OPTIMISM #4 - April 14, 2020

Dear Clients and Friends,

If you look closely, beyond the sensationally negative news channels, there are many signs of optimism.

I like to watch what the people at the helm of Canada’s great companies are buying.

On December 12th, Al Monaco, CEO of Enbridge, the largest network of pipelines in North America, bought 6542 shares at a price of $51.08, for $334,000.  (You can buy them today for 40$.)

In February, already having about 42 million worth of shares, he bought another 5 million dollars more.  Except that he is super optimistic about the future of the business, why would someone do that?

Between March 9th and March 18th, Jim Pattison bought $1,275,000 shares of West Fraser Timber for 42 Million.

March 16th, Jacques Goulet of Sun Life bought 7,000 shares for $290,000.

Darry MacLellan, president and CEO of Canadian Western Bank, bought 20,000 shares for 16.75 or $335,000.

BMO Director Don Wilson invested $739,000 US$ to buy 16,500 shares, making is total 30,000 shares.

Philip Orsino, also of BMO, bought $960,000 worth, increasing his account to 88,000 shares.

Aaron Regent of Scotiabank, bought 9345 shares for $496,000, brining his share total to 62,522.

Jeffrey Orr, a long-time top person at the Power Corp group (owners of Great West Life, London Life, Canada Life, Investors Group, Mackenzie Mutual funds and many others), also the Desmarais family from Montreal, bought 20,000 shares of Power Corp for just over 2 million dollars.  Now why would he do that?  Optimism maybe?

Also, as previously mentioned, shareholders get a 10.5% pay increase on the dividend. Yes, that’s you.

There are many more examples.  Too many to list.

Some investors position themselves so that they make money if the stock goes down in price, referred to as ‘shorting’.  According to today’s Globe and Mail, many such positions have been reduced, I assume because they think share prices will rise.

Among the top 5 decreases in short interest are two banks, Toronto-Dominion Bank and Bank of Montreal. This could signal that the market is not worried about underperforming loans and mortgages.

Why are these people doing this?  Because it’s a smart time to invest.  It will make them a pile of money.

I suggest you do the same.

Speak to your Portfolio Manager about increasing your shares of top-quality dividend paying businesses while they are on sale.

We may never get another chance to buy at these prices.

Derek Moran R.F.P.