February 19, 2015

On Thursday, the S&P 500 was down 0.1% and Toronto was down 0.2%.

Stocks on the move included; Canadian Western Bank down 2.5%,

FirstService up 6.0% (illustrating once again that it can be good to stick with high quality companies even when they seem expensive) It looked expensive at the start of this year at $58.49 but it is now up 30% to $76.35. Despite the quality I would sell at this price.

The Bombardier Pref share that I follow (the series 4) was up 6.4%.

The Bombardier B shares were down 2.8%.

Bombardier shares were halted near the end of the trading day as Bombardier announced it was selling $750 million Canadian of B shares on a subscription basis at $2.21. This is down from today’s price of $2.45. This low price is the result of Bombardier having gotten itself into a terribly weak position. If I did not own any I might buy as a speculation, but I already have a modest position in this weak company.

All else equal, this should push up the price of the preferred shares. But then again they plan to also issue a lot of new debt which could hold back any tendency of the pref shares to rise. I do think the pref shares are a safer speculation than the B shares. But a speculation they are. Do not buy for yield, this is not a safe investment. (Yield investments are usually in much safer investments). I own some pref shares but again am not too interested in doubling down on this risky investment.

In other news SBC Lavalin has been charged with corruption. (Not surprisingly, it seems there were indeed other cockroaches in the kitchen). I said when their troubles first surfaced a few years ago that I suspected that the corruption ran fairly deep and wide. This company could end up being sold off for parts yet. (Stantec would likely grab some of it).