January 26, 2020

On Friday, markets had (a rare) down day as the S&P 500 ws down 0,9% and Toronto ws down 0.3%. 

This was related to the new Coronavirus. It’s probably anyone’s guess how badly that will continue to impact the markets or whether it will turn out to be a non-event for the markets.

Most stocks were caught in the down draft.

American Express was an exception as it rose 2.85% based on its Q4 earnings report.

After recently updating my own portfolio composition I looked at how large a component Toll Brothers had become after its recent strong gains. I decided to trim that in non-taxable accounts and ended up selling what amounted to 31% of my total position in Toll Brothers. It still remains one of my largest positions.

On Friday Boston Pizza announced that it had extended its credit lines on better terms. There was a lot of complicated detail but in summary they said: “The amended and extended credit facilities provide both the Fund and BPI with lower fees and interest rates along with more favourable financial covenants.  Also, the borrowing capacity of the Fund’s credit facility was increased by approximately $6 .7 million to enable opportunistic NCIB purchases,” 

This all sounds quite good. It’s hard to imagine that they would get these better terms if they are  (as the market apparently fears and I somewhat fear) about to cut the distribution. But I have been fooled on that before where a company gets good borrowing terms and then reports poor earnings. (It happened with AutoCanada and I believe CRH Medical a few years ago). Lenders are first in line for cash flows and so they might feel safe even if cash flows available to unit holders will be down somewhat. But overall, the announcement looks like good news. They could do some share buy backs which are accretive to distributions per unit. They have done that in the past but had fully used up the borrowing capacity that was dedicated for that purpose. Now they have added capacity and presumably they view the units as under-valued.


Scroll to Top