April 26, 2014 Comments

Friday was a weak day on the U.S. markets as the S&P 500 fell 0.8%. Meanwhile, Toronto fell 0.1%

Most of our stocks fell including Melcor down 1.8%, Canadian Tire down 1.9%, Stantec down 2.1%, Toll Brothers down 1.5% and Bank of America down 2.4%. And Visa was down 5.0%.

I don’ think this is an unusual level of volatility in the markets.

I am working now to add Onex Corporation, a private equity investment company, to the list. Unfortunately, while I can provide substantial information about the company I don’t know if I will come up with any particular rating. It’s a complex entity and may simply be too hard to analyze, at least for me. It’s one of those well-known Canadian companies that I always wanted to know a bit more about. Lately it was in the news when its CEO Gerald Schwartz was reported to have collected biggest compensation package in Canadian corporate history. Taking a quick look I discovered that the company had actually LOST money on a GAAP basis in each of the last two years. Furthermore, it did not have a lot of retained earnings on the balance sheet.

So… I resolved to take a close look at it. I have read its annual report and am in the process of crunching numbers and filling out my standard report format. But my sense is that it may be too complicated to rate. It definitely looks way over-priced on some metrics. But much of the value is not reflected on the balance sheet, and does not seem to be reflected in recent earnings either.

Even if I can’t come up with a definitive rating, I will learn a lot about the company and its approach to investing and will document that.

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