OPTIMISM #8 - June 22, 2020
Dear Clients and Friends,Trends never seem to go in straight lines, but the general direction seems positive.
I like this wording: “ …risk is more often in the price you pay rather than the company purchased.”
This week, Empire announced, [the owners of Sobeys and Canada Safeway] will increase its dividend July 7.
This dividend increase announcement and the one reducing the bonus pay from front-line workers were made about the same time. I don’t recall the dividend increase being mentioned. Funny.
The increase was only one cent per quarter. It might sound meaningless; however, the dividend went from 11¢ to 12¢ so the increase for 2020 is 8.3%.
This is their 25th consecutive year of dividend increases.
Sophisticated investors continue to buy at current low prices:
On June 19th, Canadian billionaire Jimmy Pattison, bought 1,035,656 shares of Westshore Terminals. The cost of this investment exceeded $16 million.
On June 15th, Prem Watsa, bought US$149-million of additional shares in Fairfax, the insurance company. By acquiring 482,600 shares “our shares are ridiculously cheap," Mr. Watsa said in a news release on Monday.
“That statement reflected my recognition that in the 35 years since Fairfax began, I have never seen Fairfax shares sell at a bigger discount to their intrinsic value than they have recently.”
For long term perspective, here is Royal Bank (RY) over ~30 years.
Our recent downturn looks much like those of the past, and each time it recovers to go on to a new high.

Although there may be a second dip (read: buying opportunity), many stocks are still cheap.
The good weather is finally here. Have a great week.
Derek Moran R.F.P.