November 22, 2016

U.S. stock indexes set new record highs again today.

The S&P 500 was up 0.2% and Toronto (which is not at a record high) was up 0.4%% (on thin volume, as always

Notable gainers included Canadian Western Bank up 2.8%, Stantec up 2.9%, Melcor up 3.8% (on thin volume, as always).

Not many stocks on our list declined, but AutoCanada was down 2.5% and has not participated in the gains that most Alberta-linked companies have had lately.

With many of our stock picks up so much in the past two weeks, I would be inclined to trim some positions and raise cash. The difficulty is that I hold few or no stocks that I think are at all over-valued. Still, some sales would be prudent and could also facilitate adding to those stocks that seem most under-valued.

Statistics Canada reported retail sales figures for September. Alberta had a slight gain including a gain in sales  at auto dealers. AutoCanada has already reported Q3 sales. Still, this report is positive and shows that in terms of consumer spending, the energy recession has not had a very big impact in Alberta, at least not yet.

Statistics Canada also reported figures for investment spending on new home construction in September. “In Alberta, spending fell 29.0% from the same month in 2015 to $681 million in September, the 15th consecutive month of year-over-year declines. All dwelling types contributed to lower investment in new housing construction, with investment in apartment buildings and single-family dwellings accounting for most of the decrease.” Single-family home investment (construction) in Alberta was about $400 million in September which is down from $672 million two years ago. For Melcor the issue is new lot sales builders which are down even more as builders would tend to use up any existing lots they have and are no drought cautious on buying new lots. I suspect that it is typical now for a builder to wait until they have a contract to build a home before they purchase a lot. I will check into that. The good news is that there is still some home building going on. Even in a recession, there are always some people who want a new home built.

I noticed Amaya gaming was in the news today with a report that one of the indicated investors involved in an attempt by the former CEO (and I believe founder) David Baazof to take the company private through a take-over offer. I have mentioned before that I would not trust either Amaya or (especially) David Baazof. He has been charged with insider trading. And Poker Stars which Amaya bought a few years ago has a checkered history. I would simply stay away from a company like this.