The first day of August was a strong day in the markets. The S&P 500 was up 1.2% to a new closing record of 1707. Toronto was up 0.9%.
I am feeling a bit Giddy about the performance of our stock picks this year given today’s action.
Stantec was up 5.4%. That makes 26% this year (it was rated (higher) Buy at $37.14 to start this year) and a staggering 1903% since Stantec was first added to this web site as a Strong Buy at a split adjusted $2.50 in September 1999. It was one of our earliest stock picks and has been the best overall gainer. Their business model has not changed but they have gotten a LOT bigger. Sadly, it is not one of my own bigger positions but it does represent 4.8% of my equity portfolio. By the way I just don’t go in for the idea of putting something like 1% into a stock. If I can’t put at least 3% in, what is the point? unless it is just an initial buy with a hope to add more. I have not read the latest results and so I don’t know what I would rate Stantec at today. I suspect a Buy rather than (higher) Buy, but I don’t know. I don’t think I would rate it Sell.
Another big gainer was Constellation Software up 6.8%. Based on my latest update (from May) for this stock I suspect it continues to be a great company but looks quite expensive.
Our U.S. bank stock picks were up as well today. Also the Oil sands ETF, CLO up 2.4% on news of TransCanada’s planed pipeline to the east and also the general upward push in the markets on good economic news today.
With all this good news the trick now may be not to get over-confident and too exuberant.
I ended up selling the rest of Canadian Western Bank shares today just because I suspect the next earnings release in early September will be hit hard by insurance losses due to the Alberta floods. I will buy some or all of it back if the the stock does drop several dollars. On the other hand if it does not drop the worse that has happened is I have more cash and will I miss out on some gains in CWB. Well by early September we will see if I have gotten a little too cute in trying to sidestep short-term news on CWB. My usual practice would probably be to just hold on and be prepared to buy on a dip.
And then there is Barrick Gold. I mentioned this company July 1 and July 3 when they pre-announced that they would be having (another) huge write-off for Q2.
Well the numbers are in and they now have negative retained earnings to the tune of almost $5 billion. Now to be fair they have paid about $4 billion in dividends since 1998. But it looks like the grand total of earnings in its entire history is now either negative or some tiny number. This is a company with $18 billion in share capital much of which they have had for some years. They had $13 billion of share capital as far back as 2006. Again to be fair not all of that $18 billion was cash forked over by investors, some it came from issuing shares for a large acquisition (Placer Dome) a few years ago. (it’s unknown how much real investor cash had been put into Placer by actual shareholders and how much was just market gains). Still it appears that quite a few billions (maybe $10 or so, to as much as $13) in cold hard investor cash was placed in the hands of Peter Munk and company at Barrick and their job was to make a return on that money. But with accumulated earnings over all the years since their creation of about zero, they have made no return for their investors. It takes a staggering incompetence to achieve such a record. And to do it over a period where Gold was up hundreds of percent is truly a notable feat of incompetence. (well, in my opinion at least).