On Monday, the S&P 500 rose 1.3% and Toronto rose 1.1%.
Toll Brothers was up 2.3%. Agrium was up 2.2%. Liquor Stores N.A. was up 2.9% (it reports earnings next Monday)
AutoCanada was one of the few decliners on out list and was down 2.6%.
Sunday’s leak about Buffett being “in talks” to buy Precision Castparts was true but the deal was already done by the time it leaked. What likely happened is that as the deal was about to be announced the circle of people who knew about it started to widen beyond the trusted few and so a leak happened. But in any case the leak occurred when markets were closed and the deal was going to be announced before the open in any case. So not a major leak as probably no one had the opportunity to trade on the news. Still Buffett will not like that the news was leaked.
Buffett acknowledged that the deal was not cheap from a valuation perspective and indicated that the current CEO of Precision was a key reason to do the deal. That is always the case with Buffett. He only buys companies where he judges that exceptionally good management is in place and will stay on.
I’d like to see Buffett take an interest in Bombardier but its poor management history probably totally precludes that. And possibly owning Precision Castparts which sells to all the big plane makers would also preclude owning a plane manufacturer.
Melcor reports tomorrow, after the close. Due to the cyclical nature of the company and due to the impact of market value gains and losses on its properties it may not be immediately apparent if the earnings are good or not. I am optimistic that they will have had a pretty good Q2, but the more important thing may be their views on the quarters ahead. In any case, they have the ability to withstand recession conditions and I am confident that the shares will offer a good return over time.