June 18, 2015

In a further reaction to the FED statements of Wednesday, the S&P 500 rose 1.0% on Thursday and Toronto was up 0.3%.

Berkshire Hathaway was one of the bigger gainers, up 1.9%.

Melcor managed to fall 1.3% to $17.50. I grabbed another 200 shares. This is company that has a book value of over $27. The book value was $9.00 per share at the end of 2008. So that is a gain of $18.00 per share in book value in six years albeit some of that was mark to market gains on rental building. Melcor earned $2.64 per share in 2014 on an adjusted  basis and about $3.00 per share on a GAAP basis in each of the last three years. It lived through 2008 without reporting a loss on an annual basis. I don’t recall it ever having an annual loss since I started watching it in December 2002 at a stock price of $3.60. The share price shot up to over $30 in 2007 (THAT was far too high) and then back down to close to $3.60 in the scary days of early 2009. THAT was a tremendous buying opportunity. It seems to me that things would have to get awfully bad in Alberta for Melcor at the $17.50 range not to work out to be a good investment. If things are as bad as those selling their Melcor shares at $17.50 seem to think then I wonder how much Alberta house prices should be down? 30% rather than just around 3%? West Texas is at U.S. $60 per barrel or $73 Canadian. I am not convinced that that qualifies as a low price in comparison to the average price of oil in the past 15 years. I don’t have the data at hand but I would be willing to bet that $73 Canadian per barrel for West Texas is higher than the average over the past 15 years. I believe Oil dipped briefly to U.S. $10 in 1998. Alberta may be headed for a recession but it’s not a depression.