September 11, 2017

Monday was a strong day in the markets with the S&P 500 up 1.1% and Toronto up 0.4%.

CRH Medical was up 10.1% in Toronto after announcing another acquisition. My view was (and is)  that despite the recent government-mandated reduction in the revenues that it receives for each anesthetic procedure, it was still reasonably profitable and its growth strategy was intact. I continue to have confidence in this company. The higher Canadian dollar is something of a headwind but should be a relatively minor factor in the big picture as the company grows.

Home Capital (which I have mentioned, but which is not on our list) was up 3.4%. There is a vote tomorrow regarding whether Warren Buffett / Berkshire Hathaway can buy a second approximate 20% chunk of the company at the discounted price of $10.30. Home Capital has just announced that its Oaken Financial subsidiary has cut the rates on its GICs. This was completely expected since after the rescue by Warren Buffett the company does not need to offer abnormally high rates to attract GIC deposits. If the shares happen to fall after this vote, (no matter which way it goes) that would be a buying opportunity, I believe.

AutoCanada was up 2.3%.

CMHC released housing starts data for August. The annual run rate trend is very strong at 219,000 housing units per year. Given my large Melcor position, I am always most interested in the single family starts in Alberta. Those were up a hefty 45% from the prior year for the month of August. I believe that would still be well below the level of 2014 but is nonetheless quite positive.