February 14, 2014 Comments

It was a strong day in the markets on Thursday with the S&P 500 up 0.6% and Toronto up 0.7%.

Canadian Tire was up 3.1% to $97.39 on its strong earnings. I’d still rate it a Buy (or higher). Constellation Software was up another 3.8% to $249.49. It seems too expensive but has continued to power ahead.

Our only big decliner was Bombardier which was down 9% to $3.68 on poor earnings and outlook and higher costs for its C-series plane. I don’t see a balance sheet in the press release, which is annoying. I am curious to see if the balance sheet looks better after the recent sale of its fractional jet business which I would assume had significant assets and significant debts.

Unless it is going greatly improve its profits down the road, this seems like poor business with weak profit margins. This is particularly bad considering the company is highly leveraged with debt.

It really seems like time for new management here. I am not sure why a public company thinks it is acceptable to keep the founding family member on as CEO in the face of poor performance. The Board of directors needs to be turfed here.

I plan to update this report shortly to see if it might now qualify as a speculative pick.

I don’t really follow it but I notice that Barrick Gold has lost another bundle. What a pathetic sad story of destroying invested capital this has been. Yet there are those who would laud the achievements of Peter Munk in building such a large company here. In corporate performance size should be considered to be a very distant second priority to the goal of making positive returns on capital.

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