An otherwise good day in the markets on Wednesday was rather spoiled by bad news from one of the stocks I own and that is on our list.
The S&P 500 was up 0.1% and Toronto was up 0.2%.
Canadian Western Bank was up 1.9%.
CRH Medical was down 21% to $2.81 on Toronto after announcing that a contract involving 20% of its operating earnings will not be renewed when it expires at the end of October 31, 2021. It is possible that the contract could still be renewed but for now the expectations is that it will not be. It’s quite a negative development because previously the expectation had been that all such contracts would be renewed periodically. This is a risk I had looked into back in 2017 but had not concluded it was a serious risk. It’s not yet clear if this is something that will happen with additional contracts. I am holding onto my shares but this is definitely a nasty development. And it comes on top of a year when their business is down due to the pandemic. Checking insider trading the company itself has been buying back shares fairly steadily since April but the last purchase indicated was on November 10 at $3.17. This would indicate that the non-renewal of the contract is taking management by some surprise. It is disturbing to see that the CFO exercised options and sold 25,000 shares just last week on December 18 at about $3.70. And he had not previously sold any shares all year. He did not necessarily know the major customer would announce the non-renewal of the contract but it would seem he should have some explaining to do in regards to insider trading rules. But, he still holds 368,000 shares and so it is not the case that he was selling a large portion of his holdings.
With apologies to Trump supporters (and he does have some good policies) I will say that the recent avalanche of pardons that include associates of Trump (and potential or even actual past witnesses against Trump) are the very definition of corruption. If there is such a thing as legalized corruption in the U.S. this may be it. That country has an enormous amount of respect for the “framers” of its constitution. But it seems clear some updates are needed and include Federal oversight of the federal election. And probably a big change in how many offices are held on a partisan basis and also the notion of party affiliation being a matter of public record. On the other hand I will say that I agree totally with Trump that $600 one-time COVID relief payments are insufficient and I agree he is right to ridicule many of the things in the Bill that is bringing COVID relief payments. Well, it seems the last four weeks of the Trump presidency are going to continue to be, shall I say, unusual.