February 24, 2016

On Wednesday, markets closed relatively unchanged after a very weak start to the day. The S&P 500 was up 0.4% and Toronto was down 0.2%.

After the close, Enbridge announced an equity raise of $2 billion dollars at $40.70 per share. For context, Yahoo Finance indicates Enbridge has an equity market value of $37 billion, so in that sense it is not as big of an equity raise percentage wise as it might appear. It’s unfortunate that the shares are being issued at this price when the stock had traded over $50 for much of the past two years and as high as $65. But hindsight is 20/20.

I was thinking that this equity raise might be positive for the Enbridge preferred shares. But it does not look like it is large enough in relation to Enbridge’s debt to have all that much impact.

The report for Canadian Tire is updated and the company is rated Buy. I have been wrong so far in my idea that the lower Canadian dollar was going to be a big issue for them. And they seem confident that it will not be in a problem in 2016 either. While there are always bad things that can happen such as losses on credit card receivables, the numbers suggest that this company is a Buy.