Wednesday was another strong day for the U.S. stock market with the S&P 500 up 0.7%. Toronto was up just 0.1%.
Nothing on my list was up as much as 2.0% but a number were up over 1%.
Dollarama was down 2.75%.
There have been a lot of large corporate acquisitions in the news this week including, most notably, Brookfield Asset Management’s $4.8 billion acquisition of 62% of Oaktree Capital. There were other acquisition announcements this week of over $500 million in several sectors including mining. To me, this suggests that corporations are willing to pay high prices for assets and suggests that what Warren Buffett calls “animal spirits” are running high. This is positive for stock prices.
Melcor Development released 2018 results after thee close today. As expected Q4 lot sales in Canada were down versus last year and were down 24% overall for the year. But they sold a good number of lots in the U.S. including some that they developed and some that they had bought as finished lots. Overall the Q4 results were similar to last year which was a lot better than I thought it might be. They do expect weak lot sales in Canada in 2019. But they are very well positioned to weather a downturn. The book value per share is now $32.01 which is 147% higher than the stock price of $12.93. Roughly half of the assets are income producing. The land assets are certainly illiquid but they are also of a very “hard” nature. Based on past experience, I don’t particularly expect the market to take much notice of the earnings or outlook.
CRH Medical also reported Q4 and 2018 earnings. These earnings looked good to me but I saw a headline that suggests they were about equal to expectations.