October 2, 2017

On Monday, the S&P 500 rose 0.4% and Toronto was also up 0.4%.

The U.S. markets were apparently unaffected by the mass shooting in Las Vegas. Sadly, the general public is mostly no longer all that shocked by such an event.

Canadian Western Bank was up 1.1%. It announced this morning that it has been approved for a “normal course issuer bid” under which it could buy back up to 2% of its shares.

Some companies announce such bids but then end up buying back few or no shares. My information is that CWB has NEVER bought back any shares and I am not sure it has ever had a normal course issuer bid for common shares. So, there is every reason to believe CWB is serious and will buy back shares. The share price is probably up somewhat since the CWB Board approved this and applied to the stock exchange for approval. Still, I am pretty sure they will be buying. It is unfortunate that CWB had to issue shares in 2016 at $24.50 only to buy some of those back now at much higher prices. But circumstances have changed. In 2016 there was apparently a need to shore up capital. Now the bank believes it has “excess” capital and can afford to buy back some shares. And it apparently believes the shares remain under valued.

Often companies are very poor judges of the true value of their own shares and are sometimes prone to paying too much in buy backs. But given that CWB has no past history of buying back shares, I think they do have a rational basis for doing so at this time.

In summary, this buy back would seem to be good news and should provide an added buoyancy force on the share price.

Couche-Tard was up 1.6%.

Linamar was up 2.8% to $78.28. I know it is a great company but I don’t know if it remains good value at this price.

The next update will be for FedEx. I will plan to update Linamar soon.

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