March 9, 2017

On Thursday, the S&P 500 was up 0.1% and Toronto was about unchanged.

Linamar was down 3.8% despite posting good earnings and raising its dividend. The stock certainly looks cheap on a trailing earnings basis but the market seems to fear that its earnings are at a cyclic peak and about to decline.

CRH Medical was up 2.9% on Toronto.

The Canadian Western Bank rate reset preferred share CWB.PR.B that is on our list was up another 2.25% to $22.77 as the five year bank of Canada yield rose to 1.26% today. This preferred will not reset for another 25 months when hopefully the five year bank of Canada yield will be higher still. At the current Bank of Canada rate it would reset to 4.0% on $25 which is not overly attractive. I would not likely be a buyer of these shares at this price. But if you wish to bet that the five year Canada is going to keep rising then this may be a reasonable investment.

Boston Pizza Royalties fell 2.6% to $22.40. This was likely due to higher interest rates. These units are somewhat like perpetual preferred shares and logically drop in price with lower interest rates. However I still like these units because the yield is 6.2% and I believe the yield will likely continue to rise slowly over the years and this could offset the affect of higher rates. I materially reduced my exposure here earlier and am now inclined to hold onto the remainder. It still represents 8% of my portfolio.

Ceapro was down 8%. I had indicated that this was a speculative pick and that I would not be surprised by a price decline. Its new expanded facilities have added a lot to its costs and so its Q4 earnings could very well be disappointing. And unless it forecasts a large increase in sales for 2017, the forecast earnings may also disappoint. It does have a lot of cash on hand and so should not be any danger financially. I am not going to make a big bet on this company but I may add to my tiny position.

Melcor reports next week. But its REIT reported today. Q4 showed a 5% drop in rental revenue which is negative but not any kind of disaster. They had a small writedown in the value of some buildings in Q4 and this will be reflected in the Melcor Developments numbers as well. Overall the quarter was weak but this should have been expected. The headline earnings number on the REIT was negative but this was driven by what is basically some strange non-cash accounting items that I have mentioned in the report. Occupancy was down but only very slightly. We shall see how the market reacts to this in the trading of the REIT units and Melcor itself.