October 26, 2016

On Wednesday, the S&P 500 was down 0.2% and Toronto was down 0.4%.

CN Rail was down 3.8% after its earnings release.

Heineken was down 3.6% as it announced 3rd quarter sales volumes and earnings and that it would be hurt by currency fluctuations. I would consider adding to my position on dips such as this.

Boston Pizza closed up slightly at $22.08. It was about 19 months ago that they had a share offering at $22.10. After that the units declined and very briefly were just below $16 in January this year which was a great buying opportunity. For those who bought and held it, this entity has done what we would hope. It is spitting off 6.2% and anyone who bought at $22.10 has received 19 months of dividends and could now sell for essentially the same amount they paid. Despite fluctuations I expect these units to hold their value over the years while continuing to pay the dividend. So, the 6.2% is an attractive yield for those who can commit to holding the units for at least several years. Of course, it is possible that the units could drop back again especially if interest rates rise a lot or if the restaurant sales drop more than a couple percentage points at any time. But I don’t expect interest rates to rise very much anytime soon and I expect Boston Pizza’s same store sales to rise most quarters but not every quarter.

Regarding Wells Fargo’s woes it is hard to say what to do. If someone has none they might want to buy a little amount for speculation. At the same time if you hold a LOT of Wells Fargo you might want to reduce the position. Former employees continue to come forward with tales of poor treatment by management. It all needs to be thoroughly investigated by an outside party. It’s not at all clear that the current (and brand new) CEO will keep that job. Warren Buffett has not yet said anything. He has said he is not saying anything about the election or this or anything else until after the election. People are digging up stories now that prove that concerns about unauthorized account openings and certainly very high sales quotas were around for quite some years. The fact is that analysts (including myself to the extent that I saw any such rumblings) were willing to assume that it just a few disgruntled employees that were complaining. Wells kept presenting itself as always doing the best for customers. With profits growing nicely, it was easy to ignore the critics. But not now. It may be that this mess has a very long way to go.

In other news, VISA’s profits were up nicely. Again. As were Constellation Software’s. Again.