On Thursday, the S&P 500 and Toronto were each up 0.2%.
Toll Brothers rose 1.9%.
Shopify was down 4.9% after a short seller report came out. That’s really not much of a drop considering how fast this stock has risen and considering its high multiples to sales.
Apparently there was some progress on a U.S. / China trade deal after the China’s number 2 man met with Trump. That could boost markets tomorrow – or maybe not since it was already expected – futures markets are little changed this evening.
Regarding interest rates: Fortis Inc. just announced it will buy back up to U.S. $400 million of its 3.055% notes due in 2026. In part this is because it just sold and asset and so perhaps has spare cash. Fortis is a growth company and so it is a bit remarkable that it feels that it it would rather not have the use of $400 million for the next seven years at a rate of 3.055%. In fact they are paying a premium of $30 per $1000 to avoid having continue to borrow this $400 million at 3.055%. This suggests that Fortis has a very low cost of borrowing and they probably don’t see the cost of borrowing rising much anytime soon.
I attended the annual meeting of Canadian Western bank today. These annual meetings are largely perfunctory and scripted. With rare exception the annual meetings of large companies are almost a charade. I am not “picking on” CWB, this is just the way things are done. 12 nominees were running for 12 available spots on the Board. So, they all got in! The Chairman followed the script by asking if there were any other nominees from the room. Of course none were expected and none were nominated. I believe that almost all of the votes would have been cast in advance of the meeting. (Mine was) Most retail investors are not “registered” owners and I believe must vote by proxy which is typically done in advance of the meeting. Registered shareholders could vote at the meeting and it looked to me like at least three did so at the appointed time during the meeting. There were likely more registered owners who voted just before the meeting started.
The CFO and The CEO both gave good presentations highlighting the strong record of CWB. This Bank has a very strong track record. It’s ROE in 2018 was 11.9% and they target 12 to 15%. They have not lost money in any quarter in over 25 years. Despite that, the shares are trading at only just over book value. As Buffett would say, if you wanted to start a new bank and fight for market share it would cost you book value (plus more in startup expenses). Here you can simply buy an already established bank for very little over book value. I would certainly expect this to be a good investment at that price over the medium to longer term. The very near term is harder to say. If I did not already have a large exposure to CWB I would want to buy more at this price.
After the management presentations there was a chance to ask questions. Only four were asked. It seems people must attend these meeting more to socialise than to learn anything.