Markets bounced higher on Monday as concern about the Omicron variant ebbed somewhat. The S&P 500 was up 1.2% and Toronto was up 1.1%.
Toll Brothers was notable with a 3.8% gain.
I noticed that ChemTrade logistics Income Fund is out with a 6.25% convertible debenture. That sounded tempting and I recognize Chemtrade as a name that has been around a long time and has done well in the past. But a quick glance at their financials shows losses the last few years. And the stock has traded lower going all the way back to 2014. It does pay a high dividend which can hold down a share price due to lack of retained earnings. Maybe they are still strong financially but I am taking a hard pass on this one. That is, I am definitely not buying any.
Alimentation Couche-Tard was in the news today because its 10 times multiple voting share’s will be combined with its regulars one vote B shares as of Wednesday. This is basically a non-event at this point.
The founders have long controlled the company by owning multiple voting shares. The four founders are billionaires and hold large investments but they will no longer have voting control of this $51 billion dollar company. For whatever reason, both the multiple voting A shares and the single-vote B shares trade on the market. The B shares trade in vastly heavier volume and are what most investors own. Going back to when I first looked at this company back in 2005 was that the multiple voting A shares never did trade at much of a premium at all. Presumably that was because of legal matters that would prevent anyone from buying out the A shares at a premium without paying the same for the B shares. Also there was a stipulation that the two share classes would combine once the youngest of the founders turned 65 (which is what is happening Wednesday). The founders tried to get this stipulation changed a couple years ago but they were unable to get agreement from the B share owners.
I don’t follow many of them but my understanding is that multiple voting shares usually don’t trade at much of a premium. An exception is Canadian Tire where the trading volume of the multiple voting shares is extremely thin and they have always traded at a massive premium. That makes the multiple voting Canadian Tire shares dangerous to own since at some point that premium could disappear.
Many years ago Telus had a non voting share that traded at a lower price and was meant for U.S. owners and to avoid foreign voting control rules. These also traded in Toronto. They traded at a noticeable little discount and I used to recommend those shares. That turned out good advice because those cheaper non-voting shares ultimately got converted to normal voting shares and rose in price at that time.
I have had BHP on this site for a long time and I recommend the cheaper BBL shares in New York. Those shares are expected to be combined with the slightly higher priced BHP shares sometime this year. There is possibly an arbitrage opportunity to short the BHP shares in New York and buy BBL but that is best left to institutional traders. Not something I would ever try.