May 13, 2015

On Wednesday, the S&P 500 was about unchanged and Toronto was down 0.4%.

Canadian National Railway was down 3.2% to $74.11. I think it would be good value at this price.

Couche-Tard was down 2.3% to $46.08. It still seems expensive at that price but is a great company.

Melcor’s price did not react much at all to the earnings report but the volume was higher than normal (though still small at 29,000) shares. I have very little cash to make buys at this time but I threw in an order (a little below the market price) to add a little to my Melcor position. I will be interested to see if the company starts to buy shares now under its issuer bid. Most profitable companies trade at least somewhat above book value. Melcor’s book value is over $27.00 but the stock trades under $18.00. Possibly we have here the proverbial $1.00 of value trading for 50 or 60 cents. Last year RBC pegged the value at $35 but later dialed that back. And it may be that the price will simply continue to trade under its true value in part due to the family control position. But I don’t mind riding the family’s coat tails and if the profits are higher in five and ten years (which I certainly expect) then the stock price will be higher as well.