On Thursday, the S&P 500 was about unchanged and Toronto was up 0.6%.
AutoCanada was up 4.3%.
Bombardier fell 9.7% after reporting a fairly weak quarter. While earnings were weak they were at least positive. But their orders for new planes were extremely weak in the quarter. I mentioned earlier that it may be at the point where no one wants to place an order, much less put down a deposit at such a weak company.
In the earnings release there was really almost no information on what the company intends to do to make things better. They did confirm plans to sell off a portion of the Transportation business before year-end and to do some cost-cutting and also they are delaying the in service date for the next generation of their large business jet. They did mention that they still have some room left on the company credit line. There was not much indication of any big initiatives from the new CEO although he has replaced some of the executives.
For whatever reason the preferred shares were at first up on the day and finished the day unchanged.
I have not seen or heard the conference call. Perhaps a few more details came out in that.
Another weak and exceedingly poorly managed company is TransAlta. It’s been beaten up mercilessly of late including most recently being found guilty by the Alberta regulator of manipulating the Alberta power market on a few occasions back in 2010 and 2011.
I am loath to invest in another possible turn-around situation, especially under present management. But this company is now trading just under book value and at a $2.4 billion equity value could potentially become an easy take-over target. For unfathomable reasons Berkshire Hathaway Energy is already in partnership with them on some proposed new plants. So possibly Berkshire could make an offer. Any buyer of the whole company would likely have to have little or no existing generation in Alberta since the regulator would not want to see any added concentration of generation ownership in Alberta. Existing management and the Board is likely tired of all the bad press and would likely be willing to sell if a decent offer came in and if they themselves would get a nice severance. There is no controlling shareholder and so really management would not have much say in the matter anyhow.