On Friday the S&P 500 was about flat while Toronto was up 0.45%.
The Melcor REIT got clobbered down 23% after the news that I mentioned on Thursday. I’m hopeful that something good will come out of the review but there is certainly no guarantee of that. The REIT found itself with too much debt as interest rates rose and it was prudent to cut the distribution. It’s an age-old rule of corporations that debt interest and debt principal must rank ahead of equity distributions. As of Q3 they though that they would be able to sell some properties in Saskatchewan to take care of the liquidity issue. It seems likely that did not happen or was insufficient.
Penny stock Ceapro was up 57% (from a very low level) after its press release touting various research irons that it has in the fire. Unfortunately, this company has a long history of projecting future developments which never seem to occur. In March it will hold a vote on a proposed merger with another company. This stock is definitely high risk and unpredictable.
TransAlta bounced up 5.3% after releasing Q4 earnings. I have going over its results in detail. It appears to be under-valued on a cash flow basis. But it is also very unpredictable due to changing commodity prices. And it has a lot of debt and a weak balance sheet. (The company claims the balance sheet is strong but that’s not the case.) I will do have an update on it in a day or two.