc Bill Gross hath wrought. Gross directly managed $350 bn of assets in “very traditional US-focused core bond funds” so “there is likely to be a limited fall out from other fund areas given that there is no substantive management change” in these investments. Moreover Pimco's cost basis is 50% variable and linked to assets under mangement.

“Therefore it should be able to offset some pressure from fund redemption.”

*Harry put in a word for Validus Holdings, the Bermuda reinsurer he recently wrote up here. He said its ROE was 15.6% “although comparisons are tricky because VR is more into reinsurance where profits can swing more.” TOM was 36%. Debt was also 40%.

*Chris Loew's Japanese stock for playing the sinking yen finally is up, perhaps because Kubota is also a play on agriculture and infrastructure, both of which may see more government spending after Japan saw another bad growth month. KUBTY.

*Galapagos is giving Compugen a good run. The Belgian firm which completed phase I and II trials of its rheumatoid arthritis drug trial, GLPG 0634, is now enrolling them in a long-term extension. Over 100 veterans of the earlier trial are now enrolled in Darwin 3 tests of the selective JAK1 inhibitor drug. GLPYY ended Q3 with euros 240 mn of cash and liquid assets and pulled in revenues of euros 63 mn. It had an operating loss of euros 15 mn but sold off its service operations, thereby achieving a net profit of euros 56 mn. It expects to close out 2014 with cash and non-cash revenues of euros 100 mn, boosted by euros 18 mn from discontinued services operations. It expects to have euros 175 mn of cash at year end. GLPYY; CGEN.

AIM Chinese Consumer Shares

*Simon Thompson writes in today's Investors Chronicle blog about Camkids, which trades as CAMK in London's Alternative Investment Market: “risk aversion has gone too far.” Unlike our Naibu, also on the AIM, Camkids raised its dividend to 8%; NBU cut its dividend because it was forced to outsource shoe production. Both AIM Chinese have lots of cash to back their shares and have been beaten down by worries about China. But both rely on Chinese consumer spending on grandchild teenagers or kids. Simon Says of CAMK which rose today: “hold for medium-term gains”. The same is probably true of NBU which is not covered by the Chronic Investor which remained flat.

*Following an oil major yesterday, Schlumberger Ltd is withdrawing expat employees from US and European Union countries from Russian exploration and production because of sanctions over Ukraine. Russia uses foreign expertise to improve its backward methods for “fracking” and SLB gets about 6% of its sales from Russia. SLB is Dutch-incorporated.

*The Leviathan partners plan to build an offshore floating production storage and offload facility (FPSO) which will link to the Israeli grid and can also feed into an offshore gas liquefaction unit for the Far East or a pipeline to Egypt, Palestine, or Turkey, according to the development plan submitted to the Israeli Ministry of National Infrastructure. It will be able to hold 16 bn cubic meters of gas per year, meaning Leviathan can produce that much. The existing Tamar field produces 10 bn cu m/yr. The Leviathan build will cost $6.5 bn for the FPSO part only. If Israel gets 9.2 bn cu m of gas annually from either this field or others still to be brought on, up to half the gas may be exported. Our Delek Group via 2 subs owns 45.33% of Leviathan and operator Noble Energy of Texas owns 39.66%. The remainder is held by a small Israel firm, Ratio Oil. DGRLY is betting the farm on Leviathan. DGRLY

*Allana Potash hosted a high-level Ethiopian delegation to Canada after the UN General Assembly. ALLRF (AAA in Toronto) is developing a huge potash mine in Ethiopia. Israel Chemicals, which just listed on the NYSE as ICH, is a shareholder along with the International Finance Corp, the free-market equity arm of the World Bank.

*Royal Bank of Scotland will cut its provisions by £800 mn ($1.45 bn) thanks to lower default risks as the Irish economy improves. This brings RBS, whose prefs we own, closer to a de-nationalization, but there is a still a very long way to go to Tipperary.

*The two largest foreign holdings of Israeli pension funds are Google and Novartis, probably a sign that custodians are asleep at the switch, given that tech and pharma are such a big chunk of Tel Aviv's stock market already. TEVA is the big kahuna of the TASE, so buying NVS doesn't diversify the pension fund.

Truman vs Dewey Revisited

*Cosan fell another 2.75% today on more worries that Marina Silva will be defeated by Dilma Rousseff in the first round of the Brazilian Presidental poll Sunday. It reminds me of how polls said Harry Truman would lose to Tom Dewey in 1948.

*Fund notes. Today our Africa Opportunity Fund, AROFF, fell to $1. Time to buy more. This has nothing to do with Bill Gross or Central Hong Kong. Given the spread I put my order in at 97 cents.