October 6, 2015

S&P 500 down 0.4%, Toronto up 0.7%

Oil rose several percentage points and is trading at $49.07.

Among the gainers: Canadian Western Bank up 3.0%, and AutoCanada up 2.8%.

Bombardier surged very near the end of the trading day to close up 14.9% on rumors it would sell a stake in its C-series plane program to Airbus. This surge then prompted both companies to announce that they HAD been in talks but the talks were over and there was no such sale pending. So, it appears the talks were leaked. Another example of Bombardier’s inability to do things properly? There should not have been a leak and when there was the stock should have been halted.

Regarding Canadian Oil Sands Ltd. There are reports that the price that Suncor is proposing to pay (albeit in Suncor shares) is well below replacement cost of the assets. Checking the Canadian Oil Sands balanced sheet the offer is in fact at about book value. That could be below depreciated replacement cost given older assets on the books at lower historic costs and given accelerated depreciation. Seymour Schulick who owns 5% of the company is apparently most unhappy with the offer (which is valued at just under $9 per share) and figures the shares are really worth more like $20. Really Seymour?  Is the market rally quite THAT dumb? Seymour Schulick made his fortune in mining ventures and is a smart investor, so maybe he is right, maybe the market really is THAT dumb. If so, it means there are opportunities to buy shares at far less than their true value at least from time to time.