December 31, 2017 TFI and Dec 29 CWB

December 31, 2017: TFI International is updated and rated (lower) Buy at $32.86. I am comfortable holding this company at this price and will be inclined to add to the position on dips. It’s a very well managed growth-by-acquisition company. It is facing tough competition in its U.S. truck load operations at this time and therefore the company is only cautiously optimistic about short term growth. Like most good companies this has been a good company to buy on dips. It started 2017 at $34.89 rated Weak Buy / Hold. But it dipped as low as $26.44 during the year and we rated it (higher) Buy at $27.50 on May 21.

The report on the Canadian Western Bank rate reset preferred shares Series 5 is updated with a rating of (lower) Buy at $24.17.

These may be of interest for those looking for relatively safe yield and who would be prepared to continue to hold for the yield in the event the share price declines.

These shares certainly have a volatile history for something that would have been considered safe and considered by many to be “fixed income”. In reality preferred shares are not fixed income in the sense that they are not guaranteed to mature at any given price. Those who are truly interested in fixed income and not bothered by market value losses may consider them to be fixed income.

These were issued at $25 in February 2014 yielding 4.4%. This was the going rate for rate reset preferred shares at that time and in fact I believe some large bank rate reset shares were issued under 4.0%. They were supposed to protect against the expected rise in interest rates. But interest rates unexpectedly fell and rate reset shares plummeted. These particular shares bottomed out under $15 in early 2016. A review of our comments in 2016 will confirm we had positive comments on these shares throughout 2016 (and 2017 as well). Our highest rating was (higher) Buy at $16.61 posted about March 11, 2016 (the post is undated). These shares were rated Buy at $19.05 at the start of 2017. The capital gain of 27% in 2017 was certainly more than expected.