Hi ladies and gentlemen,
We have been a bit quiet lately, so we thought we would give a minor update.
These markets are certainly making heads spin on a day to day basis. They haven’t sorted anything out either negatively or positively to assume a real direction, so giving an update is difficult. The fact that I installed a Trump Tracker app on my Amazon Alexa is a disgraceful sign of the times.
Although the day to day markets are for lack of a better word nonsensical, I think its important to look at a longer term as well as fundamental basis. Over the last two months we have had multiple 3% market change days both up and down. I wish I could say this is not normal, but we did basically go up for two years without these days and that is not normal. We should level out with a bit more volatility.
This chart shows two things over a longer term- the 11 month correction that began in January of this year is continuing, but importantly, so far these bottoms continue to hold, if they break we will potentially have a bigger problem. In a positive light, which many have forgotten, we are actually holding a slightly higher bottom than we did in January and we held it twice which reinforces it as a base. We don’t know if this will be a one year or two year correction, we are almost one year in and the market even broke out to the upside in the summer only to give us a head fake back into a correction.
If the market breaks out to new highs or new lows it will fundamentally change things here, but until then we think this is primarily headlines, not problems in the fundamental economy.
When the market gets like this, it becomes a bit of a passenger ride, and I focus a bit more on what we own, because the market is the market, and our stocks have their own fundamentals.
Here are a few of the November highlights:
- Alimentation Couche Tard: Net earnings attributable to shareholders of the Corporation (“net earnings”) of $473.1 million ($0.84 per share on a diluted basis) for the second quarter of fiscal 2019 compared with $432.5 million ($0.76 per share on a diluted basis) for the second quarter of fiscal 2018. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $473.0 million 1 or $0.841 per share on a diluted basis, compared with $0.801 per share on a diluted basis for the second quarter of fiscal 2018, an increase of 5.0%. They paid off an additional 500 million in debt in the quarter and over 1 billion since we bought the stock in the spring of this year, company is executing exactly as planned.
- Royal bank- all time record profit – TORONTO, November 28, 2018 – Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $12,431 million for the year ended October 31, 2018, up $962 million or 8% from the prior year, with double-digit diluted EPS growth of 11%
- TD bank had amazing earnings: FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year: · Reported diluted earnings per share were $6.01, compared with $5.50. · Adjusted diluted earnings per share were $6.47, compared with $5.54. · Reported net income was $11,334 million, compared with $10,517 million. · Adjusted net income was $12,183 million, compared with $10,587 million. (Both can easily hike dividends)
- Box inc, our new position: Fiscal Third Quarter Financial Highlights – Revenue for the third quarter of fiscal 2019 was a record $155.9 million, an increase of 21% (ASC 606 in fiscal 2019 compared to ASC 605 in fiscal 2018) and 23% (ASC 605 in fiscal 2019 compared to ASC 605 in fiscal 2018) from the third quarter of fiscal 2018. – • Grew paying customer base to more than 90,000 organizations, including new or expanded deployments with 23andMe, BBVA Compass, BPDA The City of Boston, Mizuho Bank, National Bank of Canada, Radian Group, Shiseido Company, and Sunbelt Rentals. ( I love this- I just learned that our major website update over the summer was done by Box themselves, meaning each and everyone of us is a customer~)
- Teck Resources- new position: Vancouver, BC – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) reported profit attributable to shareholders of $1.3 billion ($2.23 per share) and adjusted profit attributable to shareholders of $466 million ($0.81 per share) in the third quarter compared with profit of $584 million ($1.01 per share) and adjusted profit of $605 million ($1.05 per share) a year ago. (slightly skewed as they sold a power plant to increase the earnings number but it is still very profitable)
Yes we are invested in the stock market and we cant hide from the volatility, but our companies are doing exactly what we pay them to do. Happy to chat if you have any questions.