May 7, 2018

On Monday, the S&P 500 was up 0.35% and Toronto was up 0.5%.

Constellation Software was up 2.1%.

AutoCanada was down another 4.0%. I plan to post an update tomorrow. Q1 adjusted earnings were quite weak. In part this was due to the net impact of of its transaction with its founder whereby it bought the minority 20% interest in five dealerships but sold its majority 80% in four others for a net loss of the equivalent of about two dealerships. But there were other reasons for the poor earnings and it is not clear if those reasons were mostly temporary such as due to poor weather in Q1. Q2 should show a notable increase in sales and gross profit due to the acquisition of eight dealerships in the Chicago area plus a large multi-brand “autoplex” also in Illinois. Presumably this would also add to net profits in starting Q2. Overall, I believe AutoCanada merits a rating of Buy.

Boston Pizza Royalties Income Fund will report earnings probably this week or next. I am cautiously optimistic that they will show same-store sales growth due to menu price increases associated with the Ontario minimum wage increase.