July 22, 2015

On Wednesday, the S&P 500 fell 0.2% and Toronto fell 0.5%.

Several of our U.S. stock picks continue to rise. Toll Brothers was up 2.5%, Wells Fargo was up 1.0% and Bank of America was up 2.0%.

Meanwhile Boston pizza was down 3.0% to $19.90 and AutoCanada was down 4.3%. (I added to my positions in both of these today.). Stantec was down 2.3%.

A definite wave of fear has swept over Bombardier. Its B shares were down 5.6% and its preferred shares were down 10.1%. Apparently the latest decline happened when Bombarier held a conference call with CiteGroup bond analysts (which sounds like selective disclosure but that is another issue) and reassured the analysts that Bombardier had at least three years worth of liquidity (which is I believe basically cash plus room on the credit card I mean credit line). Bombardier was unable to answer any questions about the C-Series plane and most other matter because they must wait until July 30 when they release earnings and inform all investors at once. This conference call seems ill-advised. Possibly the fear here is over-blown but is is clear that Bombardier has been a terrible investment. It appears to be in a tough industry and to have horrible management. I contacted them today to let the company know what I think of them. The difficulty now is that this whiff of real fear could be self-fulfilling. If there is now a real fear that the company will go under then why would any airline place an order? (much less put down the deposits and progress payments that Bombardier relies on) payments Why would any supplier give them credit? At last report, Bombardier did have substantial cash. But that cash was largely offset by payables.

In other news, Canadian Pacific Rail reported that car loadings were down in every category except forest products. I have not analyzed CP as a stock and have no opinion on that but the lower car loadings are another sign of a softer economy. Whereas CN had reported an increate in automotive car loads, CP reported an 18% decline and also a 6% decline in Canadian intermodal car loadings. I believe that CP is more exposed to the Western Canadian economy than CN is.

 

 

 

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