October 20, 2015

The S&P 500 was down 0.1% and Toronto was up 0.6%.

Stantec was up 2.8%. AutoCanada was up 4.6% after announcing it will acquire two Nissan dealerships in Ontario.

Melcor fell 3.4% to $14.34. I had placed an order a couple of weeks ago to add a few shares to my position if it fell to $14.51. So that order got filled today.

Subscribers may tire of me noting that this stock is under-valued. The book value was $27.58 per share at the end of June. So basically, you can buy this at about half of book value. Most companies trade at something in excess of book value. It is always possible that some of its land assets are worth less than book value (price it paid plus investments in developing the land plus capitalised interest). On the other hand, I have not heard of any big decline in land values in Alberta. And it may not be able to continue to its practice of creating value by developing new rental buildings (retail and office) at least not for a while. While Melcor does own land and buildings it is something of an asset light operation when it comes to actually developing land and buildings. It contracts that work out. That may make it easier for it to scale back costs if that business is to be much slower. There is no doubt that this is a cyclic company. However, I fail to see any evidence to suggest that it is only worth half of its book value per share.

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