May 28, 2024

On Tuesday, the S&P 500 was about unchanged while Toronto was down 0.5%.

AutoCanada was down 4.6%.

Nvidia continues to soar.

The 5 year Canada bond yield is at 3.8% showing no signs that it expects interest rates to come down.

Oil is at $80.

The Alberta economy continues to be strong it appears.


May 27, 2024

The U.S. stock markets were closed for the Memorial Day holiday on Monday.

Toronto was up 0.2%.

Preferred shares mostly moved modestly higher.

Futures indicate that U.S. stocks will open modestly higher on Tuesday.

May 26, 2024

On Friday, the S&P 500 was up 0.7%, but this simply recovered the decline on Thursday. Toronto was up 0.5%. – which did not quite recover the loss on Thursday.

Costco was up 1.8% to $810. At 53 times trailing earnings and 47 times projected earnings that is expensive. The market is projecting about 13% earnings growth. Same store sales growth for May was relatively modest at 5.5% and for the first 35 weeks of the fiscal year was 5.3%. So the stock is expensive in relation to its same-store sales growth. The figures would suggest it would be wise to trim positions. But in the past, trimming Costco has only been a wise move if you were able to buy it back later at a lower price. Simply holding has been a good strategy over time. So, it’s not easy to decide how to proceed if you own Costco. Earlier this year I trimmed and then did buy back at a modestly lower price. Now I’ve trimmed again and will hope to buy bac lower. We shall see. It’s interesting to see that the 52 week low was $502. This stock has temporarily pulled back at times.


May 23, 2024 9:45 am

Nvidia is the story of the day with another 9% gain after releasing earnings.

In more mundane news, New Home prices were up slightly for Canada overall in April versus March. The gains in Alberta were strong:

“The largest month-over-month increases in April were reported in Edmonton (+1.1%) and Calgary (+ 0.9%). Builders attributed the price gains to construction costs along with favourable market conditions. In Alberta, the rapidly growing population is fuelling demand for new housing. According to the latest population estimates of Canada, Alberta (+4.4%) recorded the fastest year-over-year rise in population in Canada in the first quarter of 2024.”

Inter-provincial migration gains came out a few days ago. Calgary gained the most people by far. Edmonton was second highest. Halifax and Moncton also has strong gains, Toronto, Montreal and Winnipeg were the three biggest people losers. (They lost people to other parts of Canada but still probably gained given international arrivals).




Preferred Shares updated May 22, 2024

I’ve updated the yields and ratings on most of the preferred shares.

It was around this time last year that I became quite bullish on preferred shares. As of now the rate resets have given quite strong gains on top of paying their dividends. But there was volatility and last Fall was an even better time to buy.

The perpetuals are also up at least modestly.

At this time the rate reset shares are generally not as attractive as they were last last year but they are still mostly somewhat attractive. For these shares it is important to look at not only the yield but the date of the net reset and the spread over the 5 year Canada bond that will apply at the reset date. The credit rating can also be important especially if it is a lower strength company.

Perpetual preferred may be the more attractive option at this time and they have not moved up as much but they should move longer term interest rates come down.

I have not sold any of my referred shares lately. It may be tempting to some trimming but often the best approach is just to hold.

Pref shares have tax advantages in taxable accounts but they can certainly be useful in RRSP and TFSA and other non-taxable accounts as well.

May 22, 2024

Wednesday’s session saw the S&P 500 down 0.3% and Toronto down 0.5%.

Starbucks was up 3.9%.

Shopify was up 3.3%

Toll Brothers was down 8.5% despite posting strong earnings.

I likely won’t post my usual comment tomorrow evening due to traveling back to Edmonton.

May 21, 2024

On Tuesday, the S&P 500 was up 0.25% while Toronto was unchanged.

Tesla (not on our list but I own a little) was up 6.7%.

Toll Brothers reported a 60% earnings gain after the close but is only up 1% in after-hours trading.

Housing starts in Canada were down 9% year over year in May driven by a huge 37% drop in Ontario. The figure for single family detached homes was up 3% for Canada with Ontario down 8%.

Alberta housing starts were up a HUGE 62% with single-family detached up 37%. This should bode well for Melcor Developments although I have been hitting a brick wall in trying to get them to understand that their land development costs must be too high and that a 40% gross margin on lot sales is just too low considering that the dollars in inventory could be tied up for perhaps 8 years. They have refused to do the analysis that I suggest is needed.

I updated the reports for the Brookfield Office Properties rate reset shares. See Subscriber Home Page. You may recall these shares REALLY tanked in the Fall and it was hard not to fear they might go to zero. In late December their credit rating was lowered to Junk status. But the shares then turned higher and have made very strong gains since then.

Sometimes it feels like the market tries to shake us loose from positions. And it sometimes offers up juicy bargains but it seems very scary to buy.

It’s easy now to think that these share s were obvious bargain at their lows. But they also looked like obvious bargains on the way down well before they bottomed and it was a painful ride down. I held on through the Fall and have not sold and that has worked out well.

Canada’s inflation for May came in at 2.7% and this lowish level is giving hope for an interest rate cut in June. All else equal that would be positive for stocks and bonds.

May 20, 2024

Toronto is closed today but U.S. markets are trading.

On Friday, the S&P 500 was was up 0.2% and the Dow Jones Industrial Average popped over 40,000 for the first time ever. Toronto was up 0.7%.

Cameco was up 6.4%. It’s been somewhat volatile but is up 100% in the past year.

I see where Canada is apparently looking at higher import tariffs on Chinese Electric Vehicles. Apparently the tariff on all Chinese autos now is 6% and that is imposed on Teslas made in China. I’m not aware of any Chinese EVs coming in other than Teslas. The U.S. is apparently imposing a 100% tariff on Chinese EVs. That’s a sign of a weak country that figures it can’t compete. It’s sad.

As of 3 pm easter time the S&P 500 is up another 0.2%.



May 17, 2024 7:30 am eastern

On Thursday the S&P 500 was down 0.2% while Toronto was up 0.1%.

WSP Global was down 5.3%. I did not see a reason for that – probably an analyst downgrade.

lululemon was down 2.5%

Toll Brothers was down 2.8%. I sold some (42%) of my Toll Brothers yesterday. It’s had a fantastic run lately. That surprised me given they had lower contracted home sales in later 2022 and early 2023 that I thought would show up in lower earnings. There is also the higher interest rtes. But with a lot of Americans holding onto their houses and not selling due to locked in low 30 year mortgages, new homes became a hotter commodity. In addition I have long said that Toll Brothers was very well managed and focused on return on equity. Management efforts are paying off.


May 16 before market open

Walmart and a former Sears Canada CEO

Further to last evenings comment. I had noticed that a former Sears Canada CEO Mark Cohen who is now a retail professor at a university was commenting negatively about Walmart’s strategy.

My recollection (and I may not have it quite right) is that the last one or two CEOS of Sears Cana were terrible and helped drive the company out of business. Or they and Mark Cohen certainly contributed to it and failed to prevent it. So it’s a bit rich to see this guy deign to tell Walmart what to do.

And then this morning’s news was that Walmart beat expectations by a lot this latest quarter just announced.

I see this Mark Cohen was fired from Sears Canada way back in 2004.  I have a pretty long memory for this stuff. Maybe I am being unfair, were his ideas good or bad? I just figure it’s a bit rich for a fired retail CEO to tell Walmart what to do or opine much about its strategies. I’m pretty sure Mark Cohen’s replacements at Sears did not fare any better.  Mid priced department stores had been doomed.



May 15, 2024

On Wednesday, stocks rose after U.S. inflation came in slightly tamer than feared.

The S&P 500 was up an impressive 1.2% but Toronto managed only a 0.2% gain.

Toll Brothers was up an impressive 5.9%. They have been doing fantastic but it might be wise to trim larger positions somewhat. It will ultimately remain a cyclical stock over the years most likely.

West Fraser Timber was up 3.0%. Apparently the market expects U.S. new home building to remain strong.

Yesterday, after the close, Melcor Developments reports Q1 earnings which were sort of okay in that they were belter than last year. But the gross margin on ;land sales remains too low and probably indicates that their land development costs are too high. Today, the market did very little in reaction. That’s partly becasue the market basically does not know Melcor Developments exists. It has virtually no analyst coverage and its trading volume is quite low. I keep in touch with management have basically been trying to shame them into doing better or at least trying harder. I sent them an email today , if anyone wants a copy of what I sent, let me know.

May 14, 2024

On Tuesday, the S&P 500 was up 0.5% while Toronto was down 0.1%

There were no particularly notable moves in any of the stocks on our list today.

Okay, let see… GameStop is at it again.

GameStop GME was up 60% today to $48.75.

But let’s look at some strange details. Yesterday it closed at $30.45. Then it OPENED this morning at $64.83. That was a gain of 113% versus the close yesterday. WILD stuff. Then later in the day it got as low as $36.00. If you bought at the open at $64.83, you were down 44% at one point and still down 25% at the close.

These are HUGE percentage losses. But how many dollars are involved? Well the company ended the day with a market cap of $14.9 billion according to Yahoo Finance. A few weeks ago the share price was about $11 and so the market cap would have been about 11/65 time $14.9 = $2.5 billion dollars.

So, the market cap is up by about $12.4 billion dollars. That’s BIG in anybody’s books.

So owners in aggregate have made $12.4 billion dollars (before trading fees). This could be taken away tomorrow but as of the close today, that is a real WEALTH gain. Not a money gain as such but a WEALTH gain and wealth is measured in dollars.

What about traders? They can make or lose money playing against each other. The number of shares is apparently 306 million. And the volume today is reported as 197 million shares. That’s 64% of the share count. Most likely some shares traded hands multiple times today possibly in what is called High Frequency Trading. Presumably some high percentage of the share would have stayed put and not traded. It’s possible that 10% of the shares or 30 million traded hands an average of over 6 times today. I don’t think that detail is knowable.

Okay if 197 million shares traded hands at an average of say $45 today, that would be $8.9 billion dollars. It’s hard to imagine how that can be mostly retail traders on Reddit. If the average retail trade was $3000 it would take almost 3 million trades to get this amount of dollars. 3 million trades of an average of 67 shares would do it.

All of this seems absolutely nuts. A lot of people are going to get badly hurt here. Perhaps just as many will make money. I worry about the person who owned $10,000 worth a month ago and now has $65,000  worth. That can be “game” changing for a lot of people. But it can melt away tomorrow. What if $25k has tuned into $160k and then evaporates? That’s the stuff of divorce if not suicide. This is dangerous stuff!





AutoCanada comment May 14 2024

The report on AutoCanada was last updated on March 13 and rated Speculative Buy at $23.75.

Since then then they have released their Q1 results which was a loss for quarter and the price is now down to $21.33.

Overall, this is a tough industry. People shop around for vehicles and they buy quite infrequently. No individual dealer has a vehicle that you can’t get at another dealer. So it’s not a recipe for a high profit business.

At the same time, car dealers always seem to be prosperous looking businesses so it’s probably a good although not great business over time. (Even Warren Buffett’s Berkshire Hathaway bought a chain of auto dealers some years ago.)

AutoCanada went through a stretch of really poor management (#Steve Landry who I shall not forgive for what I consider to be his ineptness). Steve was replaced by Paul Antony in 2018 who owns substantial shares in the company and is a far better manager. But Paul has now ran into the headwind of higher interest rates. He also had to dig out of a BIG hole left when Steve Landry vastly over-paid for dealerships in and near Chicago. Paul Antony has numerous initiatives to improve things but more work is needed.

AutoCanada today admits that’s its costs are too high. That’s better than having a company with costs too high that won’t admit the problem (#Melcor Developments) but it’s not as good as a company that actually has costs under control.

The company is still expanding and is still buying back shares and that indicates confidence on the part of management.

I think the bottom line here is that AutoCanada has a reasonable chance of doing quite a bit better but it’s unlikely to ever be a real star. I have a modest position that I am holding. It’s about 2% of my portfolio.

May 13, 2024

Monday’s session saw the S&P 500 about unchanged and Toronto down 0.2%.

Not a lot of movement in the stocks on our list. Stantec was one of the bigger movers up 2.0%.

I see news that Arthur Irving has died at age 93. I respect greatly respect his success in business. But he was estranged from his eldest son for what seemed to me to be no good reason. That’s not impressive. But I think Arthur was generally a happy person. I read where he was active and still skiing at about age 88. But after age 90 things tend to go downhill quickly in almost all cases.

Irving Oil is in the middle of a strategic Review and this could spur something big like some kind of sale of the company. A 100 years or so is a good run for a family business!

I see the following crazy but unsurprising headline:

“Canadian banks directed over US$100 billion to oil and gas last year: report”

As you can imagine, the report was not exactly meant to celebrate the banks lending to this sector.

Banks are in the business of lending money. Who they lend their money to should not be anyone’s business except maybe shareholders as long as they are not knowingly facilitating crimes. Oil and gas companies are not criminals although more than a few whack jobs might argue that they are. But this kind of nonsense of outsiders sticking their noses into the business of banks and other companies is obviously only going to get worse.

Data on Building permits for March was released today. For Canada, March was weak compared to February but apparently the first quarter overall was reasonably strong. With these reports it always seems to be possible to see it as either good or bad depending if you compare to last month or last year. Alberta’s residential building permits were up 34% versus March one year ago although down 7% versus February. I’ll take that as good news.

May 9, 2024

On Thursday the S&P 500 was up 0.45% and Toronto was up 0.6%.

Canadian Tire was up 6.9% despite slightly lower same store sales and higher credit card losses. Higher retail gross margins boosted earnings.

Stantec was down 3.6% despite posting higher earnings.

Costco was up another 2% as was Toll Brothers.

Linamar was up 6.8% after posting Q1 earnings.

Starbucks was up 3.0%

All-in-all it was another good day to be an owner of companies.

I saw where what I like to call The Competition (Elimination) Bureau is investigating lululemon for possibly misleading consumers about the environmental impact of their products. You can’t make up this kind of idiocy. This is the same organization that had no issue with Rogers taking over Shaw and which has approved just about every competition-eliminating merger ever proposed in the 35 years or more that I have been watching their rulings.


May 8, 2024

On Wednesday, the S&P 500 was unchanged while Toronto was down 0.1%.

Shopify got hammered down 18.5% after releasing disappointing Q1 results. It’s been a volatile stock in terms of price. My last update called it a “highly speculative hold”. My rating is out of date and I will plan an update before too long. Also the price shown in my last update from last year is before the 10:1 stock split.

West Fraser Timber was up 3.1%

Stantec reported another very strong quarter after the close.

Also after the close the Melcor REIT reported results. It continues to struggle someway and earnings were modestly lower. But at the same time the results are not disastrous. Recall, that the distribution has been suspended pending a Strategic Review. They made a crypric statement that they will pay a distribution equal to taxable income that would otherwise be reported. (They have to distribute all taxable income in order to avoid income tax). This is less than useful without knowing the expected taxable income in 2024. It’s hard to say, but looking at the past allocations of the distribution for tax purposes I’d expect roughly another 15 to 20 cents in distributions might need to be paid by the end of 2024. But it could certainly be lower given the expenses of the Strategic Review. The REIT has four properties for sale to raise cash and reports one is expected to close and provide 7.8 million cash at the end of this week. That’s certainly a small positive step forward.






May 7, 2024

On Tuesday markets edged up once again with the S&P 500 and Toronto each up 0.1%.

Cameco was up 2.4%.

Costco was up 2% and is near it’s all-time high. That’s despite an forward P/E ratio of 43.7 And trailing P/E of 49.5%. The difference between the two numbers would suggest expected earnings growth of 13% which is ambitious but certainly possible.

The Canada five year bond yield has retreated slightly to 3.67%. A downward direction on this yield is positive for stock prices – all else equal.

May 6, 2024

Markets had another strong day on Monday with the S&P 500 up 1.0% and Toroto up an impressive 1.4%.

Let the good times roll!

Cameco was up 4.7%

Shopify was up 3.7%

Toll Brothers was up 3.3%

There is always lots of gloom and doom but stock investors don’t seem gloomy at all.


Stantec Report updated May 6, 2024

Stantec is updated but rated only a Hold at $114.52 or US. $83.73.

It’s up a very impressive 45% since my last update in March last year when it was rated (lower) Buy.

It’s up an incredible 9,062% since I first added it to this web site as a Strong Buy almost 25 years ago. That was September 3, 1999 and the price was $10.00 but that’s just $1.25 adjusted for stock splits. The compounded return has been 20% annually which I certainly never would have guessed back in 1999. If this stock hits $125 later this year  then it will be a 100 bagger in 25 years. At Saturday’s annual meeting, Warren Buffett talked about he amazing power of compounding a good or decent return for many years. The return has to be decent and be above inflation. Basically double digit returns can work wonders over periods of 30 years or more. And 20% annual returns can produce astounding results but that’s very hard to find and sustain of course.

Stantec currently looks quite expensive. But it may well report another strong quarter when it reports in a few days.

Those with large positions might want to trim but the best strategy for a smaller position is probably to hold and to be prepared to add to it if it happens to pull back substantially.

May 4, 2024

On Friday the S&P 500 was up a hefty 1.3% and Toronto was up 0.6%.

Apple was up 6.0% after its strong earnings release.

Shopify was up 3.4%.

I had the opportunity to listen to the entire 5 hour Q&A session lice streamed from Berkshire Hathaway’s annual meeting. Buffett’s wisdom is always worth listening to. I ended up with 8 pages of notes.

It was interesting that his two investment helpers in no way got top billing. In fact they were barely mentioned. I would not be surprised to see one or both of them leave. Buffett made it clear that Greg Able will be in charge of investments as well as will be CEO after Buffett. Unless those two really like Greg, they will probably head for the door.


May 2, 2024

On Thursday, the S&P 500 was up 0.4% while Toronto was up 0.9%.

Stantec was up 3.4% but has yet to report Q1 earnings. It made what appears to be a modest acquisition of a U.K firm announced yesterday.

Apple was up 2.2% and then releases earnings and is up a further 6% in after-hours trading.

AutoCanada got spanked down 16% as margins on car sales have come down to more normal levels after having risen for a couple years due to low inventory. Interest rates are also a big headwind for the company. management appears to remain quite optimistic.

Reports today said that markets rose after fears of higher interest rates abated. That seems a little strange given that for months the reports were that stocks were holding their lofty levels partly on strong hopes of lower rates. Hopefully we are not in the Wile E. Coyote moment.

I see where David Rozenberg seems to be predicting economic gloom. In other breaking news, the sun rose today. He is the permiest of perma bears.

May 1, 2024

On Wednesday, the S&P 500 was down 0.3% while Toronto was up 0.1%.

Starbucks got clobbered down 16% after reporting a weak quarter. “China comparable store sales declined 11%, driven by an 8% decline in average ticket and a 4% decline in comparable transactions”. I’m confident that this remains a high quality company with one of the strongest brands in the world. I had a modest position in it and added to that today.

It could be that consumers are finally having to cut back. But over time Starbucks will continue to grow.

The FED today kept interest rates unchanged and said they could stay that way for some time yet. That’s not good news for stock valuations.

Oil has started flowing int he Trans Mountain pipeline expansion. This is a major good news story for Alberta that has been years in the making. The Alberta economy is relatively strong and seems set to be probably the strongest growth province in Canada for the next few years.


April 30, 2024

On Monday … I forgot to make a comment… Tesla was up about 16%….

On Tuesday, markets were weak as the S&P 500 was down a hefty 1.6% and Toronto was down 1.4%.

I see some  Cannabis stocks which are tiny slivers of what they used to be were up very substantially today. I really don’t care to even glance at the reasons why. Not my thing. But going to BNN I could not help seeing that the reason was a potential reclassification of it in the U.S. Whatever.

Canada’s GDP number for February was lukewarm at best. That’s actually a good thing for those who are hoping for lower interest rates.

One of Warren Buffett’s companies a utility named PacifiCorp is facing potentially $30 billion in liabilities for allegedly causing or contributing to destructive wildfires. These awards and potential awards are outlandish. If push comes to shove, Buffett will likely declare bankruptcy of that utility. He would not want to do that but he also is not about to let this take down his other utilities. As big as $30 billion is, it’s not large enough to be any major threat to Berkshire as a whole. And in any case I doubt that Buffett will pay anymore than is legally required and the way to minimise that is to declare bankruptcy of PacifiCorp if the $30 billion number stands.

I worked in the field of utility rates and regulation for 29 years. The “deal” on rate regulated utilities has always been that all costs are passed on to customers other than minor forecast errors (short-term cost overruns)  and other than sort of gross negligence. I have a hard time believing that PacifiCorp was grossly negligent. Basically the regulators are reneging on the long-standing “regulatory compact”. We shall see where this ends up.



April 28, 2024

On Friday, the S&P 500 was up 1.0% and Toronto was up 0.4%.

Alphabet / Google (unfortunately not on our list) was up a huge 10.0% after releasing results.

Toll Brothers was up 2.4%

The prospect of lower interest rates continues to float out a little later in the year. (seemingly keeps slipping from our grasp.) The 5 year Canada bond yield is now 3.89%.  In general, higher rates lead to lower prices on longer term bonds and perpetual preferred shares. Rate reset preferred shares are affected on a more individual basis depending if they have a near-term reset coming up or instead will pay the same distribution for up to five more years.



April 25, 2024

On Thursday, the S&P 500 was  down 0.5% while Toronto was roughly unchanged.

Meta was down 10.6% but of course remains a monster performer over the past couple of years and even more so in the long term.

Canadian restaurant and bar sales for February were reported yesterday and were strong. On a seasonally adjusted basis, February sales were up 3.8% versus January and up 4.4% year over year. For Alberta it was a 2.6% gain versus January and a 5.8% gain year over year.

On a raw non-seasonally adjusted basis the figures are: For Canada a 2.2% increase versus January (unadjusted) and a 7.7% increase year-over year. For Alberta a 2.7% increase versus January and an 8.4% increase year-over-year.

Notice the year-over-year gain differs quite a lot when seasonally adjusted versus not adjusted.  While February was the exact same season both years the different occurrence of weekend days could make a big difference for restaurant and bar sales.

Retail sales data for Canada were also reported yesterday and were somewhat weak. These are seasonally adjusted figures, which is what StatsCan always favors, and rightly so. For Canada February retail sales versus January were down a microscopic 0.1% – call it flat. Year over year they were up 1.2% which is not much growth given inflation (volume was likely down) and given the population increase.  For Alberta, there was a 1.1% decrease month-over-month and a 2.1% DROP year-over-year. With higher grocery prices adn higher interest rates people are apparently cutting back on non-discretionary purchasing. (Most of us have enough stuff already and can take a break). Not good news for the like of Canadian Tire.

Statistics Canada used to give nice summary tables with the percent change month over month and year over year and broken down by category and/or province. They seem to be doing a lot less of that more recently and it is very annoying.


April 24, 2023

On Wednesday the S&P 500 was down just 0.1% while Toronto was down 0.7%.

Tesla, which is not on our list but which I believe I have mentioned in the comments was up 12%.

CN Rail was down 4.8%. This will likely prove to be a little buying opportunity.

I added a little to my Enbridge position today.

Aecon Group reported another loss after the close. I barely glanced at the press release but once again this pathetic management blames “four legacy contracts”. They build huge projects but seem to be terrible at cost control. But those particular four projects are thankfully winding down. They have a new CFO and when I get time I will toss a few insults his way. It’s cathartic if nothing else. Any insults I toss will be based on some detailed analysis.

Next I will be diving into Stantec’s annual report and results for an update. It has a fantastic long term track record. But it did have a weak patch some years ago when they got into some of the fixed price construction business like Aecon does. They got into that in England sort of accidentally when they made an acquisition that came with some construction business in addition to their bread and butter fee-for-service engineering work which is WAY less risky.


April 23, 2023

On Tuesday, the S&P 500 was up a hefty 1.2% while Toronto was up 0.6%.

Shopify was up 4.6%. American Express was up 2.6%

Toll Brothers was up 5.0%.

The majority of stocks were up.

CN Rail announced weaker results after the close.


April 22, 2024

On Monday, the S&P 500 was up 0.9% and Toronto was up 0.3%.

lululemon was up 2.6% and Restaurant brands was up 2.3%. Both are strong companies and long term keepers in my view.

That’s it for this comment. I’ll try to have something more substantive tomorrow.

April 21, 2024

On Friday, the S&P 500 was down 0.9% while Toronto was up 0.5%.

Enbridge which I just updated was up 2.8%.

American Express was up a hefty 6.3% after releasing Q1 earnings.  It just over 10 years sicne U added it to this site and it’s up 166% since then. Not earth shattering by any means but a great return and that’s not counting the dividends. Looking back I see it fell pretty hard for most of the first two years after it was added here. There was a nice bottom in early 2016 and of course it dipped in with the COVID market panic in the Spring of 2020. So a bumpy but ultimately nice ride.

I notice Statistics Canada reported investment in building construction. For Canada they headline that February was down slightly from January and digging into the tables I see Canada was down modestly versus February last year.

I focus on year-over-year and I focus on Alberta because of my Melcor investment. Alberta was up bigly (25%) versus February last year and was down modestly versus January. Alberta is doing well. Actually it’s busting at the seams in many ways.


Enbridge Inc. Updated April 21, 2024

The report on Enbridge Inc. is updated and rated Buy at $48.

Really I probably did not need to do any analysis to conclude that this is a Buy given the 7.6% dividend yield and given its massive and important assets. But I went ahead and read the annual report pretty closely and ran my usual numbers.

This stock is not too likely to soar but it is pretty likely to keep paying its dividend and to grow earnings and the dividend slowly over the years. It will likely do better than preferred shares over a ten year period. But both can have their place in a portfolio.

I plan to add to my position although Being largely fully invested, I don’t have much cash to invest. (I’ll dig around under the couch cushions and see what I can come up with).

April 18, 2024

On Thursday the S&P 500 was down 0.2% while Toronto was up 0.2%.

A while back I mentioned I was buying a few shares in TH International which is Tim Hortons in I believe China. I don’t know much about it at all but someone was recommending it and it sounded credible. Since then it went down but today it was up 24% after releasing earnings. At $1.28 it’s basically a penny stock which are usually high risk investments.

Tesla was down 3.5%.

Tamarack Valley Energy CEO said today that Canada will need more pipeline after Trans Mountain. It’s scary to think of the battle that would be needed to get that done.



April 17, 2024

Wednesday’s action saw the S&P 500 down 0.6% while Toronto was up 0.1%.

Let’s see, oil is at $83 which is solidly profitable for the oil companies while not too hard on the consumer. (I mean it could be a lot worse for consumers, $120 oil is not out of the question).

The five year government bond yield at 3.76% is still  saying “don’t held your breath” when it comes to interest rate declines. A very well known political advisor and campaign manager)to Bill Clinton in 1990 said in his next life he might like to come back as “the bond market” because then you can intimate anyone. That was very very true in the ’80’s and ’90’s. Then the bond market went pretty docile for 25 years (with a temporary fit of anger around the year 2008 especially if you were Greece). Now its loins are stirring again.

Looking at individual stocks:

Perennial loser Andrew Peller was down 4.75% but on small volume.

No other particularly notable moves. I’ll be looking at Enbridge tomorrow.


April 16, 2024

A big day today:

  1. March inflation numbers came out and the the headline increase was 2.9% year over year (so still running hot). BUT key core measures used by the Bank of Canada were lower than expected at around 2%. Good news!
  2. The federal budget came out. The big surprise was an increase in the capital gains inclusion rate but with a $250k level for individuals remaining at the old 50% level.
  3. The security issue that was blocking a lot of users from getting to my site has finally been resolved. I’m more than willing to refund some subscription fees for anyone that wants that. I’ll do it on a request basis.

Meanwhile the S&P 500 was down 0.2% and Toronto was down 0.45%.

Tesla was down about 3% today and is laying off 10% of stocks. I don’t have a rating on it and it is a volatile stock. But id do own a little and I drive a Tesla and I will add on dips, funds permitting. I got to use the Full Self Driving free trial for only about 5 days. But I liked it a lot. I’d consider a monthly subscription at the expected price around $150 Canadian. You can’t snooze while in that mode. The software require you to pretty much keep your hands on the wheel. It will even disable self driving for a week if you fail to keep hands on wheel enough. It’s okay to take hands off for a minute or two. I got two warnings as I was enjoying the novelty of hands off.

Next update will be for Enbridge now that the crazy certificate issue is resolved.

April 15, 2024

On Monday, the S&P 500 was down 1.2% and Toronto was down 0.7%.

I don’t see any news about the stocks on our list to speak of.

Tesla is doing layoffs but is also going to start bringing big revenue from subscriptions to its full self driving software. I have A Tesla and we all got a free trial of Full Self Driving this month. It’s not 100% and requires driver attention but it’s still pretty awesome – and will get better. I think nibbling on Tesla if and as it drops might work out well.

The yield on the Canadian government 5 year bond has risen to 3.8%. That is signalling no imminent reduction in interest rates at the Bank of Canada or in mortgage rates.

Tomorrow’s big news in Canada will be the federal budget. Although most of it has already been announced. The size of the deficit might be the focus tomorrow.

April 11, 2024

On Thursday, the S&P 500 was up 0.7% while Toronto was down 0.4%.

Apple was up 4.3%. Other than that no particularly noteworthy moves in the stocks on our list.

The new measures announced today for first time buyers of new homes and the enhanced RRSP home buyer loans should be positive for Melcor Developments. As I wrote to their CFO, if they can’t make a decent ROE this year (I said minimum 15% although that may be wishful thinking) then they are a lost cause. My suspicion is that they have a cost management problem. They also hold far too much land and I have asked them to do a projected cash flow analysis to determine the present value of each parcel of land in case the alternative to sell now is a better option. But they just seem to hold onto land. They also overpay their executives given the poor performance.

In other news Trump’s lawyers apparently are desperate to get at least one juror who will not vote guilty no matter what.  In my mind they have charged him with too many things. Should have focused on a couple of key things like inciting a riot at the Capitol and the fake electors and attempt to not accept the election results. And also its crazy to be charging him regarding this Stormy Daniels thing almost 8 years later. It’s a crazy world. It’s amazing that the S&P 500 takes all this in stride.


April 10, 2024

On Tuesday, the S&P 500 was down 0.95% and Toronto was down 0.7%.

Most stocks were down but Cameco was up 3.4%.

The Bank of Canada left interest rates unchanged today and seemed to signal that cuts might not come as soon as hoped and might ultimately not be as deep as hoped.

The 5 year government of Canada bond rose to 3.78%.

You might still find some good rates on GICs given this development.

Pref shares are likely to be a bit weak on this news until hoped for rate cuts revive again. We need bad economic news before Bank of Canada will cut. Or at least lower inflation.

April 8, 2024

Monday’s session saw the S&P 500 and Toronto both essentially unchanged on the day.

There were no particularly notable moves in the stocks on our lost.

Trudeau continues to dole out more borrowed money. Every incremental dolalr of spending is borrowed money given the deficit.

On Wednesday there will be updated comments from the Back of Canada but no interest rate decrease is expected. On Friday the U.S inflation figures come out.

The CEO of Royal Bank was saying what a great thing it is that its takeover of HSBC will mean that the profits and dividends of that that bank will now flow to to Canadians. I think he mentioned $700 million per year. He did not mention that the purchase price presumably left this country.

He also grumbled that Canada now requires big banks to hold more capital than is required of large US banks. The US had been expected to adopt Basel III which Canada already has. Now the U.S. is backing off and RBC says unfair – it won’t be able to compete as well internationally he said. He wants a level playing field.  Well in my view that’s just too bad, so say. Why should Canada change and make its big banks more risky just because the US wants to let big banks be more risky than contemplated under Basel III? The vast majority of Canadians are not cheering for a bit more profit at RBC. And perhaps the RBC CEO forgets that his operations in Canada are largely protected from US competition. Canadian banks buy up U.S. banks frequently but U.S. banks are not allowed to buy Canadian banks nor are they allowed to offer banking services in this country unless they open a subsidiary here. The whole Canadian financial sector is HIGHLY protected from foreign competition. No level playing field there. That’s something that seldom gets mentioned.


Rate Reset Preferred Shares have done well

Today, I updated the Emera rate reset EMA.PR.H in the Subscriber home page to Buy at $22.46. The last update called it Strong Buy at a somewhat lower price. This preferred share has been quite volatile. It’s been as low as $18.30 in October and was certainly a great buy under $19.

The rate resets have done well in the past year or so. For example, using Friday’s prices the six rate resets that I featured in the Newsletter article sent on July 2, 2023 are up an average of 18.4% – with a range of 3.69 to 36.2%. The TD Bank one rocketed up apparently on the assumption that it will be redeemed this fall although I don’t think that is guaranteed to happen.

In general it’s probably still a good time to hold both rate resets and perpetuals but the perpetuals will have more upside if and when interest rates drop. The Preferred shares in the article linked above are only up an average of 3.2%.


Canadian Western Bank rate reset shares updated

The report for CWB.PR.B is updated and rated Buy at $21.81 to yield 7.3% and the report for CWB.PR.D is updated and rated Buy at $25.30 to yield 7.56%.

See the Subscriber Home page. Both of these have one more dividend at their former lower rates that will be paid on April 30 and the higher dividends start three months later.

For a limited time during April there is an opportunity to convert to a floating rate that will initially start at about 9.0% but only if enough share holders elect the conversion option.

April 7, 2024

On Friday, the S&P 500 was up 1.1% and Toronto was up 1.0%.

Dollarama was up another 3.7%.

Constellation Software was up 2.6%.

Canada’s jobs survey was quite weak on Friday morning. Given this is a survey it is subject to statistical error. I’d wait another month before concluding that the trend is as negative as Friday’s report suggests. This survey has been subject to some pretty swings up and down in the past. Swings that appear to be statistical errors at times.

I see news that RBC has fired its female CFO after an undisclosed personal relationship with another employees who she gave preferential treatment to including a promotion. Wow that is a BIG job to be fired from. Her compensation last year was $4.1 million. She had been with the bank for 25 years. The other employee was also terminated. RBC has named an interim CFO.

A lot of people have no sympathy for this sort of thing but I would say let’s not be vindictive. She is apparently to get no severance and this is a big loss. I wonder if there would have been an opportunity to simply disclose the relationship and have the other person work in a different department? Possibly that would not have worked either. What if the CFO was already married?  Can’t exactly disclose an affair. What if it was a same-sex relationship? That can be tricky to disclose. Humans are programmed to have relationships. Anyhow, she did wrong and she’s paid a heavy price. Such is life.



April 4, 2024

On Thursday, the S&P 500 fell sharply in the later part of the day and ended the day down 1.2%. Toronto was down 0.3%.

Dollarama was very strong with a 10% gain after posting strong earnings and boosting its dividend.

lululemon was down 4.4%.

Given the pull-back in Costco I have bought back the shares I sold recently. Perhaps I should have waited and hoped for a bigger pull-back but if that happens I will buy more, funds permitting.

I also added a little to my Starbucks position as the price dipped.

I’m hoping to be more concentrated in strong companies like Costco and Starbucks and Visa and Dollarama and others as time goes by. Shopping in the bargain bin (Melcor) has not worked out well in recent years. And in most cases my U.S. investments have done better than the Canadian ones, although there are certainly some real gems in Canada as well.

Comment on WSP Global Short-seller report

Spruce Point Capital Management has issued a strong-sell report on WSP Global and they are “short” the company. The stock is down a relatively modest 5% to $210.

Listening to the Spruce Point founder this morning on BNN, I think he had some valid points. But I am not in a position to do the forensic examination of their accounting that would be needed to confirm some of his point.

The WSP report on Subscriber Home Page is marked “out of date”. I marked it that way for the start of 2024 because the report was from March 2023 AND because the price had jumped since then.  I was planning to update this month. If you click on the report, my last rating was Weak Sell / Hold at $173. Based on this news and on my weak assessment last year at $173 I would be very much inclined to sell on this news. Most holders have big gains on this stock and so it’s not such a bad thing to sell. At a minimum I would sell half at this time. I’d be even more inclined to sell if held in non-taxable accounts.

BHP Group updated as Sell April 3, 2024

BHP Group is updated and rated Sell at $59 for the ADRs that trade on New York.

Due to a weak outlook and also due to its unpredictability and complexity we are rating this a Sell and this will be the last update for this company.

We have a capital gain of 31% since the original “speculative Buy” recommendation at $44.66 six years ago. But investors who held since then have received $14.00 in dividends and a value of $8.64 in the “spun-off” shares of Woodside Energy received including dividends on Woodside. That’s a total return of 82%. We are not following Woodside and would sell those shares as well.

April 2, 2024

On Monday, the S&P 500 was down 0.7%  and Toronto was down 0.5%. The market is beginning to fear that interest rate cuts are not so imminent after all. The Canadian 5 year bond yield is at 3.67%.

Oil is strong at US $85 which is good news for Alberta.

Most stocks were down modestly.

Costco has slipped down to $711. I have already bought back some of the Costco shares that I sold around $760. I really would not mind seeing it go lower as I would buy more at lower prices.

Starbucks has dipped below $90 for the first time since October and I may add to my position in this high-quality company.

Berkshire Hathaway Updated April 2, 2024

The report on Berkshire Hathaway is updated and rated and rated (lower) Buy. It is somewhat expensive in relation to earnings and book value. On the one hand if I had a large position I would be tempted to trim it. On the other hand selling Berkshire has always been a mistake unless it then fell and was bought back at a lower price. I have a modest position and will likely continue to hold.

April 1, 2024

On Monday, the S&P 500 was down 0.2% while Toronto was up 0.1%.

Cameco was up 8.15%.

Oil is at $84 which is nice for Alberta.

Canadian Western Bank Preferred Shares rate resets.

CWB.PR.B will reset to pay 6.371% of $25 (2.76% spread plus today’s 3.611% 5 year Canada bond yield) so $1.59275 per year. This is a 7.39% yield on today’s price of $21.54. I believe this is attractive since it also seems likely that there will be a capital gain if interest rates fall. However there is no guarantee of a capital gain and the shares could fall in price particularly if there is a panic in the markets for any reason.

Holders also have the right to convert these to a floating rate preferred share – but only if a certain minimum number of shares are elected for conversion. The initial floating rate will be 7.759% annualized on $25 or 9.0% of today’s $21.54. Usually not enough shares elect the floating option, but this high floating yield might attract enough shares. Note however that this floating dividend will be expected to decline as interest rates fall.

CWB.PR.D will reset to pay 7.651% of $25 (4.04% spread plus today’s today’s 3.611% 5 year Canada bond yield) so $1.91275 per year. This is 7.58% of today’s $25.22 share price. This is attractive but may not have much of a capital gain if interest rates fall since it is already above the $25 price at which it could be redeemed in 5 years. But that’s a log ways off and it could possible get as high as $26 or even $27 if interest fall rapidly.

Note that I had been saying the spread on this share was 5.04%. I apologise for that error, it is 4.04%.

Holders also have the right to convert these to a floating rate preferred share – but only if a certain minimum number of shares are elected for conversion. The initial floating rate will be 9.039% annualized on $25 or 8.96% of today’s $25.22. Usually not enough shares elect the floating option, but this high floating yield might attract enough shares. Note however that this floating dividend will be expected to decline as interest rates fall.

And note that for both of these preferred shares the April 30 dividends will be at the old lower rates and the higher dividends begin on July31.

Here is the press release from CWB.

Site back up March 31, 2024

After a disastrous attempt to move to a new host location, the site is back up, as you can see. I will resume updates and comments tomorrow. Looking forward to it. My apologies for this site being down so long.

March 18, 2024

U.S. markets were strong today with the S&P 500 up 0.6% while Toronto was down very slightly.

Auto Canada was strong with a 4.1% gain.

Canadian Tire has slipped under $130. It is suffering as people cut back on non-discretionary spending. But Canada Tire had been doing very well for many years before the recent profit decline. It has been very well managed. If they can turn things around then the stock will rebound. Q1 is never a strong quarter for them but hopefully by the time they report Q1 they will be able to point to a better outlook ahead.

March 17, 2024

On Friday the S&P 500 was down 0.65% while Toronto was up 0.1%.

TransAlta was down 3.5%. It seems to be living up to its old reputation as a poor investment. I was hoping it was on better footing with new management and a lot of changes to its assets in the past few years. There is  uncertainty about future electricity policy in Alberta as the government is eyeing some changes and that is weighing on this stock.

Cameco was up 2.6%

You may notice this web site starting to look a little different. More changes are coming.


March 14, 2024

Thursday’s session saw the S&P 500 down 0.3% and Toronto down 0.6%.

AutoCanada was up 2.3%.

Toll Brothers was down 3.95%.

One of the larger investors int eh Melcor REIT (Firm Capital ) has written to the REIT Board asking tthat Melcor take the REIT private at a price close to its book value. Nothing may come of that. But It would be the fair thing to do in my view. The REIT and its strategic Review Committee have not commented on this or let investors know about the letter as far as I can see.



March 13, 2024

On Wednesday the S&P 500 was down 0.2% while Toronto was up 0.6%.

West Texas Oil is just under $80 U.S. dollars.

After the close Melcor Developments released Q4 and 2024 earnings. The results seemed “okay” but for some reason they lowered the dividend from 16 cents to 11 cents. The book value per share is reported as $39.45. There appears to be some mistakes in the press release. Most of the percentages in the selected highlights table appear to be wrong.

In better news, I notice that American Express at $223 is up 19% this year to date and it’s up 57% since I rated it a (higher) Buy on October 20 at $142. The forward P/E is 17.3 and therefore it is not overly expensive. If I had a very large position I’d consider trimming it. I have a modest position and have no plans to sell.


AutoCanada updated March 13, 2024

The report on AutoCanada is updated and rated Speculative Buy at $23.75. Revenues have been increasing strongly. Earnings per share are volatile and have declined in recent quarters after very strong results in 2021 and 2022. The gross margin or markup on new vehicles seems very strong at over $5000 per vehicle. And then they make an additional $3500 on finance and insurance products on average. Management is aggressive but admits that certain cost have been too high and they are working on improvements.

Profits should increase in the long term but the high debt level of the company is a concern. It will benefit if interest rates decline as expected.

One investment company (EdgePoint) has made a very large bet on AutoCanada and owns about 28% of the shares. This is a strong vote of confidence.

March 12, 2024

Tuesday was a positive day for stocks as the S&P 500 rose 1.2% and Toronto rose 0.3%.

Toll Brothers was up another 2.4% and then announced a 10% dividend increase after the close.

Cameco was up 2.95%.

Costco was up 3.2%.

TransAlta went the other way losing 6%. This was after news that Alberta will move to curtail the ability of certain large generators in Alberta to offer in power only at very high prices in certain circumstances. It may also be thought that TransAlta’s plans to buy additional generators in Alberta (the Heartland acquisition) will be in jeopardy as the government is concerned about market concentration.

March 11, 2024

On Monday the S&P 500 was down 0.1% while Toronto was up 0.15%.

West Fraser Timber was up 2.6%.

AutoCanada was up 11.4% in what seems to be a slightly delayed reaction to its Q4 earnings report. I will update the report on this company in the next day or so. It appears to be attractively priced. It has certainly been somewhat cyclical and faces the headwinds of higher interest rates. But I continue to think it is quite well managed and has a good future. Its reported earnings in Q4 and 2023 were distorted (lowered) by an usually large stock compensation expense.

The two Brookfield Office Properties preferred shares on out last have had a big recovery from their lows. These shares are guaranteed by its immediate parent Brookfield Property Partners L.P. but not by the ultimate Brookfield Asset Management parent. Apparently the market is now more confident about Brookfield Property Partners. But it is a complex entity. It might be reasonable to reduce this position somewhat. These shares continue to be higher risk.

Aecon Group updated March 11, 2024

Aecon Group is updated and rated Sell at $17.03. This company has a volatile history and remains extremely unpredictable.

It has been very poorly managed resulting in huge cost over-runs and therefore losses on a number of major fixed price contracts. They have also tried to distance themselves from their past mistakes by labeling certain problematic projects as “legacy” contracts.

In addition its disclosure is very poor in our opinion.

The recent rebound in the share price is a good opportunity to exit. A reasonable approach would be to sell at lest half of positions. I just sold two-thirds of my modest position in this company. I’ll retain the rest in case management really has finally turned the corner on their troubles.



March 10, 2024

On Friday the S&P 500 was down 0.65% and Toronto was down 0.3%

Costco finally has a little pull-back falling 7.6% after releasing earnings. But this just gives back a small part of its recent increases.

Cameco was down 6.2%. It remains long-term bet on uranium prices and the nuclear power industry.

My next date will be for Aecon Group. It has had a good recovery but continues to face big cost over-runs on what it calls “legacy” projects. I will likely sell at lest half of my small investment in this company. They undertake many fixed price contracts but have a track record of cost over-runs. They are trying to reduce the percentage of fixed-price contracts but those still make up about 50% of projects in backlog and possibly a higher percentage of current projects.


March 7, 2024

Stocks were hot on Thursday as the S&P 500 rose 1.0% and Toronto rose by 0.9%

Linamar was up 11.4%. Cameco was up 5.4%. Aecon Group was up 4.8%.

Constellation Software was up 4.5%.

One of the rate reset preferred shares on our list and that I keep an eye on is TD,PF.A . It has a low spread over the 5 year Canada bond of just 2.24% and is scheduled to reset on October 31. It was featured in my newsletter article on July 2, at $17.49. Now it’s at $23.07 for a gain of 32% (plus the dividend). Although I said it was a buy on July 2, that size of gain is NOT something I expected. At the start of this year it was at $18.35 and I rated it only a (lower) Buy. But I mentioned the possibility of it being redeemed at $25. That must be what the market is now expecting. This share is over-priced at $23.07 unless it is assumed that it will most likely be redeemed on October 31 at $25. TD has been issuing a lot of a certain type of bond (5 years but extendible to 10 at the bank’s option) this year, apparently aimed at retail investors. They have had those bonds as new issues many times in the past 8 months or more. It may be that those bonds will replace these rate reset shares in TD’s capital structure. TD has redeemed other rate reset shares in the recent past. But there is no guarantee that this one will be redeemed.

Canadian (and by province) building permit data for January and was strong whether compared to December (seasonally adjusted, as always) or compared to January last year. Alberta’s building permits were up 26% year-over year and single family home building permits were up 33%. This should bode well for Melcor Developments stock price and god knows it could use a reason to rise. Whether it’s builders took on a good number of lots in Q4 or not, (and at good prices) remains to be seen. What may be more important is if Melcor has good things to say about its outlook.

Ontario led the gains when comparing January to December, seasonally adjusted.



Melcor REIT report updated March 7, 2024

The Melcor REIT has suspended its distribution due to a cash crunch and is undertaking a strategic review. Meanwhile it is is still generating cash and it does not appear to be in danger of going broke. There’s potential upside from the strategic review but there are no guarantees. The report labels it a Speculative Buy at $2.60.

March 6, 2024

On Wednesday, the S&P 500 was up 0.5% and Toronto was up 0.3%

Aecon Group was up 11.8% after reporting Q4 earnings. Perhaps it is finally doing better operationally after years of cost over-runs on projects.

The Melcor REIT bounced up 8% after reporting Q4 earnings. I have read its results closely and spoken to the CFO. While the distribution suspension is very disappointing, the stock price over reacted to the downside. It’s very unlikely that these units are headed to zero. The REIT has a number of good properties. They are facing a cash crunch at this time and needed to preserve cash. It does appear that the strategic Review is genuinely meant to be beneficial to unit holders in the end. I’ll update the report tomorrow and I expect to rate it Speculative Buy. I fully admit my track record on this one has been bad.


After the close, Linamar posted a strong earnings report.

Melcor REIT comment March 6, 2024 1 pm eastern

The Q4 results for the Melcor REIT show some continued weakness but were not dire.

The conference call was very brief and the two or three analysts that cover this are probably  not too interested in promoting it. They like all of us owners have been burned.

I just had a 20 minute call with the CFO and she explained that the REIT does face a cash crunch but I definitely did not get the sense that things are dire. She indicated that it is possible that the distribution will be reinstated at some level later this year. If not they could face income tax. But dealing with the cash crunch is a higher priority than paying a distribution.

It’s hard to say what is up here. Melcor Developments may want to take the REIT private back into Melcor. If so it would be unfair to do it at a really low unit price.

The units have recovered a little bit today and I think they do have value here. But obviously things can continue to be volatile.

I have no plans to either buy or sell units.



March 5, 2024

On Wednesday the S&P 500 was down 1.0% while Toronto was essentially unchanged.

West Fraser Timber was down by 3.0%.

Shopify was down 2.9%.After the close the Melcor REIT released Q4 and 2024 results. As expected profits and cash flows were down due to higher expenses. But the report certainly does seem to be cause for panic. The REIT has a lot of debt coming due in 2024 and that is problematic. But it appears that they have substantial equity in the buildings involved and should be able to renew the debt although at higher interest rates.

Overall, I’m hopeful that the units will now stabilize or hopefully increase somewhat in value. That will depend partly on how analysts react to the news and to the conference call tomorrow.




March 4, 2024

On Monday, the S&P 500 and Toronto both ended the day down 0.1%.

West Fraser Timber was up 2.6% and continues to do very well.

Canadian Western Bank was up 1.6%.  After it released earnings on Friday the headlines said it has higher loan losses. That’s true but that was in comparison to a NEGATIVE provision for credit losses in the year ago quarter. CWB’s loan losses this latest quarter were at the low end of its normal range and are lower than the big banks. CWB’s results overall were about as expected. But it did have very low growth as its customers are more focused on paying down debt than taking on new debt. CWB expects only modest growth this year but it’s share price already reflects that. They now have three branches in Metro Toronto and one will soon open in Kitchener. They are laying the groundwork for higher growth ahead but it has been a slow process.

I sold half my Costco position day because it seems very expensive at 47 times forecast earnings per share. In general selling Costco is usually a mistake. I’d love to buy it back at a more reasonable price. It releases earnings later this week and as long as the overall market sentiment stays strong it could certainly keep going higher.

March 3, 2024

On Friday the S&P 500 was up 0.8% and Toronto was up 0.9%.

Cameco was strong with a 3.5% gain.

The Melcor REIT got hammered down 13% to $2.39. The market may fear that this is going to zero but that still seems unlikely.

Thinking about the Melcor REIT I wondered exactly what led the independent Trustees to pursue a strategic review. The press release says it is the (full) Board that is undertaking the review although it will be led by a committee of the independent Trustees. That Committee has retained legal counsel to represent it and I’m not sure if that is normal or represents a red flag and may be indicative of a disagreement among Board members.

It seems clear that the REIT was and is facing a liquidity crunch due to upcoming debt maturities including a line of credit that needs to be renewed in June.

It may also be the case that the auditors and or management have determined that a significant write-off of building values is required. That in turn could make it even harder to borrow and might even lead to being in breach of debt covenants although the debt covenants appeared to be set as a percent of original cost of the buildings and not market value.

The press release announcing the restructuring mentions three times that the goal is to preserve value for unit holders. While anything is possible, there was no indication that the REIT was going to have to (as a drastic example) enter creditor protection. Melcor Developments owns 55% of the REIT and certainly will not want to lose its investment.

The suspension of the distribution on its own has certainly driven the unit price down. But it does not fundamentally change the true value of the units. However, the market has probably considered that the suspension signals that the true value is lower than previously thought.

We’ll know more on Tuesday afternoon when the REIT’s financial results are to be released.



Canadian Western Bank earnings March 1, 2024 12:40 eastern time

CWB’s results were “okay” as I expected. Headlines say their provision for loan losses was up year-over-year (also up from last quarter). But one year algo they had a negative provision for credit losses (income as opposed to expense). The provision this quarter was 19 basis points. That’s at the lower end of their historic average of 18 to 23 . It’s lower than most banks. It’s not something to worry about.

Meanwhile loan growth was slow at just 1% year-over-year. Deposits are also up only 1% as businesses are cautious about borrowing and instead some are drawing down the cash they have on deposit. Net interest margin was improved. Overall it’s steady progress report. They are only looking for mid-single digit EPS growth this year and they indicate they are on track for that.

This is not a high growth company and the ROE has been a bit low- They hope to move the ROE up. The stock is good value for money but not likely be any kind of barn-burner return in the next year.

Capital ratios are good. It’s still not clear if they will redeem one or both of the rate reset preferred shares. I think we will know on March 22 or by April 1 latest. The CCEO has indicated they like having some “excess” capital at this time since it gives them options and flexibility. Looking at their capital ratios I think they have room to redeem possibly both rate reset shares but I don’t know. I’ll try to see if this was brought up on the earnings call. I suspect not given that CWB.PR.B is down a little at the moment. The highest likelihood is that they will redeem CWB.PR.D but not CWB.PR.B.



February 29, 2024

On Thursday the S&P 500 was up 0.5% and Toronto was up 0.6%.

The rate reset preferred share TD.PF.A was up 2.5% to $21.88. It’s up 17% this year to date which is pretty darn good a preferred share. It resets on October 31 and the market may be placing weight of the possibility of it being redeemed then at $25. Its reset spread at 2.24% is on the lower side but it has one of the higher credit ratings.

The Melcor REIT plunged another 9% to $2.73. With a strategic review underway and with its debt I don’t know what a realistic value is on this. Hopefully the decline is just people bailing out. The Alberta economy is reasonably strong and population has been booming. I’m hopeful for a recovery but it’s likely to take some months before there is any clarity. Their Q4 report is due out next week but may not give much information. It seems likely that they will have a write-down on the market value of their buildings due to higher interest rates (higher cap rates – lower values in the market). At last report they seemed to be doing fairly well on leasing space. They may also disclose difficulties in renewing their debt as it matures. To the extent that some of their debt is non-recourse and secured by a particular office building they might even decide to let the lenders foreclose. At their last report they claimed to be close to selling some Saskatchewan properties. That may have fallen through. With two trustees announcing they will leave on March 5 it seems likely that there was a disagreement among Trustees as to the best course of action.

Toll Brothers was up another 2.2%. It often seems to be the case that the best companies keep getting stronger and the weak continue to stumble.

I have my fingers crossed for decent results from Canadian Western Bank. Loan loss provisions can make bank earnings unpredictable. In terms of being a particularly strong or weak company, CWB seems to be somewhere in the middle. If things are not going well then we might expect to hear about some job cuts by attrition if nothing else. They’ve been opening branches in Ontario and making other moves that has added to their costs. They also face relatively high deposit costs such as on GICs. What works much better for them is business chequing accounts that don’t pay much interest on. Last year they were hopeful of luring clients away from HSBC as it gets swallowed up by RBC. I don’t think they have given any update on that.  I just listened to their CEO at an investor conference on January 9th. It sounds like Q1 will be steady. Net interest margin should improve but loan and deposit growth will be minimal if any. No indication of bad debt problems. The Bank remains strong and has plans to grow but nothing dramatic for growth. We’ll see what the morning brings as they report earnings and then see how the market reacts.

February 28, 2024

On Wednesday, the S&P 500 was down 0.25 and Toronto was down 0.35%.

After the close Stantec and WSP Global were out with earnings reports. I believe WSP was a good report but a headline suggests that Stantec “missed Q4 estimates”. Stantec itself said it had record 2023 earnings and increased the dividend by 7.7%. Whatever the case the stock price should largely reflect the news at the open tomorrow morning.


TransAlta updated February 27 2004

The report on TransAlta is updated. It’s been “generating” attractive levels of free cash flow. It looks under valued. But it is a very cyclical and hard to predict business. It also has a weak balance sheet although the CEO claims it is a strong balance sheet.

I have a particular interest in the Alberta electricity market and that is the reson I wanted to look at this company. The annual report is 278 pages and so there was LOT to look at.

I may also take a look at its preferred shares.

February 27, 2024

Tuesday’s action saw the S&P 500 up 0.2% and Toronto about unchanged.

West Fraser Timber was up 4.3%. It continues to do well even while shutting and curtailing certain mills. It may be that the industry is being smart and refusing to under-cut each other.

There’s more economic data coming in this week as well as the big banks continue to report earnings.

February 26, 2024

On Monday, the S&P 500 and Toronto were each down 0.4%.

Canada’s big banks will be reporting earnings this week with two reporting tomorrow. It will be interesting to see the loan loss provisions and what percent of residential mortgages have amortizations of over 30 years. It will also be interesting to see if they are experiencing higher credit card delinquencies.

Canadian Western Bank will report on Friday morning. I’m hopeful of continued results that are at least okay. They continue to grow slowly. But they also face high deposit costs. So far their bad debt and loan provisions have been modest and not a problem. But there can always be surprises in that area.

There are a number of important U.S. economic figures due out this week and those could move markets in one direction or the other.

The five year Canada bond yield is sitting at about 3.61%. That’s positive for the Canadian Western bank rate reset preferred shares. I believe CWB will announce on March 22 whether they will redeem those at $25 or not and if not they will set the reset yields on April 1. CWB.PR.B has risen as we get closer to the reset date and as the 5 year bond yield has risen since its lows just before Christmas.

Another rate reset that I have featured for a long time is ENB.PF.A. It does not reset until December 1. The reset could be at an attractive yield (at least 8.1% of today’s price) if the 5 year bond rate remains above 3.0% by then. I’m hopeful for capital gains on that reset share as well. But many things (positive or negative) could happen by December 1.


February 25, 2024

On Friday the S&P 500 was about flat while Toronto was up 0.45%.

The Melcor REIT got clobbered down 23% after the news that I mentioned on Thursday. I’m hopeful that something good will come out of the review but there is certainly no guarantee of that. The REIT found itself with too much debt as interest rates rose and it was prudent to cut the distribution. It’s an age-old rule of corporations that debt interest and debt principal must rank ahead of equity distributions. As of Q3 they though that they would be able to sell some properties in Saskatchewan to take care of the liquidity issue. It seems likely that did not happen or was insufficient.

Penny stock Ceapro was up 57% (from a very low level) after its press release touting various research irons that it has in the fire. Unfortunately, this company has a long history of projecting future developments which never seem to occur. In March it will hold a vote on a proposed merger with another company. This stock is definitely high risk and unpredictable.

TransAlta bounced up 5.3% after releasing Q4 earnings. I have going over its results in detail. It appears to be under-valued on a cash flow basis. But it is also very unpredictable due to changing commodity prices. And it has a lot of debt and a weak balance sheet. (The company claims the balance sheet is strong but that’s not the case.) I will do have an update on it in a day or two.

February 22, 2024

On Thursday the S&P 500 was up 2.1% and Toronto was up 0.7%.

Nvidia was the big news with a 16% gain in price which was a $277 billion dollar gain in wealth and market cap overnight.

I will admit to feeling left out of the gains of Nvidia and the other members of the magnificent 7.

The other gainers today pale in comparison to Nvidia but Visa was up 2.5% and lululemon was up 2.7% and Toll Brothers was up 2.0%.

The Melcor REIT announced after the close that it is suspending the dividend and undertaking a strategic review. The distribution elimination is unfortunate but it’s possible that the Strategic Review could result in the unit price rising. But it could take a number of months before anything good comes out of this. Meanwhile there could be some panic selling.

It seems to be increasingly the case that it is better to invest in large higher quality companies. Many smaller companies have not been good investments.

In other news Canadian Retail sales for December were reported today. Retail sales in December were up 2.9% year-over-year. I found it interesting that “beer, wine and liquor” sales were down 5.5%. That’s in spite of inflation. People are cutting back on alcohol. That’s probably mostly due to tighter budgets due to inflation on necessities and may also be for health reasons. Other discretionary categories were down as well. Sporting goods were down 5.1%. That echoes the weak results at SportChek that Canadian Tire reported and was partly related to the unseasonable warm weather in December. Furniture retailers were down 6.6%.

I’ve been mentioning the Canadian Western Bank preferred shares that are due for a dividend rest at the end of April. I realised today that the new dividend rate will be reset based on the 5 year government of Canada bond yield on April 1 plus the reset spread applicable to each of the two shares. The CWB.PR.B shares are trading at $21.50 and it’s possible that CWB might decide to redeem them at $25. If not the dividend yield will rise to a reasonably attractive level. The CWB.PR.D shares ate at $24.86. They will pay a dividend of 37.5 cents on April 30 and I expect them to almost certainly be redeemed on April 30.  .

February 21, 2024

On Wednesday, the S&P 500 was up 0.1% while Toronto was down 0.2%.

Shopify bounced down 4.0%.

Toll Brothers was up 4.0% after posting another great quarter of earnings growth.

Trudeau was in Edmonton handing out $175 million to spur home building. Surely Melcor Developments will see some benefit from this.

Meanwhile the Melcor REIT seems to be over-due with its distribution announcement for this month. They may also need to announce replacements for two Trustees that left rather suddenly.

February 20, 2024

On Tuesday the S&P 500 was down 0.6% and Toronto was down 0.2%.

Canadian Western Bank was up 3.0% after upgraded their recommendation on it.

Couche-Tard was up 3.7%.

After the close, Toll Brothers came out with very good earnings.

Canadian inflation came in lower than expected at 2.9% year over year. This gave hope that the Bank of Canada can soo start reducing interest rates.

Mortgage interest costs are one of the bigger drivers of inflation. BNN indicated that mortgage interest payments are up on average by 27% year over year. That has a 3.8% weight in CPI and so that would account for 27% times .038 = 1.0% all by itself. And it seems to me that average mortgage interest payments are going to keep rising as more mortgages renew at higher rates. Certain core inflation numbers are coming down but its not clear that headline CPI will go down given higher and higher mortgage interest.

The Bank of Canada will likely want to see evidence that high interest rates are cooling the economy in terms of business expansion. I think they actually need to see layoffs before they will cut rates.

Inflation in overall shelter costs was 6.2% year over year and it has a 28% weight in CPI. That means shelter accounted for 1.7% of the 2.9%. It appears that a a lot of prices are finally not rising much or are down year-over year. Gasoline and airfares were down.

Click the following link and then click “latest Snapshot” to see all the basket weights. Very interesting. And click price trends to explore inflation by the individual major basket items.



February 19, 2024

Markets are closed today for the holiday.

On Friday, the S&P 500 was down 0.5% while Toronto was up 0.2%.

Shopify (always volatile) bounced down 3.0% and lululemon was down 2.0%.

One of the worst performers that I have followed for quite a long time is Andrew Peller. Last week there was news that much or even virtually all of the Okanagan wine vines have been killed by a bitter winter cold spell in January. If so it’s more bad news for Andrew Peller as they have substantial assets there in terms of both vineyards and also wineries.

Andrew Peller made no mention of this in its February 12 earnings release. It’s perhaps par for the course for this management not to mention the bad news. It’s hard to imagine that they were not negatively impacted.



Canadian Tire updated February 18, 2024

The report on Canadian Tire is updated and rated Hold at $140. It’s Q4 earnings released last week were very disappointing.

Same-store sales were down 6.8% in Q4 And it appears that shipments to the Canadian Tire dealers were down double digits which suggests tat the dealers see continued weak sales ahead. Part of the weakness in same-store sales was due to the warm December weather. Unfortunately the mild winter has mostly continued in much of the country.

2023 earnings were also impacted by inefficiencies after a distribution center fire. Therse indirect impacts were not adjusted for. Interest expense has also risen. But overall it is hard to understand why adjusted earnings per share have declined by about 335 on average over the past three quarters.

Unless management can turn things around through significant cost cutting it looks like 2024 may not see much recovery in earnings if any.

Canadians are facing and have faced significant inflation in groceries, utilities and property tax and in some cases in interest expenses. It appears that discretionary spending has taken a noticeable hit.

Looking at these results I’m now a bit surprised that the shares did not decline after this earnings release (other than a temporary blip down on Thursday morning which was quickly recovered)


Canadian Western Bank Preferred Shares Comment

As I have mentioned, I fully expect CWB to redeem their CWB.PR.D shares on April 30. Those shares would otherwise reset at a huge spread of 5.04% above the 5 year Canada bond yield.

I had thought that the CWB.PR.B rate reset preferred shares would not likely be redeemed given their lower 2.66% spread. But I was taking another look at the fact that CWB issued a $250 million in subordianted debt  paying 5.95% (a non-viability contingent capital debt) on January 15 “for general corporate purposes). The two preferred shares together can be redeemed for $250 million and that may be what they are planning. Bank capital rules are constantly changing and CWB has been using the new “Limited  Recourse Capital Notes” as well as using more subordinated debt.

Overall it is still very uncertain but I am starting to think that the CWB.PR.B shares may well be redeemed at $25 on April 30. That would be a nice gain from the current $21.52 price. But it’s far from certain that they will be redeemed. If the 5 year Canada bond yield, currently at about 3.7% is down towards 3.0% on April 30, the bank may be less inclined to redeem these.

Enbridge preferred share report updated February 15, 2024

The various preferred shares have done well since I updated them in mid December. Today I updated the Enbridge’s ENB.PF.A. It was rated Strong Buy on December 16 at $15.47 and is up 12% since then.

It will reset to a higher dividend on December 1 this year. The level and attractiveness of the dividend at that time will depend on interest rates and the outlook and the market at that time.

Overall it still looks like it should offer a capital gain and so I left the rating at strong Buy.


February 15, 2024

Markets gained ground on Thursday with the S&P 500 up 0.6% and Toronto up a hefty 1.6%.

Canadian Tire ended the day down only 0.3% after reporting a very weak Q4. The weakness is not shocking and it seems likely to persist for some time. Still, the stock trades at a low valuation and that’s likely why it held up well today. It was down about 7% at the open today and so it may well bounce lower tomorrow. So far it looks like today’s early bird traders basically got to eat a worm.

CMHC reported January housing starts this morning. It’s interesting how there can be different interpretations of the same data. BNN’s headline says annualized housing starts down 10% versus December. That figure is from the CMHC press release. But CMHC also said that the trend was down (just) 2% year-over-year.

Looking at the data, January housing starts in Canada were UP 13% year-over-year overall with single-detached starts down 3%.

Looking at Alberta starts were up 48% overall and 50% for single-detached. Calgary single-detached starts were up 60% and Edmonton up 43%. That should be good news for Melcor Developments.

Overall, it does not look like a bad report to me and it’s amazing how the same data can be interpreted so differently.


February 14, 2024

On Wednesday markets recovered much of the ground lost yesterday.

The S&P 500 was up 1.0% and Toronto was up 1.5%.

There are lots of Q4 earnings reports coming in.

After the close, West Fraser reported a substantial loss but the stock was virtually unchanged in after-hours trading. I mentioned a few times that I am surprised how well it is holding up.

The Boston Pizza Income Royalty Trust reported good earnings this morning and raised the distribution by 5.6%. The yield is almost 8.8% and it looks like a good investment. Keep in mind the distribution is taxable and so this is better suited to non-taxable accounts.

Yesterday, after the close RioCan reported results that were okay but none too exciting. They increased the distribution by just 2.8% and are not projecting much growth this year. Still, it’s very well managed and should do well over the years.


February 13, 2024

Tuesday was quite a negative day in the markets after U.S. core inflation came in hotter than expected. This means that interest rate cuts are not likely to happen as soon as was hoped.

The S&P 500 was down 1.4% and Toronto was down 2.3%.

Investors should not be shocked by the decline today. Markets have been doing extremely well of late and so a pull-back is no surprise.

Shopify was down 12.5% after releasing earnings with a weaker than hoped for outlook.

The U.S. inflation report also pushed bond interest rates up.

The Canadian 5 year government bond rose 12 basis points to 3.83%. That seems likely to push up the rate for 5 year mortgages.

This is also definitely negative for perpetual preferred shares. Those have given us good gains lately but it seems likely that some of those gains will now be given back. Rate reset preferred shares tend to be harder to predict. The Canadian Western Bank rate reset CWB.PR.B that will reset on April 30 has risen sharply to $20.95 in recent months. I’m tempted to reduce my position but then again it’s possible (although probably unlikely) that they would decide to redeem this at $25 on April 30. These shares were issued in 2014. It’s possible that with changing bank capital rules they are no longer as useful to the bank. CWB also has CWB.PR.D that will reset on April 30. That one would have a very high interest rate upon renewal and therefore I am relatively certain that it will be redeemed at $25.

Toll brothers was down 5.1%.


February 12, 2024

On Monday, the S&P 500 edged down 0.1% while Toronto as up 0.3%.

Toll Brothers was strong with a 4.4% gain.

AutoCanada bounced up 4.5%.

Andrew Peller was up 4.4% (to a pathetic $4.47) after its announcement yesterday about the big payout to John Peller on his promised retirement.

Then, after the close today, Andrew Peller announced earnings for its fiscal third quarter ended December 31.

The headline was “Andrew Peller Limited Reports Solid Performance in Third Quarter of Fiscal 2024”. So “Solid Performance”, that sounds good, let’s see what that consisted of:

Versus Q3 of the prior year:

Sales down 4.5%
Gross margin dollars down 18%
EBITA down 15%
Net loss of $0.4 million versus a larger loss of $3.9 million the prior year

In what world is this “Solid Performance”? According to the company it is solid given “continues macroeconomic headwinds across our sector” and indicated that “our brands often outperformed the industry”.

I find it rather disgusting to call this Solid Performance. If this is outperforming the sector then it would seem that they are stuck in a terrible business. Canadian wine producers face very stiff competition from imported wine.

Well, we’ll see how the stock reacts tomorrow. They did claim that things will be improving. I regret that I ever started looking at this company. With the shares down do much int he past few years, I am holding onto my shares in this weak company hoping for better days ahead. That has proven to be a mistake so far.

Tomorrow, the markets will be eying the U.S. Consumer Price Index results for January hoping it will come in low and give the FED reason to start thinking about cutting interest rates. Apparently, the headline number is expected to come in low but analyst and the FED will look into the details and will focus on the trend after possibly adjusting for the more volatile items such as gasoline prices.

In Canada, the 5 year government bond yield is reported as 3.74% today, up slightly on the day. That is NOT indicative and any imminent reduction in interest rates.

5 year fixed mortgage rates are apparently available as low as 4.69%. It appears that competition between banks has kept those rates edging down this new year despite the higher government bond yield. I would not bet on mortgage rates going lower still unless the government yield starts to go down again as it did late last year.




Linamar Updated February 11, 2024

The report on Linamar is updated and rated Buy at $65.33.

It looks quite cheap based on valuation and is very well managed. But it is in a tough and cyclical industry and the ROE is not as high as it was historically. I think its a good bet at this price. They will likely increase the dividend with the Q4 earnings announcement in early March.

February 11, 2024

On Friday the S&P 500 was up 0.6% and Toronto was up 0.4%.

Shopify was up another 3.3%. Amazon was up 2.7%.

On Friday afternoon Andrew Peller had some announcements: They are appointing five new directors. (On November 9th all four of its independent directors resigned at the same time and these are the replacements.) John Peller reiterated his intention to retire as CEO by the end of this year. These new Board members have approved a $4.5 million dolalr retirement bones for John Peller AND after his “retirement” he will be paid $2 million per year as a consultant (the time period that lasts was not indicated but there was hint that it might be at least two years). On top of that the company is paying $3.0 million in consulting and legal fees incurred by the controlling Peller family as part of the arrangement.  To put these numbers in some context: The company lost $3 million in fiscal 2023, and made $12 million in fiscal 2022 and $27 million in fiscal 2021. This all strikes me as an overly generous payout for John Peller and I don’t see any reason that the controlling family’s legal and consulting costs should be paid. To me it smacks of “legalized theft”.  Unfortunately this is the sort of nonsense that can happen at smaller companies controlled by management.

They also announced this news in the middle of the trading day which is certainly not best practice. I would assume the four previous Board members left because they were not willing to go along with this nonsense – but I don’t know. The market so far seemed unperturbed by the news.

I mentioned last week that two Trustees at the Melcor REIT were leaving abruptly. That could also be a case of not being willing to go along with something the controlling family wants to do.


February 8, 2024

On Thursday. the S&P 500 was up just 0.1%. I did officially poke it’s nose over the 5000 level for the first time before closing at 4998.

Toronto was down 0.2%.

Shopify was up 3.1% after reports that it may raise some of its subscription prices.

lululemon was up 3.3%.

TFI International reported lower earnings acter the close but projects growth ahead and increased its modest dividend by 14%.

Interest rates on the bond markets moved higher today. The reported yield on the 5 year Government of Canada bond rose to 3.68%. After a steep decline this past Fall from highs around 4.5% it bottomed at about 3.1% in late December but is up quite significantly since then.

Similarly, the U.S. ten year treasury bond closed at 4.15% today after starting the year at 3.95%.

All else equal, higher interest rates push down the values of almost all stocks and bonds and preferred shares. One exception would be any rate reset preferred shares that are close to a reset date. For example CWB.PR.B that will reset at the end of April.

Stocks and preferred shares had been mostly increasing since the start of this year despite the interest rate increases. That may have been driven by confidence that these rates would soon turn around and go lower. The expected timing for that has now been pushed to somewhat later this year than was earlier hoped but stocks including preferred shares have not been negatively impacted it seems.

If the market starts to turn more attention to various risks, it will tend to push the value of most investments down. Exceptions could include government bonds. Having some cash and near-cash in a portfolio is never a bad idea as ONLY cash (and cash equivalents) can be counted on not to decline when fear mounts.

Having recent read Nassim Taleb’s The Black Swan (a tough read) I think his main message was that markets are always risky and unpredictable. The trick is to be positioned such that when an unforeseen slump occurs, you will not be decimated or too badly hurt by it. Holding cash could certainly be part of such an approach.



Canadian Exchange Traded (ETF) reference article updated February 8, 2024

Our reference article that gives a list of Canadian ETFs and their fundamental value ratios and comments on their attractiveness is freshly updated. This includes, ETFs for stocks, bonds and commodities (Oil, gold, silver and natural gas). This is a beast of an article and includes numerous links for more or (as time passes) updated information.

You can easily build a portfolio using this list or augment an existing portfolio.

At the top of our list on the Subscriber Home Page there is also a link to our article on Global Exchange Traded Funds. And simplest of all is our article on single ETFs that give a broad globally diversified portfolio in one ETF. (Example VBAL).

February 7, 2024

On Wednesday, the S&P 500 was up another 0.8%. It touched 5000 (well 4999.9) for the first time ever.  Toronto was up just 0.05%.

TFI International was up 3.5%. What a winning company this has been over the years.

Shopify was up 5.3%.

Canadian Tire was down 2.8% and has now given up most its strong gains from January.

I noticed the Melcor REIT was down 5.3% to $3.94. That seemed odd, given it has risen to $5.00 at the end of January. I then saw news that two of the REIT’s seven Board of Trustee members have left (resigned) with a departure date of March 5 (or possibly earlier if the REIT decides). Normally Trustees would leave by simply not standing for re-election at the Spring Annual meeting. Larry Pollock and Carolyn Graham are resigning as Trustees. Larry Pollock was a long-time President and CEO at Canadian Western Bank and Carolyn Graham was his long-time CFO and she remained CFO for quite a few years after Larry retired as CEO. This move likely suggests some major disagreement. It could be about cutting or not cutting the distribution. It could possibly have to due with asset sales that are happening or not happening. Or it could be a disagreement over some other major strategic move. These two are extremely qualified and were in a position to be financially independent. They were not relying on their director fees for their income. This is a disturbing development.


February 6, 2024

Tuesday’s action saw the S&P 500 up 0.2% and Toronto up 0.4%.

I see news today that several regional bank share prices in the U.S. have declined. At least one bank, New York Community Bank could be facing a run on deposits and its share price is apparently down 60% since January 1.

It’s always the case that something can come along to pull markets down. The trick is to be positioned in such a way that you don’t panic in those situations.


Starbucks report updated February 6, 2024

The report on Starbucks is updated and rated Buy at $95.41. This is a very high quality company but it’s valuation is arguably somewhat high. Overall, this is probably a good stock to take an initial position in with a view to holding for the long term and adding to it on dips.

February 5, 2024

On Monday the S&P 500 fell 0.1% and Toronto was down 1.0%.

Hopes for an imminent decrease in interest rates were further dashed by comments that the FED chair made in a television appearance on 60 minutes.

The yield on the five year government of Canada bond rose about 13 basis points to about 3.6% Despite that, mortgage rates in Canada edged down. That may be be due to stiff competition between banks and may not last if that 5 year bond rate keeps increasing.

Most of the stocks on our list were down today.

It’s not surprising to see stocks come down a little after all the recent gains. So far the North American markets are ignoring the war in the Middle East. That could change.

I see news that the Chinese stock market was down 8% today. That may not have much relevance for North America but it does not seem like good news at all.


February 4, 2024

On Friday, the S&P 500 was up a very hefty 1.0&% but Toronto was down 0.2% as oil prices were lower.

Shopify was up 8.7%.

The BIG story of the day was Meta (facebook) being up 20.3% and also Amazon being up 7.9%.

I will admit to being a little bummed at not owning these two. At least I do own some Shopify.

I calculated that the market cap gain for Meta was about $215 billion and for Amazon the gain was $130 billion.

That’s a $345 billion dollar gain in wealth in just two stocks that appeared out of thin air on Friday.

It gets me thinking about the implications of how wealth is measured. There was no real change in the amount of actual goods and services in this world overnight Thursday. It’s not like a massive new and useful nickel or oil or natural gas deposit was suddenly discovered. We just had a sharp upward revision to the estimated value of the future earnings on these two companies based on their strong results in the past three months and comments on their outlook.

The stock market creates and destroys wealth every day. Stock valuations go up most days . And in  sense this is wealth from thin air, especially when it happens very suddenly. Over time companies do created actual products and services and that’s very real. But when we have an increased opinion of value that create hundreds of billions in new wealth overnight, it’s maybe not quite so real. (And I am not opining on the true value of those shares).

I just think it’s newsworthy and thought provoking when the market value of their shares increases and just two companies can create $345 billion in brand new wealth overnight.

The owners of these two companies could sell and lay claim to an extra $345 billion in actual goods and services or other assets if they wanted. Luckily, they mostly won’t do that. You might think that someone else had to lose $345 billion for these share owners to gain it and yet that’s not the case at all. No one had to lose anything.  But if wealth goes up materially for a few people and GDP and the real goods and services and real and even intangible assets have not increased is there a some collective loss for the rest of us? Is this a sort of indirect currency devaluation? I don’t know but these are just things I wonder about.

Meanwhile though if we too can own shares destined to rise we will get our share of this action over time.



February 1, 2024

On Thursday, markets recovered much of Wednesday’s decline.

The S&P 500 was up 1.25% and Toronto was up 0.5%.

Aecon Group was up 3.8%. It has done well lately. I’ll wait until I see its Q4 numbers before commenting on whether or not it has put its troubles behind it.

Costco was up 1.5% and closed above $700 for then first time. I had thought it was too expensive but I said before that betting against this company tends to turn out badly. Yahoo Finance shows it trading at 48 times trailing earnings and 44 times forecast foreword earnings. That’s about as high as I have seen it. Soon it will report January same-store sales and we will see how that looks.

Cameco was up 5.4%.

Most of the preferred shares on our list were also up today.

Shopify was down 4.6%.



January 31, 2024

Markets were weak on Wednesday and the FED chair indicated that interest rate cuts are not as imminent as the market was hoping.

In response the S&P 500 was down 1.6%.

Oil was down about 3% and Toronto stock index was down 1.0%.

Accordingly the great majority of stocks on our list were down modestly

lululemon was notable with a 5.7% drop.

This decline should come as no big surprise at all after all the recent gains.



January 30, 2024

On Tuesday, the S&P 500 was down 0.1% while Toronto was uo 0.1%

After the close MicroSoft reported what one analyst said was insanely high operating earnings growth. But in After hours trading the shares are down although only down 0.3%.

Meanwhile I saw headlines that Starbucks reported earnings and outlook were quite disappointing and yet that stock is up 4.2% after hours.

A clearer picture will emerge tomorrow when analysts have a chance to digest the news.

AutoCanada was down 5.1% giving back yesterday’s gain.

There seems to be an increasing number of announcements of layoffs. Today it was Enbridge and UPS. It may be that the long-predicted recession will emerge.

Penny Stock Ceapro Report Updated

The report on Ceapro is updated and rated Highly Speculative Buy / Hold at $0.16.

This company has been quite a disastrous investment over the years. At the end of 2022 it looked like it might be set for much better days. Instead, revenue has plunged in 2023. And now they are proposing a merger that is actually more of a take-over of Ceapro although Ceapro share owners will own 50% of the purchasing company -f the deal proceeds. It’s all VERY uncertain. On a positive note it has cash of about 15 cents per share and a book value of 38 cents per share. So in theory it looks under-valued. But I’m not inclined to add to my position. And on the other hand I can’t see selling it at this price.

I’ve never had much luck with the few penny stocks I have looked at. They tend to have a highly deserved reputation for being risky.

January 29, 2024

Monday was another positive day in the markets as the S&P 500 rose 0.8% and Toronto rose 0.35%

AutoCanada was notable with a 6.6% gain.

Restaurant Brands and Shopify and Visa were each up 2.1%.

The Melcor REIT was up 2.2% to $5.00 which is a good recovery from what was likely a ridiculous recent low of $3.60.

Most of the preferred share were up today and have done quite well since I started emphasizing them last Spring.

January 26, 2024

Markets were quiet overall on Friday with the S&P 500 down 0.1% and Toronto up 0.1%.

But American Express was up a stout 7.1% after releasing earnings and a strong outlook.

Preferred shares have been doing well.

The two Brookfield Office Property preferred shares on out list were up 5.6% and 3.3%.

I noticed that CWB.PR.B is back to $20. These shares had briefly hit $25 in December 2021 before tumbling to a low of $16.20 last Spring. (Looking back, I’m glad to see I had them rated as a Sell at $24.72 near the end of 2021.) They are set to reset on April 30. An ideal scenario here would be if the 5 year Canada bond stays high until then so they reset at a high level but then interest rates fall after that so that the high dividend would be more attractive. The “spread” on these (see report on Subscriber Home Page) is moderate at 2.76% and so they not get back to $25. I do not expect CWB to redeem these at $25 on April 30 although that is a possibility. The current yield at $20 is only 5.4% but they are now trading based on the fact that the dividend and yield is likely to reset significantly higher on April 30. (This depends on the 5 year Canada bond yield at that time – it’s currently 3.6% but is generally expected to be lower at the end of April.)

The perpetual preferred shares have also done well this month and that’s somewhat surprising given that interest rates (such at the yield on the 5 year Canada bond) have rebounded quite a bit this month.




January 25, 2024

On Thursday, the S&P 500 was up another 0.5% and Toronto was up 0.4%.

U.S. GDP for Q4 came in strong which could have spooked markets due to inflation concerns but apparently a price index came in showing lower inflation.

Toll Brothers was up 2.3% recovering a portion of its recent decline.

Visa Inc., reported earnings after the close with adjusted earnings per share up 11% and beating estimates. But the stock declined modestly in after-hours trading. I think it continues to be a strong buy and hold stock.

The Royal Bank rate reset preferred share RY.PR.S that is on our list announced its reset dividend today. And the information is updated on the Subscriber Home Page. At today’s closing price the yield is 6.7% and the dividend (with first payment April 24, 2024 will not change for 5 years). This could offer a capital gain of several dollars if interest rates decline.

On thing I found confusing is that Yahoo Finance indicates it paid a dividend yesterday at the old rate but the prospective indicates that the new dividend is set to cover the period beginning February 24. Something seems strange here. The Prospectus seems to say that the dividend is paid in February, May, August and November. But according to Yahoo Finance it has been paid always in January, April, July and October. It seems the date that Yahoo is giving is the ex-dividend date. Checking further I now see that the ex-dividend date was yesterday January 24 but the dividend is not paid until February 23 or 24 which I think is an unusually long time after the ex-dividend date. If you buy tomorrow you don’t get the first dividend until almost four months from tomorrow.

I usually don’t pay a much attention to ex-dividend dates because I find that stocks often change in price by more than the dividend amount many days. And in general in the past I have almost always bought stocks for the capital gain potential and not so much for the dividend. So buying based on the dividend date is just not something I have done. But it can make sense on thinly traded stocks and/or higher dividend stocks to be more aware of the ex-dividend date. And it makes sense to look at that with preferred shares.

January 24, 2024

On Wednesday the S&P 500 edged up 0.1% while Toronto was about unchanged.

CN Rail was down 1.8% despite reportedly beating expectations with its earnings release.

The Bank of Canada left its key policy rate (the overnight inter-bank target lending rate) at 5.0% and seemed to indicate that no one should hold their breath waiting for an interest rate cut. It will happen only when inflation is under better control.

The Trans Mountain pipeline is finally inching towards completion with line fill to take place mostly in March and the first shipments around the start of April. This is good news for Alberta.

A report indicates that light vehicle sales in December rose 14% year-over-year in Alberta, the strongest of any province. This is good news for AutoCanada which has a relatively heavy concentration of dealers in Alberta.

January 23, 2023

On Tuesday, the S&P 500 ended the day up 0.3% and Toronto was up 0.5%

The two Brookfield Office Properties preferred shares were up another 6.3% and 3.3%. BPO.PR.A has a 52 week range of $7.06 to $16.09 and closed today at $10.63. That’s some wild volatility on a security that should normally be considered relatively safe.

After the close, CN rail reported Q4 earnings which although modestly lower than last year (adjusted earnings per share) were better than expected. The dividend is being increased 7%. CN has been an enormous winner over the long term. (It’s good to be in a duopoly position in Canada.)

I notice CWB.PR.D is up to $24.93. I believe today was the last day to buy it and receive the next 37.5 cents dividend which will be paid on January 31 to shareholders of record as of tomorrow January 24. (If you buy tomorrow you will not be a shareholder of record until at least the next day).

CWB will have the right to redeem these shares on April 30 at $25 and I believe they will do that because of the high dividend.

It will be interesting to see if they drop about 37 cents tomorrow to about $24.57. At that price I think they would definitely be a buy. Even at about $25 tomorrow they would not be a bad investment given one more 37.5 cent dividend around April 30 and a probable redemption at $25. And if not redeemed the yield is likely to be very attractive.

CWB also has the CWB.PR.B outstanding. I definitely do not expect those to be redeemed on April 30 and neither does the market expect it. See the Subscriber Home Page for more details on both of these.

Metro Inc. report updated January 23, 2024

The report on Metro is updated and rated (lower) Buy at $69.76. It should do well long term. But the company itself is project earnings per share this year to be flat to down 2% due to some learning curve costs as new distribution centers become operational and as depreciation and interest costs for those new buildings start to hit the income statement. (These costs typically only start to get expensed when a building becomes operational).

They report Q1 discal 2024 earnings on January 30.

January 22, 2024

On Monday, the S&P 500 was up 0.2% and Toronto was up 0.1%

The two speculative Brookfield Office Properties preferred shares on our list were up 3.7% and 6.9%.

After the close, West Fraser Timber announced it will permanently close a sawmill in Fraser Lake B.C. due to a lack of economically available “fibre” (trees). The stock has been holding up remarkably well in light of other recent closures.



January 21, 2024

On Friday, the S&P 500 surged 1.2% and Toronto was up 0.7%

The two Brookfield Office Properties preferred shares on out list ere up 5.9% and 4.5%. This has been an extremely volatile and mostly losing investment. These are risky but it appears that better days are ahead.

My next update will be for Metro the big Quebec-based grocer and pharmacy chain. They had a very strong fiscal 2023 (which ended September 30). But they project adjusted earnings per share  in 2024 to be flat to down about 2%. So the timing may not be the best but it looks like a solid long-term investment. I may buy a few shares tomorrow as an initial position. Honestly, Loblaw may be a better choice but I have not looked at it in a very long time. Loblaw is a stronger and more dominant company but it also trades at a somewhat higher P/E ratio.



January 18, 2024

Thursday’s action saw the S&P 500 up 0.9% and Toronto up 0.3%.

Apple was up 3.3%. It’s “almost” like Warren Buffett knew what he was doing when he bought about five? years ago at far far lower prices and put in $30 billion or so!

WSP Global a long-time winner was up 2.6%.

Couche-Tard – a huge long-term winner was up 3.0%.

Shopify was down 3.6%

Ceapro, a penny stock and a long-term loser was down another 3%.

The 5 year government of Canada bond yield is back up to 3.57%. Higher long-term rates are a gravitational force on stock prices but stocks defied that gravity today.



January 16, 2024

On Tuesday, the S&P 500 finished the day down 0.3% and Toronto was down 0.5%.

See also my comments from earlier today.

The guest on BNN’s market call this morning mentioned TH International. Time Hortons International with apparently 1000 stores in China (or mostly China) and growing fast. Not profitable yet but expected to be at some point. I grabbed some shares on something of a whim. The symbol is THCH.


January 17, 2024

On Wednesday the S&P 500 was down 0.6% and Toronto was down 1.2%.

Strong retail sales figures for the US are dashing hopes of an imminent decline in interest rates. The five year Canada bond yield is back above 3.5%. Lower oil prices weighed on the Toronto index.

TFI International was down 3.0%.

Royal Bank announced today that it will not be redeeming its rate reset preferred share Series BO. The press release did not give the trading symbol which is very annoying. (Likely some lawyer suggested no including the symbol for some reason.) The symbol is RY.PR.S and we have that one on our list.  These shares qualify for the bank as non-viability contingent capital. I believe that means they would be converted to common shares in the very unlikely event that RBC runs into significant financial trouble. This feature is meant to protect bank depositors. And it is perfectly correct and right that depositors should be protected well ahead of investors.

If the 5 year Canada Bond yield is at 3.5% on the reset date of February 24 (It’s 3.53% today) then the yield on these will reset to 5.9% of $25 or $1.47 or about 6.5% of the current $22.65 price. Basically, RBC probably can’t redeem these and issue new ones at a lower rate. So there is no incentive for RBC to redeem these it seems.

It’s not that hard to find a 6.5% yield today but it’s not a bad yield for investors given the strength of RBC. However the dividend might well be lower at the next reset in another five years. And investors have had a bad experience with rate reset shares over the years. Therefore it’s not clear that these shares will offer capital gains. They could fall in price of course.

If investing in preferred shares it seems wise to have some diversity of companies and to have some perpetuals as well as some rate resets.


January 16, 2 pm eastern time

Markets are down modestly today.

Canadian inflation for December came in as expected at 3.4%. “Excluding gasoline, the headline CPI slowed year over year, from 3.6% in November to 3.5% in December.” Hopes for the Bank of Canada to lower interest rates by April appear to be fading somewhat. The 5-year Canada bond yield is back up to about 3.43%. It fell below 3.2% in early January after plunging over 100 basis points in the last part of 2023 on hopes of interest rate cuts. A lower 5 year yield can be good news for stocks – unless it signals recession. Some investments benefit from a higher rate. I think the CWB.PR.B would benefit from a higher rate when it resets at the end of April. Other rate reset preferred shares (with a long time until the next reset) and certainly perpetual preferred shares benefit from a lower 5 year Canada bond yield.

CMHC released December housing start figures this morning. For Canada overall, housing starts were up 1% in December but down 7% for the year. In Alberta housing starts were up 65% in December (single-family up 39%) and were down 1% for the year. Alberta is finishing the year strongly. This is positive for Melcor Developments which will hopefully report a decent Q4 although I am not expecting the overall 2023 year to be all that high. Their ROE remains substandard.  New Brunswick was up 170% in December but one or two multi-family projects in a small province can make the numbers highly volatile. New Brunswick was down 5% for the year. Nova Scotia was up an impressive 29% for the year driven by multi-family starts.

January 1 to 15, 2024 daily comments

January 15, 2024: U.S. markets were closed for the Martin Luther King jr. holiday today. Toronto was up 0.3%. I did double my rather small position in TransAlta this morning. It was up 2.1% today. Capital power might have been a better choice but I have not looked into it. Capital Power was up 3.3% today as it announced  it is exploring the feasibility of a small nuclear reactor in Alberta (That would be years away). And Capital will have an investor event on Wednesday to look at its outlook.

After the close Canadian Western Bank announced it will issue $250 million of subordinated debentures (you could call these bail-in bonds but that ‘s a long story Non-viability contingent capital NVCC is the official term). The interest rate is 5.95% for the first five years and then it floats for five years. and also CWB will have the right to redeem in 5 years.  They current already have $525 million of such debentures. It does not look like any of the existing will be redeemed. The 5.95% rate on subordinated debt is not very low but it’s also not very high and probably demonstrates market confidence. These bonds will apparently be issued to the public as far as I could see. If they do come up as an IPO you should only buy if you are fully prepared to hold for the 5 to ten year term.

I suspect that CWB may redeem (at $25 at the end of April) the preferred shares CWB.PR.D that trade at about $24.78. The CWB.PR.B preferred shares that trade at about $19 are probably very unlikely to be redeemed – but it would be a great bonus if they were redeemed. The D shares have a huge spread over the 5 year Canada and I have long figured these would be redeemed. The B shares have a modest spread and so there may not be much reson to redeem – unless they are simply not as useful under the ever-changing bank capital rules. I hold a tiny amount of the D shares. I might sell those after the next ex-dividend date which is apparently January 23. I hold a fair amount of the B shares which I expect to continue to hold but it would definitely be a welcome bonus if they were redeemed – which would be at $25. See the reports on these two shares on the Subscriber Home page if interested in more detail

January 14, 2024: On Friday, the S&P 500 ended the day up 0.1% while Toronto as up 0.3%. TFI International was up 2.0%. What a long-term winner it has been. Constellation Software was up another 2.3%. Its gains over the years are stunning.

I may add to my TransAlta position tomorrow. Wholesale power prices in Alberta have been through the roof the last few days due to cold weather. The price cap is $1.00 per kWh and it has hit that cap many hours. A more normal wholesale price is more like 5 to 6  cents average over all hours. The average the last two days was 66 cents and today will be similar. As far as I could tell most of TransAlta’s Alberta generation is sold at the floating wholesale price. If so they have made a lot of money these past few days. That won’t show up until Q1 is reported. Meanwhile prices were much lower in Q4 with mild Alberta weather. So maybe the Q4 report will be disappointing. So TransAlta may not be any screaming buy but I like it chances to do well.

Related to the cold weather in Alberta, Canadian Tire is doing a booming business in batteries and probably automotive service. Huge lineups for batteries.

January 12, 2024 12:15 pm eastern time: Apologies for this site being unreachable on most browsers for the last two days. A security certificate had expired.

An interesting development on Wednesday was that Brookfield Office Properties announced a buy back program on all its preferred shares listed on Toronto. We have two of those on our list and they have been HIGHLY volatile and are marked highly speculative Buy / Hold. BPO.PR.A rose about 8% on the news while BPO.PR.G did not seem to react. The buy back program will be restricted to very small volumes (due to the low trading volumes) and that will limit its impact. I see this as good news that shows that Brookfield Office Properties and its immediate parent Brookfield Property Partners apparently have confidence that its office properties will weather the current weak office market. These shares remain quite speculative but this buyback news is certainly welcome for anyone holding these.

Cameco is up 8.0% today to a new high. It’s been volatile but has been a big gainer. It’s expensive in relation to earnings but with nuclear power coming back in favor this stock has potential to keep gaining.

January 9, 2024:

On Tuesday, the S&P 500 was down 0.15% and Toronto was down 0.5%.

But there were a couple of notable gainers among the stocks I track.

Cameco bounced up 5.1% recovering some of the ground it recently lost.

Shopify was up another 3.4%. It’s at a 52 week high but remains well below it’s all time high.

After the close, West Fraser Timber announced it will shut one mill and curtail another. This stock has been surprisingly resilient all year. I would think that this news is quite negative however.

January 8, 2024: Monday was a strong day in the markets as the S&P 500 surged 1.4% and Toronto was up 0.7%. Most stocks were higher. Shopify was up 4.2%.

January 6, 2024: On Friday, the S&P 500 was up 0.2% and Toronto was up 0.3%. West Fraser Timber was up 2.3% and has been a surprisingly strong company lately.

Costco reported December same-store sales which showed the highest growth in About 6 months or more. U.S. same-store growth was strong at 7.4%. Canada has remained strong all year and was up 11.9% year over year. Some of that (perhaps most) is due to price increases. Some can be attributed to Canada’s surging population. Some of it may be Costco gaining market share. The stock was up 1.2% on this news on Friday. I view the stock as expensive but betting against it usually works out badly.

January 3, 2024: On Wednesday the S&P 500 was down 0.8% and Toronto was down 0.3%. The FED minutes that came out today threw some cold water on the notion of near-term interest rate cuts. The market did not react too strongly but might react (drop) more tomorrow after mulling this over.

January 2, 2024: The first few comments of 2024 will be posted here. On this first day of trading for 2024, the S&P 500 was down 0.6% and Toronto was down 0.4%. Most stocks were down today. Markets moved up so fast in the past few months that it should certainly be no surprise if we now give some of that back.

January 1, 2024: The first few comments of 2024 will be posted here. Our stock picks did well in 2023 and I will update the performance numbers in a few days. Heading into 2024 I have marked some of the ratings are out of date.  I want the performance tracking for 2024 to be based only on ratings that I am comfortable with at this time.

Also, in terms of performance tracking I have way more preferred shares now and so I will track all those as a separate category this year. The main performance figures will only include the equities this year. Prefs were always a bit problematic to include there since they are mainly meant to provide income whereas the performance tracking is all about capital gains as I have never included dividends or other cash distributions. My own portfolio performance has always included everything I own and includes dividends and interest that will continue in 2024.

A lot of stocks were up quite a lot in the last few months of 2023. Entering 2024 I think most investors (especially those at or near retirement) should be cautious. Stocks don’t go up in straight lines and I think we are likely to see some pull backs. I’d like to be positioned to withstand and even take advantage of pull-backs.

2024 could be a tumultuous year. The S&P 500 seems somewhat over-valued. (Not a big deal but a bit of a concern.) And then we have wild cards like the US election cycle. It’s frightful to think of Trump getting elected again and it’s perhaps equally frightful to think about what happens if legal troubles prevent him from running. There is also the prospect of the various wars escalating. Bizarrely, that seems less of a concern than what happens with Trump and the divided US population. Interest rates are expected to decline. But the bond yields may have already anticipated too much decline and could certainly head back up temporarily and that’s bad for stocks.

The bottom line for me is that most investors should not be positioned too aggressively. Cash and near-cash and fixed income may prove to stabilize portfolios in 2024. But of course a reasonable exposure to equities should be maintained.

Visa Inc. updated December 31, 2023

The report on Visa Inc. is updated and rated (lower) Buy at $260.

This has been and is likely to continue to be a very high quality investment. It’s not cheap but is also not extremely expensive in relation to earnings and its quality. It’s been a fantastic company to buy and hold.

The price rose 25% in 2023 from $208. There are times when its price dips. Those times have proven to be buying opportunities.

P.S the first few comments for 2024 will be posted to the Subscriber Home Page.

December 29, 1 pm eastern time

Today is the last trading day of the year.

On Thursday, the S&P 500w as about unchanged while Toronto was down 0.4%.

Markets are relatively quiet but down mostly so far today.

Aecon Group is up 2.9%% after announcing it has paid off its 5% convertible debenture as scheduled.

I have not had any great luck with the various convertibles debentures that I looked at and and had on the list or mentioned over the past few years. Occasionally the convertible feature can pay off. But in that case it would have been better to simply own the underlying stock directly.

These convertibles paying about 5% to 6% seemed attractive a few years ago when GICs and high interest accounts were paying very little. But they were and are more risky. In the majority of cases they will pay out at maturity as promised. But they are issued by weaker companies and there is always some chance of a significant loss. I’ve pretty much lost my taste for these and will hope those I hold matures as promised. I hold a material amount of the convertible debenture of the Melcor REIT which I am quite confident will pay off as scheduled at the end of 2024. But I have very small amounts of two others that look very risky risky. HOT.DB.V and ECN.DB.A.


December 28, 2023 before the opening of trading

Wednesday session saw the S&P 500 up 0.1% and Toronto up 0.65%.

AutoCanada jumped 8.2% on the news that I mentioned in my previous post. I think management here is strong and aggressive in pursuing profits and improvement. But the high debt is a definite risk.

TFI International was up another 3.8%. This is a company that has just gone from strength to strength over the years and has been superbly managed in a tough industry. Occasional pull-backs in the price have been great buying opportunities. A great long term hold.

Today is a travel day for me. Cape Breton to Edmonton. I’m scheduled through two airports and it could be a long day. I actually have a lot of sympathy for Airlines. It is a very tough and often unprofitable industry. The logistics and connections that have to happen are complicated even in good weather. Bad weather usually wreaks havoc. Passengers opt for the cheapest possible fares in most cases and are usually unforgiving of delays. And passengers wonder why the seating is so crammed. They voted for that with their wallet.

December 27, 2023 before the market open

On Tuesday, the S&P 500 was up 0.4% while Toronto was closed for the holiday.

I did not see any particularly notable moves in the stocks I monitor.

Stock market futures suggest a quiet opening for the U.S. markets.

AutoCanada has sold a 10% interest in its newer business of selling finance and insurance to kijiji vehicle buyers. They are getting $25 million which probably indicates that they have created good value with this new business.

In theory, Costco should have dropped $15 as it went ex-dividend on its $15 special dividend but that does not appear to have happened.

Toll Brothers updated December 24, 2023

The report on Toll Brothers is updated and rated Weak Buy / Hold at $104. This stock has surged from about $68 just two months ago. Its contracts to build new homes have surged recently and so the stock price could very well continue to rise. Home Builders have been doing well despite higher interest rates because there has been a lack of existing homes for sale as homeowners with low mortgage rates locked in long term are reluctant to sell. And in recent weeks lower interest rates have been beneficial. Its profit margins on each house have also recently surged.

This is a strong company but it tends to be volatile and so I am cautious on it now after the recent price surge. Its reported earnings are likely to decline year over year in the next two quarters due to lower contracts last year. It’s not clear if that will impact the price since the market may pay more attention to the higher signed contracts that will show up in higher profits by the last half of its  fiscal 2024 ending October 31, 2024.


December 23, 2023

On Friday the S&P 500 was up 0.2% while Toronto was up 0.6%.

On Thursday and continuing somewhat on Friday the tow Brookfield Office Properties (BPO)  preferred shares were down a total of over 10% after S&P downgraded the debt of its parent Brookfield Property Partners from BBB minus, to BB (which is called Junk status or non-investment grade.) This parent guarantees the preferred shares but the ultimate Brookfield Corporation parent does not.

I have said that these two are quite risky and that certainly the market judges them to be quite risky. This credit downgrade hade been rumored for several months. I find it a bit annoying that S&P was slow to do this and now they finally do it when bond interest rates have declined which will benefit this company. Brookfield seems to remain very confident that these properties will do well over time. They finance each property separately on a non-recourse basis and so they have handed a few problematic properties back to lenders. Overall, these shares are risky I will continue to hold on the expectation that they are likely (but not guaranteed) to recover over time. And they are likely to continue to pay the dividend. Of course I would not want to be too heavily exposed to a risky position like this.

December 22, 2023 before the opening of trade

On Thursday markets mostly recovered from the little swoon of Wednesday afternoon as the S&P 500 rose 1.0% and Toronto rose 0.8%.

Linamar was up 2.9% after announcing an acquisition.

After the close it was announced that the Canadian Minister of Finance was giving the green light to RBC’s acquisition of HSBC Canada. Conditions included a short moratorium on layoffs and that they must keep 33 branches open for four years.

Canadian Western Bank has designs on luring away some of HSBC’s commercial customers. Those customers presumably like dealing with a smaller bank.

One thing that got little attention is that a lot of immigrants may have used HSBC becasue of its vast international linkages through the parent HSBC. Tough luck I guess. It’s true, RBC also has big international operations but not so much (if any) in terms of retail branches in Europe and Asia.

I was a bit surprised that what I call the Competition (Elimination) Bureau did not object to this decrease in competition. But it’s par for the course for them.

As far as keeping branches open, really bank branches are far less needed these days. I was in CIBC’s main Halifax branch last week ( to get a PIN on a new credit card) and they had one teller open in a cavernous bank hall and only two other customers besides me. Similarly I made a rare visit to a big TD branch yesterday (big downtown branch) to get some physical cash for Christmas and I had zero wait time to see a Teller.

It was the competition from HSBC (lower mortgage rates) that was and is needed. Instead of protecting competition the government is protecting obsolete jobs and obsolete branches (for a short while). Finger in a leaky and failing dike scenario. You can’t stop progress as we used to say – back when people were more sensible.


December 20, 2023

Markets turned noticeably lower in the last couple of hours of trading on Wednesday. The S&P 500 ended the day down 1.5% while Toronto was down 1.15%.

FedEx got hammered down 12% today in reaction to its earnings release yesterday afternoon. I had FedEx on the list here quite some years ago and it turned out to be a strangely volatile stock. It’s obviously sensitive to the economy and to fuel prices but it has also made operational mistakes over the years and struggled with a huge acquisition years ago. I have no opinion on it now.

Costco finally had a bad day, down 2.5%.

Starbucks was down 3.1% to $94. I like it at that price.

Canadian Tire was down 2.7% and may continue to be weighed down by a sentiment that people are cutting back on non-essentials due to inflation. I like the stock for the long-term.

Shopify was down 3.5%.

This kind of pull-back was to be expected after all the recent gains.

On another note I saw on CBC last night that Airdrie Alberta is one of the fastest growing communities in Canada. Melcor has I think two communities there with new lots available in Q4. They should have a decent Q4. Also Alberta gained 44,000 new people in Q3. That should be good for Melcor and perhaps more immediately good for a company like Boardwalk Equities and I think Mainstreet equities as apartment rents are rising.

After the close, Linamar announced that it is making a $640 million acquisition in the agricultural sector.

December 19, 2023

Markets powered ahead some more on Tuesday with the S&P 500 up 0.6% and Toronto up 1.05%.

West Fraser Timber surged 10.2% but I did not see any new to explain that. Possibly an analyst upgrade.

TFI International was up 3.0%.

Statistics Canada reported that Canada’s population surged by 431,000 in Q3, the largest increase ever in a single quarter. The population is now 40.5 million. Non-permanents residents are a huge part of the growth and that’s after deducting those that left during the quarter. As far as corporations go I would say this positive for grocery stores and for Apartment REITS.

Alberta was the only provide that gained in terms of net inter-provincial migration (I’ll call New Brunswick unchanged as a reported net gain of 21 people from other provinces), Alberta seems to have the fastest growing economy in Canada at this time. Hopefully Melcor can finally parlay that into something good. I continue to try to light a fire under their management. I don’t think I’m their favorite person at all.

The Feds introduced aggressive targets for Electric Vehicle sales and Alberta said get lost. It’s not clear yet what impact this might have on AutoCanada.



December 19, 2023 – 6:45 am easter time

On Monday, the markets continued to push higher on hopes that “lower interest rates (like St. Nick) soon would be here”.

If those hopes are dashed in any way including by the upcoming wording of the Fed’s meeting minutes, then things could go the other way. Apparently the next minutes are not due out until early January however.

On Monday the S&P 500 and Toronto were each up about 4.5%

Oil has recovered to $72.30 which is a positive for the Toronto market.

Costco continues to power ahead and was up another 3.4% to $681 and may well crest $700 before long. This company is a always a power house retailer but is expensive at 44 times trailing year earnings and 46 times forward forecast earnings. Those figures would seem to indicate modest expected earnings growth. There is also speculation of an increase in the member fee and that may or may not be reflected in the forward earnings.

All the preferred shares on our list have been updated. In general the dividends are attractive especially in taxable accounts. Their price action will depend largely on interest rate moves and expectations in most cases. In a few cases (most notably the Brookfield ones on the list) credit strength of the company is also a major driver.

Canadian inflation for November came out today and was about unchanged at 3.1%. I doubt the market will have much reaction to that although this is a little higher than expected. However the Bank of Canada governor Tiff Macklin continues to push back against the idea that rate cuts are in any way imminent. So that could cause some reaction in Canada. Canadian headline inflation will likely be lower in December with lower gasoline prices.


Preferred Shares December 16, 2023

I’ve just updated most of the preferred shares on our list. With a good selection of both perpetual and rate resets.

I’m surprised that the perpetuals have not risen more in response the the sharply lower government bond yields this past week and recently. That in turn was due to indications that the central banks will lower interest rates next year. Hopefully the perpetuals will rise in the coming weeks if the market remains convinced that interest rates will decline in 2024.

The rate resets are harder to judge. As bond yields come down, their current yields look more attractive but that may be offset by the fact that their projected future reset yields have declined with lower interest rates. In this case a reset that is four to almost five years away from its next reset and which has a high yield might be a good bet.

It’s always possible that any one of these preferred shares will be redeemed at $25 (for resets that can only happen on the reset dates every five years). In most cases this would be a nice capital gain from current prices. But we can’t count on that. The Banks are somewhat more likely to redeem because as regulations change certain preferred shares are no longer as useful to them and so they sometimes redeem them – but it’s hard to know the possibility of that happening. It’s best to buy these for the yields and not count on any future redemption ever at $25.

It’s also best to diversify across a number of these rather than concentrate on one or two issues.

It’s hard to judge what rating to put on these and there is not much difference here between my (higher) Buy rating and my Strong Buy rating.


December 16, 2023

On Friday markets curbed their recent enthusiasm a bit as the S&P 500 was about unchanged on the day and Toronto was down 1.2%.

Costco was an exception as it gained another 4.45% after its earnings release and its announcement of a $15 special dividend. It’s definitely expensive at 45 times trailing earnings but betting against this power house usually turns out to be a bad idea.

Most stocks on our list were down modestly. Dollarama was down 3.1% to $90. It’s not cheap at 27 times trailing earnings although at Yahoo’s reported 20 times forward earnings it would not be expensive. Overall, this price might be an opportunity to nibble.

The market has been somewhat euphoric after indications from the FED that interest rates are likely to decline. Government Bond rates (yields) are already down a LOT. The 5 year Canada bond yield is at 3.27% and it was as high as about 4.45% in early October.

Looking forward, we should remember that markets can easily and instantly turn negative as events unfold. Therefore a balanced approach is usually a good idea. Trimming a little from equities to rebalance to a target percentage of safer investments is considered prudent.

CMHC has reported housing starts for November. For Canada they were down 20% versus the same month last year with single-family starts down 15%. But Alberta was a bright spot with overall starts up 29% year-over-year and single-family starts up 41%. Calgary was particularly strong. Alberta year-to-date starts are down 5% with single family starts down 14%. Overall it appears that Q4 will be reasonably strong for home starts in Alberta. This is positive news for Melcor Developments. Perhaps that stock can finally start to show some life by net Spring. It is however very thinly traded and the market does not pay it much attention. I just wrote a lengthy email to Melcor’s management yesterday outlining my concerns. I’m trying to put the wood to them. It can’t hurt to remind them that investors are not happy. They don’t hear from many investors at all.


December 14, 2024

An interesting day in the markets on Thursday. The S&P 500 was up 0.3% and Toronto was up 0.7%.

Shopify was up 4.2%.

Toll Brothers was up 9.0% which seems a bit crazy after its recent gains. I decided to reduce my position which may not have been wise given the way this stock has been roaring up. But it’s also been a very volatile stock over the years so I decided to sell some.

AutoCanada was up 9.8%.

All in all, another good day in the markets.

Costco reported good results after the close and a special dividend of $15.

December 13, 2023

On Wednesday, the Fed delivered quite the Christmas Present indicating that the rate increases are over and that its likely that there will be three rate cuts by the end of next year.

Stocks and bonds jumped as this news came out at 2 pm eastern.

The S&P 500 ended the day up 1.4% and Toronto was up an impressive 2.0%.

The 5 year government of Canada is down to 3.36%. That’s down more than a full percentage point versus is recent peak of about 4.4% in early October. That is a huge decline and should certainly bring about lower 5 year mortgage rates.

Among the more notable gainers today were:

West Fraser Timber up 5.8%
AutoCanada up 8.0%
RioCan up 6.1%
Toll brothers  up 4.4%

I would expect the perpetual preferred shares to increase on this news but they did not seem to move much today which could be due to their thin trading volumes.

The Rate Reset preferred are always harder to predict. Those that have recently reset to higher dividends should do well given the higher rates will be in place for 5 years. Those that are soon to reset could decline on this news since their reset levels will be lower with the lower 5 year government bond yield.

All in all, a very good day in the markets!

December 12, 2023

On Tuesday, after a slow start, the S&P 500 ended the day up 0.5% while Toronto was down 0.4%.

Oil prices were down with West Texas currently at $68.82 down 3.5% today.

Costco pushed up another 0.9%.

Restaurant Brands was up 1.9%. And Visa Inc. was up 1.2%.

Tomorrow the market will react to the latest comments from the Fed. The market is looking for some signs of reassurance that interest rate cuts are at least possible next year.

Andrew Peller Report updated December 11, 2023

The report on Andrew Peller is updated and rated Weak Sell / Hold at $4.57. (Friday’s closing price). (It closed today at $4.40)

This has turned out to be a low return business in terms of its accounting profit for the past few years and the share price has done very poorly.

It is possible that things will improve but in the long run its unlikely to be a high return business.

You might think that a long-established wine producer would be quite a profitable business so it’s useful to look at some of the reasons why its returns are low.

Lack of brand loyalty is a big problem for wine producers. The typical customer looks for whatever brand is on sale. And customers can easily change brands with every purchase. Andrew Peller has a number of higher priced brands (Wayne Gretzky, Sandhill, Tinhorn, Gray Monk and others) but their biggest seller is Peller Family which they bottle from imported bulk wine. The Canadian producers face higher costs that many European producers and so it’s very hard to compete.

Another issue that wine producers face is that it is a capital intensive industry. Vineyards tie up a lot of money. Andrew Peller’s lands may be worth far more than book value which is great in theory but if the land is never going to be sold then investors can’t realise the higher value.

I own some shares and will keep them in the hope of a better price in the next year or two but my thinking is that this will never be a high return business due to the lack of a lot of brand loyalty and the competition from imported wine.

December 11, 2023

On Monday the S&P 500 was up 0.4% while Toronto was down 0.1%.

Costco was up another 2.1%. I have long said it’s a powerhouse. But I have been surprised at the recent gains. It’s expensive at 43 times trailing earnings and 39 times analyst forecast earnings. It’s same-store sales have softened somewhat as I have mentioned. But analysts remain enthusiastic. It reports earnings on Thursday.

Canadian Tire was down 2.7% and Canadian Western Bank was also down 2.7%.

The U.S. economy has been growing at a rapid pace while the Canadian economy is quite stagnant.

December 9, 2023

On Friday, the S&P 500 was up 0.4% and Toronto was up 0.3%.

lululemon was up 5.4% as the market decided it liked its earnings results. I’d be tempted to trim my position at this price ($490). If I do so, I’ll be hoping to buy back in at a lower price since this is a long-term winning company. I definitely will not sell my whole (relatively modest) position.

Toll Brothers was up another 1.9%.

Canadian Western Bank was up 2.9% to $31.10 after releasing Q4 and fiscal year-end results. The 2.9% gain on Friday was quite good on top of its recent gains and in light of the market’s general caution toward bank stocks at this time. CWB’s loan loss provision was quite low. I believe this stock remains under-valued.

December 7, 2023

On Thursday the S&P 500 was up 0.8% while the Toronto stock index was about unchanged.

Toll Brothers was up another 2.5%.

After the close, lululemon reported another strong quarter but apparently gave a cautious outlook for their all-important Christmas quarter. It’s interesting to see vastly different headline reactions to the same news. I saw: “Lululemon shows no real signs of slowing down” but another headline said: “Lululemon’s bleak holiday-quarter targets overshadow strong Q3 results”. The stock was down 2.6% after hours. We’ll see how the market reacts on Friday.

Canadian Western Bank announces its Q4 and fiscal 2023 earnings tomorrow morning. I’m hopeful for a good report but there could certainly be some negatives in terms of loan losses or possibly severance costs if they decide to cut back on staff. They were expected to show a higher net interest margin. Their commercial borrowers faced loans renewing at higher rates and this could slow the appetite for such commercial borrowing.

Statistics Canada released building permit data today.

For Canada residential building permit values for October were up 15.9% year-over-year although about flat compared to September. Non-residential permits were up 16.4% year-over-year and 5.3% higher than September.

I’m always interested in the Alberta residential permit figures given my shares and interest in Melcor Developments Ltd.

Alberta residential building permits were up a hefty 22.7% year-over-year for October and 14.8% higher than September. Alberta non-residential permits were up 28.7% year-over-year and 31.9% higher than September. While there can be volatility due to large multi-family and non-residential projects, this is impressive growth any way you look at it.

Price Edward Island’s building permits were up 147%! But that probably amounts to what? Three new houses and a barn (just kidding…sort of).


When there are voting and non-voting share classes – December 7, 2023

I saw a mention today that Canadian Utilities is offering to covert it’s thinly traded class B voting shares to Class A non-voting shares on a one-for one basis. The parent ATCO Inc. controlled by the late Ron Southern’s family owns 97.4% of the B shares. The comment I saw recommended owners of the B shares accept the conversion offer.

From a sort of purist point of view it sounds better to have owned the voting shares. But from a practical perspective the votes of the 2.6% public owners counted for nothing and the thin trading is a disadvantage in buying and selling. (Larger bid/ask spread, higher volatility).

I have not looked in detail but checking prices at end of January, February and March 2023 it does not appear that the voting shares traded at a consistent premium. Basically it appears that the market did not place any additional value on the votes given the 97.4% majority owner.

That makes sense and I recall a few other cases over the years where a thinly traded share class had more votes but the market did not provide much if any premium.

But Canadian Tire has been an exception to that going back I believe to the late 80’s.

Canadian Tire’s thinly traded voting shares CTC on Toronto have traded at a very large premium over the non-voting heavily traded CTC.A shares. As of right now I see CTC at $271, up 6.25% total on just 228 shares traded. That’s a HUGE premium of 87% over the non-voting CTC.A shares at $145.09 up 2.1% on 48,627 shares traded as of 1:22 pm eastern.

So why do Canadian Tire’s thinly traded voting shares consistently trade at a huge premium? That’s a mystery. The “non-voting” shares actually now get to elect three directors in a change that was made I believe a few years ago. That should reduce the premium on the voting shares but it has not. Also the dividend on the non-voting shares is one penny higher per year but that’s pretty minor.

Martha Billes, daughter of a founder of Canadian Tire, together with her son Owen Billes, owns 61.4% of the voting shares. The Dealers Association owns 20.6% of the voting shares (and they may or may not have an agreement to have a Dealer or three on the Board and there are currently three dealers on the Board). The employees share owners plan  owns 12.2% of the voting shares. This leaves only about 6% of the voting shares available for trading.

I’ve looked into this and it appears that the three main owning groups have made an agreement not to buy additional voting shares as their percentages have remained constant for a long time.

And, importantly, there is a “coattail” provision (see note 26 of the annual financial statements) whereby if there is a bid to buy “all or substantially all” of the voting shares then the non-voting shares become voting. That should mean they would not pay a big premium for the voting shares. Given this I was surprised that there is a big premium on the voting shares. But , I suppose this leaves open the possibility for someone to just buy control from Martha Billes (with or without Owen Billes shares) without triggering the coattail and that may explain the premium. Then again would they have to buy the public’s shares? Or maybe the thinking is that one of the three controlling owner groups would buy out the public shares at a big premium at some point without triggering the coattail.

In the end it remains a long-standing mystery. In my view it is risky to hold the voting stares. There is probably a far bigger chance that the premium goes away at some point as opposed to someone buying the A shares at a big premium.

In summary, there are complexities when there are voting and non-voting shares and the usual advice for investors is not to pay much premium for voting shares. And if you do not intend to hold long term then stick with the higher volume share class.



December 6, 2023

On Wednesday, the S&P 500 was down 0.4% and Toronto was down 0.5%

Shopify was down 4.8%.

After the close CN Rail announced a small U.S. acquisition but it is pending U.S. approval. They said the deal “closed into a voting trust” pending approval. That may mean that CN starts operating it immediately and getting revenue immediately. I’m not clear on that.

The price of West Texas Oil slipped below $70 for the first time since July. That’s directionally negative for Alberta. But I’m not aware of any strong indications that the price will stay below $70. It can rebound very quickly. Meanwhile, I would not worry much about Alberta.

December 6, 2023 11:40 am eastern time

Markets were relatively quite on Tuesday…

This morning they started off strong buy then started to fall and are down modestly at the moment.

As expected, the Bank of Canada left interest rates unchanged in its decision today. Bond yields are down modestly today. The perpetual preferred shares should be moving higher with lower interest rates. The last I checked they had mostly not moved much. But check the price history if interested. See link to price for those listed on the Subscriber Home Page. Rate reset preferred shares are always tougher to predict and the effect of interest rate moves depends partly on how many years or months until the next reset.

Toll Brothers is up 2.5% after releasing earnings. As expected actual earnings were down in the quarter versus 2022 because they are driven by contracts to build homes that were signed 9 to 15 months ago. But contracts for homes to be delivered in future were very strong. This company has been a star performer this year.

I don’t shop that much but here are my recent observations.

On a weekday afternoon last week Costco was quite busy. Next door Lowe’s was extremely quite. Lowe’s is not exactly a Christmas destination but it was really quiet.

My local large Canadian Tire I have noticed has been loaded with inventory – And it appears to be getting whittled down. I think their sales will be softer but should not be too bad.

I was at our local Outlet Mall near our Airport yesterday just before noon. Very quiet but that may not be unusual for that outlet mall. Under armour had almost everything 50% off which is not a great sign. That’s a discount off supposedly already discounted prices. The Nike store had lots of items 30% off.

I’m wondering how lululemon will do. If people really do cut back they should be vulnerable. But people like the quality and so I’m not going to bet against them.


December 4, 2023

On Monday the S&P 500 was down 0.5% and Toronto was down 0.2%. This comes after very strong recent gains.

West Fraser Timber was up 4.9%.

Today, the market seemed to decide that maybe it was no quite so sure about coming interest rate reductions after all. But it was a small pull-back in light of recent gains.

Comment on RIWI Corporation December 4, 2023

This is an update on a very disappointing investment.

I’ve rarely had any penny stocks on the site but RIWI Corporation was on the site from July b2020 until I believe the end of 2021. Unfortunately the price in that time has slipped from $2.95 to $0.70.

It’s had a lot of turmoil and it has lost money for the past two calendar years. It’s now looking a little more promising as it made a tiny profit in Q3 and appears set for profit going forward.

I wanted to update it because I still own it. I won’t add it back on the list with a full report unless someone wants me too.

At this point those holding it in a taxable account could sell for tax-loss purposes. Or just hold it and see how it does next year.

I’ll just post here the Summery cell from my updated analysis.

SUMMARY AND RATING:  This is a very small software company. It has recently gone through some turmoil with the founder relinquishing the CEO role, 5 longer term directors leaving, a change of auditors and incurring losses in 2021, 2022 and 2023. The  current value ratios, in isolation, would suggest a rating of Sell. It provides and sells a complex data service that is not easy to understand. Its data is intended to provide timely indications of changes in public attitudes. This can be used to predict elections. It can also indicate changes in attitudes towards carbon taxes, virus lockdowns, vaccinations and many other things. It has a relatively small but growing number of customers.

The insider trading signal is mixed as an early venture capital investor has sold out its position with some sales at low prices while the new CEO bought shares and the new CFO bought  a tiny amount both around 50m cents.. The earnings trend has been quite negative but it returned to about break-even in the latest quarter. The company explains that the lower profits are due to investments in sales employees and in technology to grow the business.

Executive compensation appears to be reasonable but Board compensation was quite high. On a  positive note, the company has ample cash and no debt and therefore is in no danger at all financially for the foreseeable future.  At this time we would rate it highly speculative Weak Sell / Hold at best. This company is suitable a modest investment / holding at most. Those holding it may wish to retain it given that things do seem set to improve going forward.





December 1, 2023

Markets ended the week with strong growth on Friday as bond interest yields fell even as the Fed Chair tried to warn he might possibly not be done raising interest rates yet. (The market did not believe him).

On Friday, the S&P 500 was up 0.6% and Toronto was up a hefty 1.1% on the day.

lululemon was up 4.4% (there was likely an analyst upgrade, it reports earnings next week)

AutoCanada was up 4.4%. (I expect continued volatility here, I have seem some anecdotal reports that car dealers in general are quiet with few sales and their inventory is piling up. It may take manufacturer incentives to move more vehicles off the lot. With the high interest on floor plan – inventory – financing I would have thought dealers should be cutting inventory but that did not seem to be the plan for AutoCanada in its Q3 report.)

Canadian Western Bank was up 3.8% getting back above $30 for the first time in about 18 months. Hopefully their Q4 report next Friday will at a minimum support this increase. But positive or negative surprises are always possible.

Over the past few days I updated my detailed analysis of the valuation of the S&P 500. My analysis may in fact be overly detailed.  I concluded that it looks moderately overvalued but there is a lot of uncertainty in the valuation in both directions depending on various assumptions. And it may be that the out-sized impact of the 7 or so largest companies is making this valuation exercise even more uncertain.

November 30, 2023

On Thursday, the S&P 500 was up 0.4% and Toronto was up 0.6%.

Bank stocks were mostly higher today except for TD which reported disappointing earnings.

In general it was another good day to be an investor.

But there are many signs that the Canadian economy is slowing.

November 29, 2023

On Wednesday, the S&P 500 was down 0.1% but Toronto was up 0.4% and most of the stocks on our list were higher on the day.

Canadian Western Bank was up 2.2%. It’s hanging in well in the face of news about bank loan loss provisions. I do think it’s under-valued. But at the same time with the big banks mostly falling in price, if CWB can just hold this price when it releases Q4 results next week, that would not be a bad thing.

Toll Brothers was up 1.9%.

AutoCanada bounced up 3.3%.

lululemon was up 2.5% and has done well in the face of so much talk of consumers being under pressure.

After the close, Costco reported another month of tepid (certainly by their standards) same-store sales growth in the U.S. at 3.0%. Canada continues to post higher numbers and was at 7.9%. My suspicion is that Costco is holding the line on prices in the U.S. more so than in Canada. I had thought this recently tepid same-store growth in the U.S. would push Costco’s share price down somewhat but instead it has risen in the past few months. I’ve seldom been right when betting against this company but once in a while it does go lower.




November 28, 2023

On Tuesday, the S&P 500 was up 0.2% while Toronto was about unchanged.

The market appears to be increasingly convinced that the that peak of interest rates has been reached. The yield on the 5 year government of Canada bond is down to 3.7%. In early October it was 4.4%.

Charlie Munger, Warren Buffett’s long-time business partner and close friend passed away today at the age of 99. His wit and wisdom is legendary.

November 27, 2023

On Monday the S&P 500 was down 0.2% and Toronto was down 0.35%.

Shopify was up 4.1% after reporting strong Black Friday results.

November 26, 2023

On Friday, markets were little changed with the S&P 500 up 0.1% and Toronto down 0.1%.

The rate reset preferred shares were mostly up on the day. These have mostly done quite well in the past month since they dipped at the end of October.

Many high quality stocks have also done very well in the past month. This includes Apple, VISA, Costco, Amazon, Constellation Software and others.

This coming weak we will get Q4 reports from the large Canadian Banks. It will be interesting to see if they have much to say about the extended amortizations on variable rate mortgages with fixed payments or on the risks associated with probable lower home prices. Looking at RBCs reports this past year, they have not said much at all. I would think that they will have to address it given that it has been so much in the news.

Canadian Western Bank reports on December 8th. They are largely a commercial lender and so should not be impacted by consumer debt issues. But certainly some commercial borrowers will be feeling the pinch of higher interest rates.


Melcor Developments updated November 24, 2023

The report on Melcor Developments is updated and rated Buy at $10.36. This has indeed been a frustrating investment. Based on its book value per share of $39.50 it appears to be vastly under-valued. But it has made poor returns on equity for the past ten years. And with higher interest rates affecting both its revenues (harder to sell home building lots) and its expenses it seems that a sharp recovery may not be imminent.

Given the low ROE it may be that this company has its assets stuck in inherently low return businesses.

On a positive note, the 5.6% dividend yield is quite safe and will likely be increased in 2024.

If Q4 comes in reasonably strong we should see an increase in the share price.

The stock also suffers from an almost total lack of analyst coverage. RBC does cover it and has a price target of $16

November 24, 2023 11:10 am eastern time

On Thursday, the U.S. markets were closed for the holiday while Toronto was about unchanged on the day.

This Friday morning markets are little changed with no moves of any particular note for the stocks on our list.

U.S. markets close early today at 1 pm eastern time.

TransAlta added to the list as Speculative Buy November 22, 2023

TransAlta is added tot he list rated Speculative Buy at $10.91. This company has quite a poor long-term history. But management has changed and its generation assets have changed as it phased out coal (converting some coal units to natural gas) and as it invested in wind and solar and based on recent acquisitions.

It may not be suitable for a long-term hold but it currently appears to be under valued.

It’s earnings are difficult to interpret due to various non-cash items and the impacts of hedging. For this initial report, I used free cash flow as an estimate of adjusted earnings. Not that this is a speculative investment due to its inherent unpredictability.


November 22, 2023

On Wednesday the S&P 500 was up 0.4% while Toronto was about unchanged.

Most stocks on our list were up on the day.

Canadian Tire was down 2.7% and it was also down yesterday. The worry is that much of what it stocks is discretionary in nature. It also faces risks from credit card delinquencies. The stock is down substantially and so it seems cheap but it may continue to be out of favor. But it has been a long-term winner and well managed company and I expect that to continue.

Thursday and Friday will likely be quieter times for the markets given the Thanksgiving holiday. U.S. markets will be closed on Thursday.

November 22, 2023 11:45 am eastern time

On Tuesday the S&P 500 was down 0.2% and Toronto was down 0.7%.

Canadian inflation came in a little lower than expected adding to confidence that there will likely be no more interest rate increases in the foreseeable future and that the next move in interest rates will likely be a modest reduction starting sometime next year.

Markets are modestly higher this morning.


November 20, 2023

On Monday, the S&P 500 was up 0.7% and Toronto was up 0.35%.

I plan to add TransAlta Corporation to our list soon. I have experience in the power industry and I am interested in following this sector to some degree. I bought a small position in TransAlta shares today but I have not yet “ran” the numbers on the company. It can be a volatile sector.


November 19, 2023

On Friday, the S&P 500 edged up 0.1% while Toronto was up 0.6% as oil recovered somewhat.

Canadian Tire was up 2% to 148. It faces a softer economy with people cutting back on discretionary spending. It’s had a strong recovery since it dipped to $132 at the end of October. It’s probably going to continue to be a bumpy ride.

On Tuesday, Canada gets its next reading on inflation and the Federal government releases a fiscal update. Never a dull moment.



November 16, 2023

On Thursday, the S&P 500 was up 0.1% while Toronto was about unchanged despite a noticeable drop in oil prices.

Costco was down 3.0% after Walmart apparently warned of softer sales conditions ahead.

AotoCanada was down 4.8%. This one could certainly continue to sink due to higher interest rates affecting sales as well as adding to their costs. I think it ultimately recovers again but that is not a certainty.

CMHC released housing starts for October. For Canada the overall trend was up 1% versus September. Multi-family starts are the biggest part of the market. These tend to be much more volatile than singe-family starts.

On a year-over-year basis, Single family home starts in October this year in Canada were 12% lower than last year. (As last year was no barn burner). However single family starts in Alberta were up 20% with Calgary at 27% and Edmonton at 24%. That’s positive news for Melcor Developments although the housing start numbers remain well below historical peak levels.

November 15, 2023

On Wednesday, the S&P 500 and Toronto wee each up 0.2%

Notable gainers included: Shopify up another 3.4%, Linamar up 4.0%, and Constellation Software up another 2.3%.

After the close, the Melcor REIT announced that its next monthly distribution will remain at 4.0 cents. The yield is now almost 13% and it seems clear the market is expecting a distribution cut or possibly even a suspension. Interest rates are the big issue as more of the operating earnings has to go toward interest payments. In addition, the rental revenue has been flat while some operating costs are rising. The REIT has some properties for sale in order to reduce debt. To the extent that the units are truly under-valued it might make sense for them to do a rights offering whereby the parent Melcor Developments as well as all existing unit holders could buy more units at a low price to shore up the balance sheet and reduce debt and any existing unit holder who fully participated would not be diluted.

The Brookfield Office Properties on out list have has a partial recovery in recent days. Yesterday, Brookfield Property Partners (which guarantees these preferred shares of its subsidiary Brookfield Office Properties – which no longer publishes financial results) issued Q3 earnings. They are losing money at this time but the situation did not seem to have deteriorated compared to Q2. This is a very complicated entity and so I would continue to treat these preferred shares as speculative. Brookfield Property partners has both office and retail properties and their Retail properties appear to be improving.

AutoCanada updated November 15, 2023

Autocanada is updated and rated speculative Buy at $19.35.

This has been a highly volatile stock. But I believe that the management that took over in 2018 are quite strong.

Markups or gross margins on vehicles have become highly volatile in the past two years or so as vehicle shortages have at times allowed for very lucrative markups. In the latest quarter just reported that was definitely not the case and the stock price got pushed down very significantly. Q3 earnings were lower due to the lower markups (stiffer competition) but also due to significantly higher interest rates.

AutoCanada has very significant debt to “carry” its inventory.

I’m concerned about the debt levels and that fact that interest costs will sop up more of the operating earrings. For the next two or three quarters, interest is likely to be higher due to higher rates year-over-year. Perhaps by Q3 2024 interest rates year over year will not be much higher.

Listening to the conference call I was surprised that that there were zero questions about the debt levels or interest rates.

On the call I was impressed that Paul Antony (executive Chair and I believe effectively CEO) laid out what seemed to credible plans for operating improvements. He also handled most of the questions.

Paul Antony appears to very ambitious and dedicated to growth and higher earnings.

I think the debt level here makes this stock somewhat speculative but it should continue to improve over the long term. The outlook for the next few quarters however is more likely an earnings decline than an increase it appears.

November 14, 2023

Wow, markets jumped on Tuesday after U.S. inflation came in lower-than-expected giving further hope to the idea that the FED’s interest rate hikes may be at an end.

The S&P 500 surged 1.9% and Toronto surged 1.6%.

The great majority of stocks rose on the day. Bonds also rose. And preferred shares mostly edged up as well.

Some of the more notable gainers included:

Toll Brothers up 8.0%, Shopify up 4.3%, West Fraser Timber up 4.3%, and lululemon up 3.2%.

Costco was up another 2.2% to $591. I have an order in to sell some of my Costco shares at $595. Costco is an absolutely fantastic company but I thought the P/E was rather high and I thought the market might start to react to its lower same store sales growth. But so far the market is still loving this company and it may well be a mistake for me to lighten my position.

Presumably, tomorrow will be a quieter day in the markets.

November 13, 2023

On Monday, the S&P 500 edged down 0.1% while Toronto was up 0.3%. (I understand oil prices were slightly higher)

Stantec was up 2.3%.

Dollarama hit $100. My god, that is a profitable business.

Constellation Software was up another 1.9%. This has been one incredible business for years. It also spun off at least one business, (I think two now) so you have to add those to the returns of long-time owners.

Linamar was down 3.3%.

AutoCanada was down another 4.6%. I’m digging into their results. Q2 had been highly profitable but Q3 was quite bad indeed and it’s not clear that the next few quarters will be good at all. But I want to dig into it a lot more yet.

US inflation numbers come out tomorrow (Tuesday) and the markets await with bated breath. The markets, being forward looking, are always awaiting and trying to anticipate the next big data point.



November 12, 2023

On Friday, the S&P 500 rose through the day and ended the day up a stout 1.6%. Toronto was up 0.3%.

Stantec was up a hefty 8.6% after a strong earnings report.

Similarly, Constellation Software was up 3.7%.

Most of the better companies were higher on the day.

Andrew Peller staggered back from the depths and rose almost 14% after its earnings report. Apparently the market was not upset with the four Board members leaving.

I updated Canadian Tire (see just below) and AutoCanada will be the next update.


Canadian Tire report updated October 11, 2023

Yesterday, I posted an updated report on Canadian Tire. This is a well-managed company. It has really been firing on all cylinders since about 2011 with an average ROE of 16% and got over 20% with the pandemic sales in 2020 and 2021. Everyone was buying bikes and various sporting equipment.

Management has impressed me for a long time adn they seem always focused on growing earnings. But they move cautiously and deliberately. They have made online sales and their Triangle rewards program a huge focus.

But now their sales and earnings are sliding somewhat as consumers are getting tapped out. And they likely face higher credit card delinquencies. And that may continue over the next year.

The stock price has declined and arguably already reflects the softness but certainly could slide further.

But I think the stock is a keeper and a long-term buy.

November 9, 2023

On Thursday, the S&P 500 was down 0.8% and Toronto was up 0.3%.

Last week markets got a strong boost from lower yields in the bond markets on expectations that the interest rate increases might be at an end and that rates would decline somewhat within a year or so.

Today, some of that hope was dashed as a U.S. 30 year treasury bond auction resulted in higher yields and as The FED Chair made comments that seemed to suggest that the rate increases might continue. Similarly in Canada the deputy governor of the Bank of Canada made comments about interest rates remaining higher for longer. “Get used it it”, she said, or words to that effect.

The 5 year government bond yield in Canada jumped about 15 basis points today. That’s not good news for stock prices.

As mentioned earlier today, AutoCanada got clobbered and was down 23%. It has a lot of debt.

Canadian Tire was down 2.5% after reporting weaker results. The weakness was largely expected. It now seems likely that it faces weakness for at least the next few quarters. But it remains a reasonably strong company for the long-term, I believe.

Cameco was up 4.5%.

After the close, Andrew Peller reported results and some very strange news.

Revenues were about flat. The good news is that profits were up sharply – but this was largely due to “Wine Sector Support Payments”. Not a great sign when an industry needs support payments. CEO John Peller has argued that this is just a repayment of fraction of all the excise taxes his company pays and should not be considered to be a subsidy to the industry.

In somewhat surprising news, John Peller announced that he will retire within a year after a suitable new CEO is found.

In a really strange development they announced that all four of its independent directors are leaving immediately ostensibly to “support a proactive refreshment of the board”. This leaves the Board consisting of only John Peller and his brother Angus Peller who is an M.D. John Peller indicated that the departing Board members “strongly supported the senior management team and all out employees”. That sounds unlikely. More likely there was a huge disagreement between the independent Board members and John Peller. One of these independent Board members had been elected (or appointed) only in 2023. He was in the business of capital management and personally owned 162,000 shares. I suspect he was not satisfied with the performance of the company.  Well, John Peller seems to indicate the departures were amicable but we shall see how the market reacts.

Other companies reporting after the close included Stantec with a good report. Also Constellation Software with once again a strong report.

Overall it seems likely that the the next few months in the stock market is going to be mostly tough going. Higher interest rates are taking a toll on many companies.

Today I reluctantly lighted up a little on my large Canadian Western bank position. That stock looks under-valued. They have a strong history of very limited bad loans. But I can’t be sure that their Q4 results on December 8th will not be disappointing so to be prudent I lightened up just a little. They have been saying that loan interest rates have been catching up to their higher deposits costs and therefore that should push up earnings. But the possibility of bad loans is always there. So far they have not announced staff cuts but they did say if earnings are not improved they will look at cutting expenses.




November 9, 2023 1:15 pm eastern time

AutoCanada got hammered down 21% after releasing earnings. They have been really hard hit by higher interest rates. I knew that interest rates were a headwind for them but I thought that vehicle margins should be high with the shortage of vehicle. But it seems that the vehicle margins were not strong.

I’ll update this one within the next week or so and take a close look at their balance sheet.

Other investments that could be particularly hard hit by higher rates include the Brookfield Office Property preferred shares that I have been mentioning. They may report as soon as after the close today.

Andrew Peller has had weak results and faces high interest costs.

I will definitely be looking closer at balance sheets and interest rate risks in my updates.


November 8, 2023

Wednesday’s action saw the S&P 500 edged up another 0.1% while Toronto was down 0.2% likely due to softer oil prices.

After the close, Linamar reported better-than expected results.

WSP Global also reported after the close and describe their earnings as strong.

Moments ago, Melcor Developments posted Q3 results. Due to a boost from U.S. lot sales and as well surprisingly strong lot sales in Canada this quarter I think it was a good quarter but I have yet to dig into the details. Typically Q4 is their biggest quarter for lot sales by far and they appear to be signalling strong lot sales in Calgary area. But there are certainly headwinds in terms of higher interest rates for both home buyers and for Melcor.

Canadian Tire will release Q3 earnings tomorrow morning. Q2 sales were somewhat weak and it’s certainly possible that Q3 could show some weakness. I’m particularly interested in what they are seeing in regard to credit card delinquencies.


Melcor REIT update November 7, 2023

The report on the Melcor REIT is updated and rated Hold at $4.01. Unfortunately it appears that higher interest rates are a bigger problem than I had previously realised. Perhaps much bigger.

They are doing quite well getting the occupancy back up close to 90%. It’s difficult to get it much higher due to a glut of office space in Edmonton in particular. But the new and renewal leasing is coming at the cost of higher tenant incentives.

The good news is that most of their retail properties are attractive and can likely support rent increases over the years.

The bad news is that their recent debt renewals are at significantly higher interest rates. And they have significant debt renewals in 2024 and in 2025. If their average interest rates were to increase by 50% (from a current average of 4.50% to about an average of 6.75%) it appears that their distribution would likely have to be reduced in that case.

They are now attempting to sell several properties to reduce debt. On the conference call they appeared to indicate that a contract to sell two of the properties is imminent and it appears they they were able to sell for about book value. But nothing is for sure until the deals are signed and then closed.

It seems quite possible that they will announce a distribution cut. They did not announce a cut with the Q3 results last week. But they also did not declare any future distributions.

Unfortunately with the unit price way down it seems too late to Sell and so I will be holding my position.

I have mentioned (for example in my June 7th and June 8th comment) that some companies must be getting crushed by higher interest rates. But I slow to realise the impact on the Melcor REIT. On May 5th I mentioned it was an issue for them but I did not realise how big of an issue. And I always thought the the low price to book value on the units provided a margin of safety.

November 7, 2023

On Tuesday the S&P 500 was up 0.3% but Toronto was down 0.85%.

Bond interest rates were down moderately but Toronto was impacted by lower oil prices.

Cameco and Brookfield completed their acquisition of Westinghouse Electric Company. This brings Cameco into more aspects of the nuclear electricity generation business but it’s certainly a very different business for them.

I’ve been surprised at the strength of Costco’s shares in the face of lower same-store sales growth. It’s a powerhouse for the long term but I thought it might pull-back somewhat due to the lower same-store sales growth.

The Canadian companies are continuing to report Q3 results.



November 7, 2023 11 am eastern time (A 4.57% bond…)

I notice this morning that TD Direct is offering a re-opening of a province of Manitoba bond maturing in about 10 years. The coupon is only 3.8%. But the yield to maturity is 4.57% since the price is 94.09 cents per dollar of face value.

If you are interested in accessing new issues like this you should sign up for alerts from your broker since they usually sell out quickly.

If you are interested in holding individual bonds then buying at the issue like this means you are not paying a broker commission. The issuer (in this case Manitoba) pays the commissions and broker fees in the case of new issues.

Normally bonds bought and sold from the likes of TD Direct  (TD Waterhouse) have a wide bid / ask spread that acts as a hidden commission that can be quite hefty.

In my view if you buy a government bond like this you should be prepared to hold until maturity since you will face that high commission if you sell early. And maturity in this case is a long ways off.

Interest is fully taxable in taxable accounts. In this case the modest increase in value from 94.01 to 100 at maturity would be taxed as a capital gain.

Given taxation, I’d prefer to hold this in a non-taxable account such as an RSP, or RIF.

I do not hold and am not looking to buy any individual bonds but I wanted to pass along this information in case some readers are interested.

November 6, 2023

On Monday, the S&P 500 edged up another 0.2% while Toronto as down 0.4%.

Bond yields were up moderately following the sharp drops last week.

RioCan was down 2.8% to $17.81. I looked at its Q3 results today and I think it is very well positioned. It is NOT fundamentally a high return business by nature. But it is low risk and provides a cash yield that will grow over time. I’m attracted to the 0.71 price to book value ratio. Its occupancy level is at a record high around 98%. It has been out of favor with investors and may continue to languish. But I think it is worth considering at about this price and certainly below this price. I prefer to own this in a non-taxable account given that the distributions do not qualify for the dividend tax credit.

November 5, 2023

On Friday, the markets capped off a very strong week as the S&P 500 gained 0.9% and Toronto gained 1.0%.

On Friday the market gained more confidence that the FED’s interest rate hikes have likely peaked and so bond yields came down somewhat which is basically like a reduction in a gravitational force as far as stock and bond prices go.

The question now is whether the positive market sentiment will hold in the weeks ahead. For those over-weighted in equities, I’d be tempted to reduce some positions but I always find it hard to decide what to part with.

Notable gainers included: AutoCanada up 7.5%, Linamar up 5.3%, and Toll Brothers up another 4.3%.

The risky Brookfield Office Properties preferred shares that I have been mentioning and that have sank so much this year continued to rebound somewhat.

Most or all of the preferred shares on our list were up.


November 2, 2023

Stocks accelerated their rebound on Thursday. The S&P 500 was up a hefty 1.9% and Toronto was up a somewhat stunning 2.9%.

It appears that the market is betting that we have likely seen the top of the interest rate cycle.

Shopify surged 21% after posting strong earnings.

Starbucks was up 9.5% also after releasing strong earnings.

AutoCanada was up 6.3%. I’m hoping that they had a good quarter because of higher vehicle prices and less competition between dealers. But that remains to be seen.

Tomorrow’s big news will be the U.S. jobs report. The market may get spooked if it comes in hot since that might suggest a need for higher interest rates.

Last night I saw a headline about Enbridge’s dividends. They announced that the new reset dividend on ENB.PR.N will be 6.696%. That’s of course applied to its $25 par or issue price and amounts to $1.674 per year. Those shares closed today at $18.61. So the yield on that price is 9.0%. That strikes me as high. Should it really be the case that investors need 9.0% to be enticed to buy these Enbridge rate reset shares? Unless inflation is quite persistent I think 9.0% for five years seems quite attractive. There is always some risk that Enbridge runs into financial difficulty but that seems unlikely. There is also the risk that the reset in 5 years time will be at a far lower dividend. But if that turns out to be true than the opportunity to collect 9.0% for five years seems attractive. Anything can happen but it surprises me how high the yields on rate resets have gone.

TransAlta announced an acquisition today. While I have not done a full analysis and while the company does not have a great track record it does look set to do well. I’m thinking of buying a small amount of shares.

November 1, 2023

Wednesday’s markets were strong as the S&P 500 was up 1.05% and Toronto was up 1.1%.

Shopify was up 3.3%.

Toll Brothers surged 5.0% and has been making frequent announcements about new communities opening up for sale. Despite high interest rates they appear to be confident.

The FED held interest rates steady as expected. And also pretty much as expected they indicated that the rates might or might not rise in December or in 2024 depending on the data and how inflation is going. But the market seemed to take comfort from it and bond yields declined a little on the news.

After the close, Costco reported October same-store sales which were not very strong. Up just 2.2% in the U.S. and 3.4% overall. These figures are adjusted for gasoline/fuel sales  price changes and for foreign exchange impacts. That’s not terrible but their same-store sales growth has cooled considerably this year compared to about the past three years. I suspect that this is indicative of low inflation year over year. It’s not likely that their sales volumes are down.

In Canada, Costco same-store sales were up a huge 9.5% in Canadian dollars. That’s probably some combination of continued inflation, our growing population and market share gains. It’s impressive!

I would think that the market should be disappointed with the U.S. and overall same-store sales but the shares are about unchanged in after-hours trading and so perhaps the lower figures were expected.

I’m looking further at TransAlta. As far as Capital Power it has a far better dividend and I think a better track record. I don’t know enough about either one yet to have any real opinion.


Comment on TransAlta

TransAlta Corporation in my opinion has been a horribly managed company over most of the past 25 years or so.

But lately I am hearing a lot about how the Alberta Power electrical generation companies are gouging customers due to certain changes in the market.

So, I thought I should take a look at it. The stock price at $10.15 is down lately but not as much as some other utilities. The forward P/E is about 21 according to Yahoo Finance

This used to be a high dividend stock but looking at the dividends I see it was cut years ago and has only been partly restores the dividend yield is only 2.2%!

So, other than this talk of gouging there is really nothing to suggest this will be a good investment.

I was thinking of doing some detailed analysis but perhaps I should not bother.

I’ll take a very quick look at Capital power tomorrow which has a far better track record.


October 31, 2023

Markets were up on Tuesday as the S&P 500 gained 0.65% while Toronto edged up 0.1%.

Cameco was up 8.35% after releasing earnings and a stronger outlook.

We finally got some relief from the ever declining Brookfield Office preferred shares that are on our list. One of those shares was up 10.6%and the other 6.0%. I don’t see any news to explain that. Possibly one analyst or buyer decided that it was too cheap to resist. Unfortunately these should still be considered to be quite risky.

As I mentioned in my comment earlier today, I am puzzled why Canadian Tire has to take a “charge” as it buys back the 20% of its banking arm that it sold to Scotia bank almost ten years ago. Maye it is the fact that that they are buying an asset that they had earlier sold. They sold the 20% for $500 million. Subsequently it had been quite profitable and has grown a lot. Now they buy it back for $895 million. Possibly they are required to return it to their books at the same price as sold year ago. That would be a loss of $395 million pretax. Assuming a capital loss tax rate of about 12.5% (half the 25% corporate tax rate) then that would be $345 million after tax which is pretty close to their $328 million charge. Perhaps a coincidence. I continue to think they should have explained the reason for the charge. Again, my sense is that this is a meaningless accounting loss.



Comment on Canadian Tire October 31 at 1:45 eastern time PLUS update 4:15 pm

P.S. I’ve now updated this comment in bold below

Canadian Tire’s shares CTC.A are down 3.2% after they announced they will buy back the 20% of their bank division that they sold to Scotia Bank some years ago. They are paying $895 million.

To me this could be quite a positive signal. Canadian Tire must not be experiencing or expecting a lot of credit card losses if they are buying back the 20% they don’t own. And they claim this will help them in their marketing . They will have more freedom.

The fact that they can come up with $895 million cash (some of it borrowed including at least $400 million) is also a reflection of management’s  confidence and the company’s financial strength in my view.

Reading the press release I see Canadian tire will take a $328 million “charge” or $5.88 per share in its upcoming Q3 earnings report related to this transaction.

So would that be? My first thought was that it means they are buying this for less than book value. That would not be too surprising as a lot of smaller lending operations are currently trading under book value – for example Canadian Western Bank is.

I am not one to dismiss “non-cash” charges. But I think I can dismiss this one.

My initial theory was that because they (maybe) are buying the 20% at less than book value they have to write-down the value of the remaining 80% to the lower value. I’m not sure though. If this is the case, the more of a bargain they get in this purchase the higher the charge , which does not make sense. P.S. I saw later in the day this theory was wrong, Scotia Bank is recording a gain and it seems clear the sale was definitely above book value.

On the other hand I see that Scotia Bank’s equity in this operation was $533 million at the end of 2022. They are paying $895 million. Or $362million more than book. If that’s the case I would normally expect their assets to increase by $362 million with no loss. P.S. I now see that Scotia recorded a gain on the sale. If this 20% has just been proven to be worth more substantially more than book value, I would think that Canadian Tire’s existing 80% should be similarly worth more than book. I’m reasonably sure that this “Charge” is a meaningless accounting entry. Although it’s possible that the asset was valued much higher on Canadian Tire’s books versus Scotia’s. In the end, I think Canadian Tire should have explained why there was charge or loss on this transaction.

Overall I just don’t know why there is a “charge” with this transaction where they buy something at presumably fair market value.

Canadian Tire shares have been sliding probably based on expectations of weaker sales (slower economy and people struggling with inflation and higher interest rates and I suppose people bought all the bicycles needed during the pandemic) and possible credit card losses. That certainly may continue. But meanwhile the company has been well managed and has a great history and so this may be a chance to buy at a good price.

There was no conference call for this transaction and it may be that the analysts will have some reaction later today if they have not already.

It will be most interesting to see their Q3 results next week and the market reaction.

P.S. I also see that Canadian tire will be exploring strategic initiatives around its bank subsidiary in 2024. I suspect that may mean they could issue shares in it as a subsidiary. I highly doubt that they would be thinking of selling the division after just talking about the need to bring it under full control. If they spun off say 40% of it to the public they would still fully control it.



October 30, 2023

Markets rebounded somewhat on Monday as the S&P 500 rose 1.2% and Toronto rose 0.6% (in spite of oil being down about $3.00)

The great majority of stocks were up on the day.

Aecon Group bounced up 6.7% presumably becasue analysts have had time to further digest its disappointing Q3 earnings released last week. Perhaps they see some hope as they peer through the gloom.

Meanwhile bond yields were up moderately on the day and that’s not good news for stock (or bond) prices.

Markets in North America seem to be largely ignoring the situation in Israel – at least so far.

The market now awaits the news from the FED on Wednesday and is assuming no change to interest rates but will focus on any comments indicating whether the FED is likely to hike in December or not.

With the cooling economy, I do worry how the report from Canadian Tire Q3 will come in. Headwinds include possible credit card delinquencies, the lower Canadian dollar and possibly cooler consumer spending.  The stock is way down from its highs but can always go lower on bad news. As usual, I am hanging on tight to my shares. Canadian Tire has been very well managed and hopefully they can adjust to changing conditions.

RioCan will release Q3 results after the close on Thursday. I’m hopeful for good results given their high occupancy rates and given the quality of their assets and their management.

The Melcor REIT will also release results after the close on Thursday. Hopefully there can be some assurance that they will not need to cut the distribution but I’m not sure. Most of their retail assets are quite good but they also have some older strip malls and they definitely have some problematic office buildings. I would hope that this is more than reflected in the low unit price but we shall see.


Brookfield Office Properties preferred shares updated October 29

The report on the Brookfield Office Properties preferred shares BPO.PR.A and BPO.PR.G are updated. See links on the Subscriber home page.

These two have been, frankly, terrible investments. The market is signalling that these are quite or very high risk. Based on the falling prices it appears that the market is signalling that these could even eventually go to zero. I’d be quite surprised if that ever happened but I can’t rule it out. I’m holding my shares but that may not work out well.

These two were issued by Brookfield Office Properties which has ran into the terrible market conditions for office space. But, the credit on these is guaranteed by the immediate parent Brookfield Property partners L.P. (but not by any Brookfield parent above that level). Brookfield Office Properties no longer issues financial statements and the relevant financial statements and results to look at are those of Brookfield Property Partners L.P.

The bad news is that Brookfield Property Partners L.P. has reported losses for each of the past four quarters to June 30 and negative funds from operations for at least the last two quarters. And the soon to be reported September 30 earnings and FFO are likely to be even worse as interest rates have moved even higher. They have a lot of debt and much of it on variable interest.

Also their financial structure is very complex. The partnership equity is divided across about seven classes of limited partnership units. There is also very substantial minority interest in their various subsidiaries. In 2023 the comparison to last year is very difficult to interpret because of some large related party transactions that they did at the end of 2022.

Brookfield Property Partners L.P. is a very large entity with assets of $130 billion. Total equity including minority interests is $47 billion. The partnership equity totals $23.5 billion and the debt is $67 billion. The obligation on the preferred shares is quite small compared to the total entity.

Another negative point is that the market is expecting the credit rating to soon be reduced from barely investment grade to below investment grade.

The great majority of the debt has recourse only to a particular building or property. This means that they are legally allowed to default on the debt of individual problematic assets (like an empty office tower). My hope is that Brookfield Property Partners will continue to be able to meet its obligations by either raising more equity from its parent and other institutional partners or by letting its lenders take over a number of its money-losing properties. They have already defaulted on the debt of several properties. My thinking and hope is that Brookfield Property partners L.P. would not default on a general obligation such as these preferred shares. I think they would jettison a lot of properties and the debt thereon before they would ever default on a general obligation.

There may be more bad news coming in the next month given the potential credit rating downgrade and the upcoming Q3 report. It is looking like things are likely to get worse before they hopefully ultimately get better.




October 28, 2023

On Friday the S&P 500 was down 0.5% and Toronto was down 0.7%.

Year to date, the S&P 500 is up 7.2% while Toronto is down 3.3%.

On a positive note bond yields did retreat somewhat in the past few days.

Next week, the market will react to the latest interest rate decision form the FED. Expectations are that they will leave the rate unchanged.

The Q3 earnings reports will continue to come in from Canadian companies. Companies with high debt levels and with debt maturing and needing to be refinanced at today’s higher levels are vulnerable.

My article on preferred shares is updated.



October 26, 2023

Thursday was another negative day in the markets with the S&P 500 down 1.2% and Toronto down 0.4%.

Shopify was down 3.5%.

Stocks that managed small gains on the day included Toll Brothers. Fortis, Canadian Western Bank, Canadian Tire and Royal bank.

Aecon Group fell 12.1% after announcing more losses on their “legacy” projects. I have trouble placing any faith in this company. But I read their earnings release carefully and listened to the conference call and it does appear that they are finally close to putting much of their troubles behind them. I hold some shares and will stick it out at this point.

I added to my American Express position based on an order I had placed earlier. At this point I have a modest position and intend to hold it long term.

U.S GDP came in strong. But analysts still expect the FED not to increase interest rates next week. In Canada, worries are mounting about consumers having to cut back due to higher interest rates.

After the close Amazon reported very strong results. This may give a positive push to stocks on Friday.

October 25, 2023

On Tuesday the S&P 500 fell a hefty 1.4% while Toronto was down 0.2%

Shopify was down 6.9%.

Most stocks were down. But some hung in for small gains including Restaurant Brands, Fortis Inc, TFI International (rebounding a little from yesterday’s decline), Visa, Dollarama, Couche-Tard and CN rail.

In general it seems to be a stressful time to be an investor. Higher interest rates are a definite headwind. Companies with high debt and modest cashflows are especially vulnerable.

There will be lots more Canadian companies reporting Q3 earnings in the next couple of weeks.

I noticed a report today for Sales at Food services and drinking paces. August was down 1% versus July. This is consistent with a couple of banks mentioning that credit card sales at restaurants have started to decline. It may be that a more noticeable percentage of the population is stating to cut back.

It will be interesting to see Canadian tire’s Q3 results. Q2 was weak. Q3 could also be weak. And it will be particularly important to see how their credit card delinquencies are developing.

Unfortunately, there never seems to be a dull moment for investors.

Those with higher allocations to cash are in a good position to snap up bargains but need not be in a rush.

October 24, 2023

On Tuesday, the S&P 500 was up 0.7% while Toronto was down 0.3%.

TFI was down 8.3% due to its lower earnings. But I would be tempted to nibble on that one.

CN Rail reported after the close with weak results but was about unchanged after-hours.

Visa reported also after hours with somewhat weak results and was down modestly after hours.

Tomorrow morning we get the latest move or (hopefully) lack of move from the Bank of Canada.


October 23, 2023

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.

American Express Updated October 22, 2023

The report on American Express is updated and rated (higher) Buy at $142.

This is a high quality company with a return on book equity of 32%. It trades at about four times book value but a relatively modest 13 times trailing earnings per share. Recent growth has been very strong. Yet the stock has fallen from highs of just over $170 this past Spring to close at $141.57 on Friday. This is presumably due to fears of higher credit card delinquencies and bad debt.

So far the higher interest rates have not harmed AMEX. Its funding costs have obviously risen but its interest income rose more than enough to offset that.

I see this as an opportunity to Buy this high-quality company at a good price. At the same time markets are always uncertain and as always some caution is warranted.

October 20, 2023

Markets were down once again on Friday. The S&P 500 was down 1.3% and Toronto was down 1.2%.

Longer term interest rates such as notably the yield on the ten year US treasury bond continued to rise this week and today and that is putting pressure on stock prices. It’s getting harder for stocks to compete with certain guaranteed investments at 5% and higher.

Canadian Retail sales for August were reported and were down 0.1% versus August on a seasonally adjusted basis. And they were up a scant 1.6% versus August last year and that’s despite a lot of inflation and a population increase of about 2.5%. The report indicates that in volume terms retail sales were down 0.7% in August versus July. This is a weak report and suggests that Consumers are starting to cut back.

American Express reported strong earnings this morning but the stock still fell 5.4%.

My next update will be for America Express. Their credit losses were up versus last year but remain below pre-pandemic levels. Their funding costs must be way up. The type of customer that pays off their credit card in full must not be as profitable with their higher funding costs. But American Express has still been gaining card holders and so they were able to over come the higher funding costs so far.



October 19, 2023

Markets were down on Thursday as the S&P 500 declined 0.85% and Toronto was down 0.5%.

Restaurant Brands was one of the very few gainers on my list and was up 2.6%.

Markets may continue to slide with higher interest rates or they could turn around at any time. The Q3 earnings reports are coming in and could certainly spark push individual stocks in one direction or the other. For Canada the bank of Canada rate decision next week will be important as the market hopes for a continues pause.

It continues to be prudent to have a balance of equities, fixed income and cash equivalents. Fixed income and cash yields are attractive for the first time in years. Buying fixed income securities in the past few months may have been a little too early but was nonetheless prudent.

I’m surprised to see RioCan down to $17.29 at the close. Just one month ago I thought it was a decent investment at $19.76. I did say it was ultimately a low ROE business but I thought the discount to book value and low P/E ratio made it attractive. I added to my position today.

Canadian Western Bank announced that it will be moving its headquarters into an existing Manulife Place Building. The move will not occur until very significant renovations take place and is scheduled for toward the end of 2025. They had been planning to move into a new tower but that tower has been canceled by the developer. CWB’s name will be at the top of the renamed Manulife tower. This is a logical move. There is little point to building new office towers in Edmonton while a lot of existing prime space sits empty. This announcement is also a positive in terms of the “back to the  office” momentum. Big corporations are not going to continue to let most office workers work from home most days.


Dollarama updated October 19, 2023

The report on Dollarama is updated and rated Weak Buy /Hold at $94. This is a fantastic company and its recent earnings growth is stellar. Therefore it may continue to be a great investment. But it is expensive at 30 times trailing earnings and so some caution in buying is warranted. This has been a fantastic buy and hold stock.

October 18, 2023

On Wednesday the S&P 500 was down 1.3% and Toronto was down 1.2%.

Interest rates on the bond markets rose to new highs once again not seen in about two decades. A scenario of “higher for longer” is a negative for stock prices.

Almost all the stocks on my list were down.

My next update will be for Dollarama. Its recent results have been exceedingly strong. It always looks expensive but it has been a stock worth paying up for.

September Canadian home starts were released today. A mixed picture. September was up 8% versus August but down 8% versus September of last year.

The Alberta picture was also somewhat mixed. Overall starts up 20% versus September last year but that was due to multi-family. Single detached starts were down 19%. Calgary was much strong than Edmonton. Oil is at $88. It appears that Alberta’s economy is set to continue to do well at least in comparison to the rest of Canada.

October 17, 2023

On Tuesday, the S&P 500 was unchanged while Toronto was up 0.4%.

AutoCanada was strong with a 3.7% gain

Canadian inflation for September came in slightly lower than expected at 3.8% year over year. This supports predictions that the Bank of Canada will not raise interest rates with its announcement next week.



October 16, 2023

Markets were strong on Monday with the S&P 500 up 1.1% and Toronto up 0.8%.

lululemon jumped 10.3% on news that it will become part of the S&P 500. This means that numerous funds that track the S&P 500 will HAVE to buy shares and this pushes up demand for the stock. I’d rather a stock go up because of higher earnings but going up for reasons of higher investor demand is okay too.

After the close, the Melcor REIT announced that its monthly distribution will remain unchanged at 4.0 cents per unit for the next distribution. I understand they are tight for cash and a distribution cut is a possibility. But my understanding is that they will be reluctant to do that. Given the strong Alberta economy I suspect that the distribution will not be reduced. We’ll know more when they release earnings on November 2. They are also trying to sell their Saskatchewan properties to raise cash. If they can do that then there should certainly be no distribution cut. But such a sale might have to be done at a loss. But then again with the units trading at such a low price (well below book value) a sale of assets below book value may not be a big deal. A sale of those assets at book value, if that were to occur, would be a very positive development. Also Melcor will likely focus on the gain versus original cost rather than the IFRS book value. There would likely be a gain on that basis. A sale would also require a buyer interested in what are apparently older strip mall type properties. Higher interest rates make it more difficult and more expensive for a buyer to finance a purchase. Worse case, the Melcor REIT can retain these for business as usual.

Canada will report September inflation figures tomorrow. The results will have an impact on whether or not to expect another interest rate increase.

It was interesting to see today that U.S. drug store chain  Rite Aid will file for creditor protection. in Canada drug store chains seem to be highly profitable. There is more competition in the U.S. but it should still be a profitable business. I looked back and as of early 2019, Rite Aid had just replaced nearly its entire Board (not a great sign) and warned in its disclosure that it had a lot of debt and the debt was at variable rates. Overall, I am not sure why the chain failed but I would chalk it up to poor management.

I see that its shares absolutely spiked around 1998 and then crashed hard. It turns out that spike and crash were caused by fraudulent accounting which got discovered. But that was a long time ago and it seems that management must have made grave mistakes in more recent years. No doubt this will make a great Business Case for Harvard and other business schools to dig into. Meanwhile share owners have suffered big losses.

Constellation Software up dated October 14, 2023

The report on Constellation Software is updated and rated Weak Sell / Hold at $2828. This is a wonderful company. It has fantastic management and a fantastic track record. But it is also a complicated company with complicated accounting. My only real concern here is the valuation which I find to be high in relation to earnings. I would not be a buyer at this price and would hope for a lower price. On the other hand selling this stock has been a mistake in the past. Those with a larger position might want to trim it somewhat.

October 13, 2023

On Friday, markets were initially higher after several banks “beat expectations”. But at the end of the day the S&P 500 was down 0.5% and Toronto was down 0.2%.

The energy and infrastructure segment in Canada got good news when large portions of the so-called “No More Pipelines” Bill was found unconstitutional. This could possibly clear the way for more LNG plants. However it remains extremely difficult to get projects approved and built and so this may be more of a political win and a symbolic win for the industry than anything else.

Oil has spiked 5.8% to $87.72.

October 12, 2023

Markets were down on Thursday after U.S. inflation came in a little high and led to expectations that the FED might have to increase interest rates at least once more.

The S&P 500 was down 0.6% and Toronto was down 0.8%.

The great majority of stocks that I monitor were down on the day.

Toll Brothers was hard hit with a 5.8% decline probably directly related to fears of further interest rate hikes. Meanwhile Toll Brothers seems to be very busy announcing new communities and with other announcements about its progress.

My next update will be for Constellation Software. It’s a fantastic company. However its financials are complex and I have a hard time arriving at a view of its adjusted earnings. Its GAAP earnings consistently understate its cash generations. It always looks expensive but then it keeps growing rapidly.

Tomorrow, Friday we get earnings from several of the big U.S. banks and that could push the market in one direction or the other depending on those results.


Alimentation Couche-Tard updated October 12, 2023

The report for Alimentation Couche-Tard is updated and rated Buy at $74.34.

This has been an incredible long-term performer. The stock is actually up an astounding 2463% since It was first added to this site rated (lower) Strong Buy at (split adjusted) $2.90 on March 31, 2005. Subsequently there were times when it looked expensive and I rated it a Sell in 2014 but that was a mistake. This has been a stock to buy and hold. The great majority of the time on the site it has been rated somewhere in the Buy range.

Its average return on equity over the past ten years has been a stellar 24%. It trades at 4.0 times book which is understandable.

There are some potential risks as noted in the report. But overall this company is likely to continue to deliver.

October 11, 2023

On Wednesday, the S&P 500 was up 0.4% and Toronto was up 0.8%.

AutoCanada was up 3.2%.

Alimentation Couche-Tard announced its latest 5 year goals today. They plan to increase their EBITDA from $5.8 billion to $10.0 billion by the end of fiscal 2028. Given their fantastic history, I would not bet against them.

Today, Statistics Canada was out with the latest figures on building permits.

[There were] “monthly gains in the value of single-family home permits. Across Canada, this component was up 5.5% to $2.9 billion in August, marking the fourth consecutive monthly increase for this component. This uptick follows a year of trending decline in construction intentions for single family homes from May 2022 to April 2023.”

In Alberta, residential permits were up 9.6% but this includes multi-family which is always volatile. Hopefully we will see an increase in Alberta housing starts. Permits presumably lead the figures for housing starts.

October 10, 2023

On Tuesday, the S&P 500 was up 0.5% and Toronto was up a hefty 1.3% – partly due to playing catchup as it was closed yesterday.

Within a few days we will start getting the first of the Q3 earnings reports.  There is always some news or other to move the market.

My next update will be for Alimentation Couche-Tard. This is one of Canada’s very best corporations. But you never hear much about it. It consistently earns over 20% return on equity and that’s with zero government help. With the vast majority of its revenues coming from outside Canada it is bringing wealth into this country for its share owners. An unsung here.

October 9, 2023

On Monday the S&P 500 rose 0.6% despite the events in Israel.

U.S Treasury bond yields declined slightly as there was a modest “flight to quality” impact.

Oil was up several dollars.

Toll Brothers was up 2% and continues to open new communities.

Toronto was closed for the holiday.

October 9, 2023 before the open

Note that Canadian stock markets are closed today for the holiday.

On Friday the S&P 500 rebounded somewhat with a 1.2% gain and Toronto was up 0.6%.

AutoCanada bounced up 5.5%.

But them on the weekend we had the attack on Israel followed by a a deliration of war against Hamas.

U.S stock market futures are down only modestly this morning.

I thought U.S. bond yields might fall in a flight to quality but the yields are apparently up modestly this morning.

Oil is up about 3% and that includes the impact of OPEC predicting higher demand

So, overall it seems no a lot of market reaction to the situation in Israel.

Costco updated October 8, 2023

The report on Costco is updated and rated (lower) Sell at $558. Given the fantastic quality of this company I hesitated to put any kind of Sell rating on it. Historically, selling Costco has been a mistake. But I find its current price earning ratio of 38 to be very rich in the face of higher interest rates. And its same-store sales growth while still growing has been softening in recent months.

I hold some and I think a reasonable approach would be to Sell a quartet to a half of my shares and hope to buy back cheaper. On the other hand it might also be reasonable to simply continue holding – and, if funds permit, add to the position if the price drops to about the $500 level or below. Holding Costco for the long term will work out well.

They may soon announce a special dividend and if so and if it were to jump a little on that news, then that might be an opportune time to reduce the position.


October 5, 2023

On Thursday the S&P 500 was down 0.1% while Toronto managed a 0.5% gain.

I notice PepsiCo was down 5.2% and it has been sliding for some months. Possibly people are finally cutting back on soft drinks and snacks. I saw a story on BNN this morning that the weight loss drug Ozempic (it suppresses appetite)  is actually having a noticeable impact on snack food sales. Not sure I believe that but time will tell.


October 5, 2023 1 pm eastern time

Market declines continue today with the S&P 500 down 0.6%. But Toronto is up 0.2%.

AutoCanada is down 4.0%. This could be related to the auto strikes. AutoCanada has been volatile but is a well managed company. It’s management is always focused on profitability.

West Texas Oil is down $82.50. It had recently spiked to $95. This dip is a negative for Alberta but in general oil is still relatively high and the oil industry is doing very well. Calgary home sales were at a record high in September as the population of Alberta continues to increase.

Lower stock prices are not a surprise. Ever since interest rates started to increase I have mentioned many times that higher rates are a gravitational force on stock prices. But I also think that for most people a balanced and diversified portfolio approach is best. It’s a nice time to have a reasonable allocation to cash and near cash. A strategy of “getting out” of equities when they are forecast to decline (or certainly after a decline) is generally unrealistic.

What could be more realistic is to get out of certain companies that might be headed for bankruptcy. I’ll be looking closely at debt levels and the interest rates being paid as I update companies.




October 3, 2023

On Tuesday, the S&P 500 was down 1.4% and Toronto was down 0.8%. A lot of the stocks on our list were down more like 3%. The Melcor REIT got clobbered.

The BIG news was government bond yields jumping up again. The 5 year Canada bond yield spiked to 4.5% before retreating very slightly. This is likely to read to even higher mortgage rates immediately.

Investors are bailing on some stocks.

In my view it is never a good idea to panic. If you have a reasonably balanced and diversified portfolio you could certainly see some declines but history suggests you will come out the other side in good shape. And those with cash can nibble on bargains but not get in a hurry.

Certain illiquid thinly traded stocks can really tank but this can be a buying opportunity.

There are times when it seem the market will try to shake you lose from holding certain good stocks. This may be one of those times.

CN Rail is suffering a big computer system outage that has suspended operations of commuter trains in Toronto.

I’m traveling home from Spain on Wednesday so my next comment will be Thursday morning.

October 3, 2023

On Monday, the S&P 500 was unchanged on the day while Toronto was down 1.9%.

Oil has retreated to $88 U.S.

Cameco (uranium company) was down 4.7% which comes after very significant gains in recent weeks and months.

The CEO as well as the chair of the Board at Laurentian bank have abruptly left the company after a computer outage adn after a strategic review that went no place. I have no idea what the future holds for that small bank but it’s not such a bad thing to see a change of leadership after stumbles and poor performance.

It’s not clear where markets will head next. Higher interest rates are a definite headwind.

But it may also be an opportune time to accumulate shares in strong companies that are well down from their highs. I think this includes Canadian Tire and CN Rail And Enbridge and RioCan.

I also like the idea of having cash on hand and not being too eager to invest it all. When you can get close to 5% on cash or a short-term GIC, there is no rush.


September 30, 2023

Friday was also the end of the third quarter. Within a couple of weeks we start to get U.S. Q3 earnings reports followed by the Canadian companies mostly late September and well into October in many cases. There is always news coming out to move individual stocks.

On Friday, the S&P 500 and Toronto were both down about 0.25%.

West Texas Oil has declined a little bit but is still about $91 U.S. which is very good for Alberta.

The 5 year government of Canada yield has been around 4.3% for  a few days. Interest rates are one of the most powerful force when it comes to stock and especially bod (and fixed income ) prices. The ability to borrow is the grease of the economy and higher rates will eventually slow the economy. And Canada’s GDP in real (inflation adjusted) dollars has been about flat for several months. GDP per capita is declining. GDP seems likely to decline modestly in the months ahead.

In my updates I will continue to pay mores attention to debt levels than was the case for the last 15 years or more. Very few companies got into trouble with debt in recent years due to low interest rates. Prior to and during the financial crisis in the U.S. there were a lot more companies that basically blew their brains out with debt. One that I followed back in the day was Ainsworth Lumber. This was a long-established Canadian family controlled publicly listed lumber company that over-invested in OSB (Oriented Strand Board) plans and went broke because of too much debt. I imagine family gatherings are painful to this day. Imagine blowing a huge family fortune like that.

Starbucks was in the news and is off-side with regulators / courts because after certain stores unionized Starbucks excluded those stores from raises given at all the other stores. That technically looked legal because it was up to the union to negotiate higher wages. But it’s basically dirty pool. But I doubt that this is any huge issue for Starbucks. They will pay a fine and some back-pay and move on.

September 29, 2023 just before the opening of trading

On Thursday markets rebounded somewhat with the S&P 500 up 0.6% and Toronto up 0.8%.

Yesterday, after the close, lululemon signed a deal with Peloton which sent Peloton shares up smartly but lululemon was unchanged on the day.

Today a report on August GDP showed very little growth (0.1%) and July was flat which caused bond yields to declined by a small amount.

I’m not sure if I mentioned that the Trans Mountain pipeline got a favorable ruling a few days ago on the route change it needed to get the pipe finished around end of this year. First Nations are looking for reasons and talking appeal. Does the madness ever end? These days all groups seem to feel that their views and interests were not considered unless the rulings go the way they want. That is unrealistic. The regulator must BALANCE interests, not give a veto to any group.

September 27, 2023

Wednesday’s session saw the S&P 500 unchanged and Toronto down 0.6%.

The big news this week is that bond interest rates have been spiking higher. The 5 year government of Canada bond is now at 4.38%.

Check the graph here. Click to see the 1 month and 1 year and maximum years views.

We have turned the clock back 16 years! as interest rates have not been this high since 2007 which was before the Financial Crisis.

This is pretty epic. Mortgage rates are on the rise again. This is bad news for stock prices. Perpetual preferred shares should also be declining. This Summer looked like a good time to buy those but you should find even lower prices (meaning higher yields) now.

Rate reset preferred are sort of bi-polar on this. Higher rates mean higher resets and that’s especially good for rate resets that are resetting shortly. On the other hand higher rates mean higher market required yields and so a rate reset that won’t reset for four years might go down in price. On top of that logical action there is investor psychology which is mostly negative toward rate reset preferred shares since they have been poor performers over the years. The bottom line is we don’t know the future but when these shares are offering attractive returns it seems prudent to buy some now and/or to continue holding. These yields could look very attractive if and when interest rates finally reverse.

The Canadian Western Bank rate reset CWB.PR.B will reset on April 30 (Though the first dividend at the new rate would be close to 3 months after that). That share was up 3.4% to $18.48 today. CWB.PR.D is at $24.68 and likely can’t go higher than about $25.25 since it seems very likely to be redeemed at $25 on April 30 due to its very unusually high spread over the 5 year bond. It would be great if CWB would redeem CWB.PR.B but they need the equity and may not be able to replace it cheaper so we certainly can’t count on this being redeemed.

As for CWB shares, oil at $95 is great for the Alberta economy and their loans in general have been very solid so far including in Ontario and B.C. Bad loans are always a possibility but CWB seems well positioned. They may finally get a day in the sun (hopefully a year or two at least) after having significantly under performed the big banks for quite some years. They have not had the high ROEs of the big banks which have had certain scale advantages.


September 27, 2023 before the open

Tuesday’s session saw the S&P 500 down a hefty 1.5% and Toronto down 1.2%.

Shopify was down 3.4%. Toll Brothers which continues to open new communities of homes for sale on a regular basis was down 1.8%.

Canadian Tire was down 2.2% to $145.59. It looks very attractive at that price but of course it could go lower before it turns around.

Costco has reported results which were quite weak in the latest quarter (compared to its growth over the years). Perhaps there will be a buying opportunity for shares of this powerhouse.

September 25, 2023

On Monday, the S&P 500 was up 0.4% and Toronto was up 0.1%.

Cameco was up 3.6%.

TD Bank announced that it will redeem one of its rate reset preferred shares on October 31 at $25 rather than having it reset. This was TDB.PF.K  It was up 15.4% today on this news.  It was recently trading at about $22.

Banks may have special reasons to redeem these shares since as bank regulations change other forms of “capital” may better suit their needs. Lately they have issued very long term bonds (Limited Recourse Capital Notes) that rest every five years and that may be better for them than rate reset shares.

Other bank rate reset preferred shares were also up a little today on this news.

I’m not sure if CWB is in a position to issue those Limited Recourse Capital Notes, but if they can, perhaps they will also redeem their rate reset shares on the next reset date, April 30. CWP.PR. D is now at $24.73 and is very likely to be redeemed simply because of its high “spread”. (Results in a high dividend unless they redeem). CWB.PR.B is at $17.70 and it might be wishful thinking to think it might be redeemed at $25 but it is possible.

At $24.73 I would be tempted to think about selling CWB.PR.D rather than buy.

In any case this move by TD is good news for the rate reset shares and hopefully there will be more redemptions.

September 22 (Athens – Saturday morning)

On Friday, markets rebounded a bit as the S&P 500 was up 0.55% and Toronto was up 0.15%.

The Canada 5 year bond yield is at 4.25% and mortgage rates are once again on the rise. This is not good news for the markets. And it’s horrible for those with large mortgages that are going be renewing. Many people will see their mortgage payments rise by 50% and more. There WILL be collateral damage to smaller private lenders for sure. The big banks will likely not suffer too much and in any case are almost certain to rebound over the longer term.

Canadian Western Bank is fundamentally not as profitable (ROE) as the big banks for various reasons. But I do like its chances to out perform in the near term becasue if has almost no unsecured personal loans such as credit cards. It does have a residential mortgage business but I am told it never offered any variable rate mortgages. It will face some defaults but in most cases the house will still be worth more than the mortgage owed.

Okay, a few random topics for this weekend post:

With the massively higher interest that people and businesses are already paying (and more to come) there has not been much discussion of who benefits. It’s not primarily the banks and their share owners – look at banks share prices – mostly down. The interest mostly flows through the bank to various depositors. Just look at the massively higher GIC rates and the daily interest available in brokerage accounts (see information on this at the bottom of the stock / investment table on the subscriber home page). Pension funds and money market funds are collecting massively higher interest compared to two years ago.

Sadly, it is younger people that are facing the huge increase in mortgage rates and it is often mostly older people collecting the higher GIC rates. I don’t begrudge that and it includes me. But it amounts to a massive generational wealth transfer in the opposite direction to the one that is usually talked about. First many or most – but certainly not all- boomers benefited from massively higher home prices and it was younger people having to pay the higher pries and now mostly the same home owning boomers are collecting far higher interest that is indirectly flowing in from younger people with mortgages. This is not a good thing for our society.

In my travels this past year be it to Maui in January, Ontario in May, Maritimes in August and now Athens what I observe is most of the people on the planes are seniors or close to it and frankly they are mostly white too. Not many young people traveling for leisure and definitely not many with young children. Young people often can’t afford children much less to travel with them by plane. Yes, there are also a lot of seniors who struggle. But there is a large contingent that is very well off indeed. I don’t begrudge the well off but I do think the young people are getting a raw deal in a lot of cases.

Okay, next random topic – Canadian Pension Plans and their funded status. I have not seen any mention that these higher interest rates are massively improving the funded status of the big Canadian pensions. Ontario’s Teachers Pension Plan, the federal employee pension plan, Alberta’s government pension plans etc. These were already mostly more than 100% funded because contribution rates were massively increased in the past 25 years in response to lower interest rates. In addition the calculations of the funded status are conservative by law. The calculations use bond interest levels even though most of the money earns far higher in equities. The bottom line is that most of these pensions will now be extremely well funded. Most big corporate pensions (there are some left like the rail roads and utilities) are also extremely well funded especially with the higher interest rates. Oh look, another win for the seniors! (Not all seniors).

Okay, moving on to talk about inflation. It’s awful. The best we can do as individual consumers is to try to vote against it with our wallets. Most of use are not coupon clippers but maybe we should be if we have time. And let’s all try to shop around more and simply refuse to pay the highest prices. Wait for a sale. Buy the cheaper store brand. Review that cable bill with all the channels we never watch and cut it back. Check out Dollarama. It all takes time but if enough people do this it will absolutely have an impact. The sooner inflation can be tamed, the sooner interest rates can start to come back down.

Next topic Athens. What I observe is a sprawling low to mid rise City. No tall buildings are allowed in order not to block the views of the Parthenon. Athens is clogged with cars and motorcycles and has many narrow streets. Downtown traffic moves pretty slow. Cars seem pretty inconvenient here and yet people drive. It sems clear that people value having their own car. It’s going to be a long time before ride-sharing and driverless cars ever get most people to give up their affinity to drive their own vehicle. I see almost no bicycles downtown core. The City appears not to accommodate them and it may be a cultural thing. Motorcycles (mostly scooter style) are extremely popular and are allowed to lane split and there appears to be a lot of free street parking dedicated to them. Restaurant meals are cheaper here than in Canada. Portions can be massive too. I’m not sure how they manage to offer the better prices but being very busy might be part of the answer. Locals apparently are not expected to tip. But tourists are expected to usually tip 10 to 15%. Service was prompt and friendly – these people hustle! Everyone seems to speak English at least to us tourists. English speakers are truly privileged that way. We should be thankful. Imagine going to other countries adn we just start talking English expecting the locals to respond in English – and they usually do. There seems to be big use of cash and less use of cards. Restaurants did not bring debit machines to the table (maybe if asked they would?), we paid cash. The City was bustling but is generally pretty run down. Many (or most) older buildings appear to need work and not much work is going on. When it comes to restaurants they appear to be almost all private, not chains. A lot of the retail also appears to be local shop owners but certainly some of the big chains are here. I did see one Starbucks and one McDonald’s near our Hotel (in main tourist area) but definitly not a big proliferations of those two (yet?). What else? I found the City to be clean and I think very safe. Anyhow that’s just my impressions of Athens for those interested and its based on just two days here, so take it with a grain of salt. Or just come and see for yourself.

I’m active on twitter ( You can follow me there @investorsfriend for lots more of these type of comments. See link to twitter above.




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