On Monday, markets ended the down moderately although they had been up moderately for much of the day. The ten year U.S. bond yield declined somewhat which was positive for markets.
The S&P 500 was down 0.2% and Toronto was down 0.4%.
American Express was up 2.1% and I did add to my small position in this company this morning. I’m planning to hold this for the long term since it is a high quality company and I think it will continue to do well over the years.
Aecon Group was up 8.2% after it announced that Oaktree Capital management will invest $150 million and will (probably, eventually) own 27.5% of Aecon’s Utility Services subsidiary. While the market response was positive, this did not look impressive to me at all. Oaktree Capital is receiving convertible preferred shares that will pay (a huge) 12% for the first three years and then 14% thereafter. The deal also provides apparently a $400 million line of credit for Aecon. Overall it looks like a complex arrangement. I would not be surprised if this little bump in the share price reverses in the next few days. Aecon has been a disappointing investment and does not appear to be a well managed company at all in my view. I also find its disclosure to be generally lacking.
After the close, TFI International released Q3 earnings. Earnings were down partly due to unusual gain in Q3 last year but also due to lower shipping volumes. It’s a great company and they also announced a 14% dividend increase. It will be interesting to see how the market reacts to this earnings release.
A headline today said that Cocoa futures were “the highest since 1979”. I wondered if that meant the highest in data going back to 1979. But it actually is the highest price since 1979. Cocoa prices spiked hugely in the late 1970s and have yet to regain their all-time highs from 1977. To me, this illustrates the difficulty of investing in raw commodities. Investing in companies that tend to grow over the years is a far more reliable way to grow wealth. Stock values also fluctuate greatly. But not many large company stocks today would be below their 1977 prices – and most pay dividends as well. There is certainly absolutely no comparison between the total returns on the S&P 500 since 1977 versus Cocoa or oil or Gold probably just about any other commodity you could name.