December 11, 2018

On Tuesday, the S&P 500 was about unchanged while Toronto was down 0.4%.

Alimentation Couche-Tard rose 2.7%. This company continues to be very well managed and has plans for continued growth. The stock has risen since the end of October despite stock indexes declining since then.

Canadian Western Bank recovered 2.5%. An insider purchased 1000 shares today at about $26.00 to hold 1000 shares. He also holds 45,000 options (Many of which may be out of the money) and about 16,000 rights to restricted or performance share units.

I mentioned that Andrew Melton has bought 670 shares of Melcor Developments last week. Today he grabbed another 950 shares at $12.65. I think it is clear that that he and Melcor management view the stock as being significantly under-valued.

FedEx was down another 1.7%. It is trading down around 10 times earnings which certainly looks attractive.

A new issue out today was a Northwest Healthcare Properties REIT 5.5% five year convertible debenture. Convertible debentures trade like stocks and can provide a capital gain if the stock rises above the conversion price. They are issued with a conversion price above the current stock price so the conversion privilege is “out of the money” initially. But it is worth something. Absent the company going broke the worse case here is the debentures pay 5.5% annually for five years and then mature at the same price they were issued at. As long as the company does not basically go broke, it would seem that this will be at least a decent investment. Of course, convertible debentures can trade below issue price prior to maturity. But no one is forced to sell at a capital loss or forced to incur a capital loss then or at maturity, again absent bankruptcy or the close equivalent. As of this evening this issue was still listed as “Open” on TD Direct.

The release on bail of the CFO of Huawei is a positive for markets. In my mind it was also a foregone conclusion since the argument to not release her on bail seemed to center of on her wealth and sophistication. To me, even suggesting that extremely wealthy people should be basically barred from getting bail was simply ridiculous. And all the more so, given that she is not accused of a violent crime. And I am certainly not convinced that Canada should turn her over to the American authorities.

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