On Wednesday, markets ended the day modestly lower wit the S&P 500 down 0.1% and Toronto down 0.2%.
I notice that the North America Construction Group Debentures that I have mentioned a few times lately have jumped to $110.55 versus their recent issue price of $100. I was attracted to these 7 year dentures fort the 5.5% yield. The conversion price at $24.75 was well above the trading price of about $16 when I first looked at this on May 1oth. Now the share price has jumped to $20.50 and so the conversion price is not as far out of the money.
This is nice quick gain of over 10% on an investment that was bought for its 5.5% annual yield. I expect this to continue to be volatile. I liked these debentures at and around $100 but I would not be a buyer at $110.
An investment company called Bridging Finance was in the news today. It is in receivership. It looks increasingly like a fraudulent company and its 26,000 clients/investors may have lost much or all of their investments. The company had loaned some $200 million to a company that would supposedly build a rail line from the Alberta oil sands to Alaska. Why that company would need $200 million for a project that was not yet started (and probably unlikely to ever go through) was unclear. Some $20 million of the loaned money was funneled back to the private bank account of the founder and CEO of Bridging Finance. Yikes! To me, this is another warning to stay away from small investment companies. Some of them may be great. But I feel far safer with investments made through the likes of the large Canadian Banks where I can buy a huge selection of investments and where I am in control of what investments I own . No doubt, there are some great private investments and great small investment firms. But I would be very cautious. In fact, I just would just always avoid them.