January 15, 2024: U.S. markets were closed for the Martin Luther King jr. holiday today. Toronto was up 0.3%. I did double my rather small position in TransAlta this morning. It was up 2.1% today. Capital power might have been a better choice but I have not looked into it. Capital Power was up 3.3% today as it announced it is exploring the feasibility of a small nuclear reactor in Alberta (That would be years away). And Capital will have an investor event on Wednesday to look at its outlook.
After the close Canadian Western Bank announced it will issue $250 million of subordinated debentures (you could call these bail-in bonds but that ‘s a long story Non-viability contingent capital NVCC is the official term). The interest rate is 5.95% for the first five years and then it floats for five years. and also CWB will have the right to redeem in 5 years. They current already have $525 million of such debentures. It does not look like any of the existing will be redeemed. The 5.95% rate on subordinated debt is not very low but it’s also not very high and probably demonstrates market confidence. These bonds will apparently be issued to the public as far as I could see. If they do come up as an IPO you should only buy if you are fully prepared to hold for the 5 to ten year term.
I suspect that CWB may redeem (at $25 at the end of April) the preferred shares CWB.PR.D that trade at about $24.78. The CWB.PR.B preferred shares that trade at about $19 are probably very unlikely to be redeemed – but it would be a great bonus if they were redeemed. The D shares have a huge spread over the 5 year Canada and I have long figured these would be redeemed. The B shares have a modest spread and so there may not be much reson to redeem – unless they are simply not as useful under the ever-changing bank capital rules. I hold a tiny amount of the D shares. I might sell those after the next ex-dividend date which is apparently January 23. I hold a fair amount of the B shares which I expect to continue to hold but it would definitely be a welcome bonus if they were redeemed – which would be at $25. See the reports on these two shares on the Subscriber Home page if interested in more detail
January 14, 2024: On Friday, the S&P 500 ended the day up 0.1% while Toronto as up 0.3%. TFI International was up 2.0%. What a long-term winner it has been. Constellation Software was up another 2.3%. Its gains over the years are stunning.
I may add to my TransAlta position tomorrow. Wholesale power prices in Alberta have been through the roof the last few days due to cold weather. The price cap is $1.00 per kWh and it has hit that cap many hours. A more normal wholesale price is more like 5 to 6 cents average over all hours. The average the last two days was 66 cents and today will be similar. As far as I could tell most of TransAlta’s Alberta generation is sold at the floating wholesale price. If so they have made a lot of money these past few days. That won’t show up until Q1 is reported. Meanwhile prices were much lower in Q4 with mild Alberta weather. So maybe the Q4 report will be disappointing. So TransAlta may not be any screaming buy but I like it chances to do well.
Related to the cold weather in Alberta, Canadian Tire is doing a booming business in batteries and probably automotive service. Huge lineups for batteries.
January 12, 2024 12:15 pm eastern time: Apologies for this site being unreachable on most browsers for the last two days. A security certificate had expired.
An interesting development on Wednesday was that Brookfield Office Properties announced a buy back program on all its preferred shares listed on Toronto. We have two of those on our list and they have been HIGHLY volatile and are marked highly speculative Buy / Hold. BPO.PR.A rose about 8% on the news while BPO.PR.G did not seem to react. The buy back program will be restricted to very small volumes (due to the low trading volumes) and that will limit its impact. I see this as good news that shows that Brookfield Office Properties and its immediate parent Brookfield Property Partners apparently have confidence that its office properties will weather the current weak office market. These shares remain quite speculative but this buyback news is certainly welcome for anyone holding these.
Cameco is up 8.0% today to a new high. It’s been volatile but has been a big gainer. It’s expensive in relation to earnings but with nuclear power coming back in favor this stock has potential to keep gaining.
January 9, 2024:
On Tuesday, the S&P 500 was down 0.15% and Toronto was down 0.5%.
But there were a couple of notable gainers among the stocks I track.
Cameco bounced up 5.1% recovering some of the ground it recently lost.
Shopify was up another 3.4%. It’s at a 52 week high but remains well below it’s all time high.
After the close, West Fraser Timber announced it will shut one mill and curtail another. This stock has been surprisingly resilient all year. I would think that this news is quite negative however.
January 8, 2024: Monday was a strong day in the markets as the S&P 500 surged 1.4% and Toronto was up 0.7%. Most stocks were higher. Shopify was up 4.2%.
January 6, 2024: On Friday, the S&P 500 was up 0.2% and Toronto was up 0.3%. West Fraser Timber was up 2.3% and has been a surprisingly strong company lately.
Costco reported December same-store sales which showed the highest growth in About 6 months or more. U.S. same-store growth was strong at 7.4%. Canada has remained strong all year and was up 11.9% year over year. Some of that (perhaps most) is due to price increases. Some can be attributed to Canada’s surging population. Some of it may be Costco gaining market share. The stock was up 1.2% on this news on Friday. I view the stock as expensive but betting against it usually works out badly.
January 3, 2024: On Wednesday the S&P 500 was down 0.8% and Toronto was down 0.3%. The FED minutes that came out today threw some cold water on the notion of near-term interest rate cuts. The market did not react too strongly but might react (drop) more tomorrow after mulling this over.
January 2, 2024: The first few comments of 2024 will be posted here. On this first day of trading for 2024, the S&P 500 was down 0.6% and Toronto was down 0.4%. Most stocks were down today. Markets moved up so fast in the past few months that it should certainly be no surprise if we now give some of that back.
January 1, 2024: The first few comments of 2024 will be posted here. Our stock picks did well in 2023 and I will update the performance numbers in a few days. Heading into 2024 I have marked some of the ratings are out of date. I want the performance tracking for 2024 to be based only on ratings that I am comfortable with at this time.
Also, in terms of performance tracking I have way more preferred shares now and so I will track all those as a separate category this year. The main performance figures will only include the equities this year. Prefs were always a bit problematic to include there since they are mainly meant to provide income whereas the performance tracking is all about capital gains as I have never included dividends or other cash distributions. My own portfolio performance has always included everything I own and includes dividends and interest that will continue in 2024.
A lot of stocks were up quite a lot in the last few months of 2023. Entering 2024 I think most investors (especially those at or near retirement) should be cautious. Stocks don’t go up in straight lines and I think we are likely to see some pull backs. I’d like to be positioned to withstand and even take advantage of pull-backs.
2024 could be a tumultuous year. The S&P 500 seems somewhat over-valued. (Not a big deal but a bit of a concern.) And then we have wild cards like the US election cycle. It’s frightful to think of Trump getting elected again and it’s perhaps equally frightful to think about what happens if legal troubles prevent him from running. There is also the prospect of the various wars escalating. Bizarrely, that seems less of a concern than what happens with Trump and the divided US population. Interest rates are expected to decline. But the bond yields may have already anticipated too much decline and could certainly head back up temporarily and that’s bad for stocks.
The bottom line for me is that most investors should not be positioned too aggressively. Cash and near-cash and fixed income may prove to stabilize portfolios in 2024. But of course a reasonable exposure to equities should be maintained.