April 27, 2019

On Friday, markets were down earlier in the day but recovered for a 0.5% gain in the S&P 500 and 0.2% for Toronto.

Aecon (see update just below) gained 7.1% after releasing Q1 earnings which featured an 18% gain in revenues per share and a smaller loss than the prior year.

CRH Medical was up 4.6% in Toronto.

Amazon was up another 2.5%.

American Express was up 1.5%.

Regarding AutoCanada, I had emailed some questions to the company and had not received any response despite follow up emails and phone calls. But when I emailed today, the Chairman (and effectively CEO), PauL Antony called me back. He had come onto the Board the very day the disastrous U.S. Grossenger acquisition was announced. He basically said that was one of the dumbest purchases he had ever seen. The due diligence was completely lacking. For example, AutoCanada was not aware that the leases on the purchased dealerships were being subsidized by the car manufactures and even (bizzarely) by the City of Chicago and that those subsidies would end upon the purchase. I believe he was saying that some of the leases have now been negotiated lower but I did not get much detail on that. The bottom line is that Paul Antony certainly appears to believe that AutoCanada can improve from here. But it is going take a lot of work and certainly some time and meanwhile the industry faces headwinds of lower sales. It has become ever more apparent that the past management did a poor job. I believe Paul Antony is far more able and motivated than the past management. But he is saddled with the past mistakes including the money-losing U.S. dealerships.

Our Stock picks are up an average of 14.7% this year. In fact fully 27 of the 28 stocks rated in the Buy or Strong ranges at January 1 are up in price. And the one that is down is down is down by only a penny. Normally that would be great. But it trails the market as the TSX is up 16.0% and also it comes after a poor 2018.

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