May 12, 2014 Comments

On Monday, the S&P 500 rose 1.0% and Toronto rose 0.8%.

Notable gainers included Toll Brothers up 2.0%, Bank of America up 2.2%.

The Enbridge preferred shares that I hold were down 1.2% to $25.35. This would appear to be because Enbridge issued new shares that seem to be about identical priced at $25.00. The existing shares, I believe, pay a dividend to owners of record as of this Thursday, May 15. I believe that means that they trade ex-dividend tomorrow so we may see them pretty close to $25.00 The existing pref never got all that high, it peaked at $25.74 which would have included perhaps 18 cents for the pending dividend. Perhaps the new issue of Enbridge pref which opened (and then closed) today was no great bargain at $25.00. But it was somewhat better than the existing at a recent $25.6 or so (notwithstanding that the $25.60 included a pending first partial period dividend of around 18 cents. I don’t pretend to know the precise relative risks of these shares versus the Canadian Western Bank that paid a similar amount and that I just sold at $26. But I consider the risks to be roughly quite similar and quite low and am happy to buy these Enbridge at $25 with proceeds of selling the Canadian Western Pref at $26.

I did end up buying some of these new Enbridge shares today at $25.00 via the IPO.

Canadian Tire bounced around a bit today from $108.14 to $111.34. I decided to sell what I had inside of tax free accounts and got about $110.00. The Canadian Tire that I hold in a taxable account I have not and may not sell. In the taxable account, which is a corporate account I am up 67% on the Canadian Tire shares. I am not sure what tax rate applies, probably at least 15% and so it may not be wise to sell those unless I thought the price was going to drop at least 10%. That is certainly very possible. But I am not predicting that and I still rate these shares a (lower) Buy and so overall it likely makes no sense to sell these in my taxable account. I am really not sure it made sense to sell int eh non-taxable account either. Every time I have sold Canadian Tire in the past 18 months or more the stock has ended up going higher. In some cases the decision to Sell something will seem clear cut. In this case it was not a clear cut decision.

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