Canada – Page 14

Quebec companies trading on the TSX

Following up on my previous post that I predict the Bloc Québécois will be the big winner in the 2019 election, it makes me wonder about Quebec-listed Canadian companies.

It is likely that in a Liberal minority government situation, they will require on the implicit support of the BQ in order to maintain power in government. Hence, there will be subsidies galore, in addition to Quebec-friendly policies.

Attached is a table of the 80 TSX-listed companies with Quebec headquarters. The list is a bit too much to go into any individual detail, but there are a few interesting ones here. For instance, who wants to speculate the SNC-Lavalin’s problems will magically disappear overnight? They solved most of their balance sheet problems with the partial sale of the 407 Freeway. How about Bombardier and their perpetual reliance on government subsidies to function? The list goes on and on! To make this even spicier, my largest undisclosed equity position is in the following list (completely unrelated to the thesis that the winds of the federal government are behind the backs of Québecers, although it’s certainly a bonus!).

Bonne Chance!

TSX Listed Companies from Quebec

August 31, 2019

Rank	Name	Ticker	MktCap($M)	Sector
1	Canadian National Railway Company	CNR	88358	Industrial Products & Services
2	BCE Inc.	BCE	58993	Comm & Media
3	Alimentation Couche-Tard Inc.	ATD	47310	Consumer Staples
4	CGI Inc.	GIB	25113	Technology
5	National Bank of Canada	NA	22994	Financial Services
6	Power Financial Corporation	PWF	21306	Financial Services
7	Dollarama Inc.	DOL	16038	Consumer Discretionary
8	Saputo Inc.	SAP	15648	Consumer Staples
9	Metro Inc.	MRU	14382	Consumer Staples
10	Power Corporation Of Canada	POW	12914	Financial Services
11	Air Canada	AC	11908	Consumer Discretionary
12	Brookfield Renewable Partners L.P.	BEP	9964	Utilities & Pipelines
13	Gildan Activewear Inc.	GIL	9942	Consumer Discretionary
14	Bausch Health Companies Inc.	BHC	9923	Life Sciences
15	CAE Inc.	CAE	9278	Technology
16	Quebecor Inc.	QBR	7647	Comm & Media
17	WSP Global Inc.	WSP	7593	Industrial Products & Services
18	iA Financial Corporation	IAG	6292	Financial Services
19	Bombardier Inc.	BBD	4502	Industrial Products & Services
20	Cogeco Communications Inc.	CCA	3537	Comm & Media
21	TFI International Inc.	TFII	3221	Industrial Products & Services
22	Lightspeed POS Inc.	LSPD	2920	Technology
23	SNC-Lavalin Group Inc.	SNC	2881	Industrial Products & Services
24	Domtar Corporation	UFS	2848	Forest Products & Paper
25	Stella-Jones Inc.	SJ	2710	Forest Products & Paper
26	Innergex Renewable Energy Inc.	INE	2330	Utilities & Pipelines
27	Cominar Real Estate Investment Trust	CUF	2277	Real Estate
28	Laurentian Bank Of Canada	LB	2047	Financial Services
29	Boralex Inc.	BLX	1999	Utilities & Pipelines
30	BRP Inc.	DOO	1873	Consumer Discretionary
31	MTY Food Group Inc.	MTY	1588	Consumer Discretionary
32	Richelieu Hardware Ltd.	RCH	1458	Industrial Products & Services
33	HEXO Corp.	HEXO	1375	Cannabis
34	Cogeco Inc.	CGO	1345	Comm & Media
35	Transcontinental Inc.	TCL	1250	Comm & Media
36	Valener Inc.	VNR	1117	Utilities & Pipelines
37	Intertape Polymer Group Inc.	ITP	1087	Industrial Products & Services
38	Cascades Inc.	CAS	1056	Industrial Products & Services
39	Knight Therapeutics Inc.	GUD	1043	Life Sciences
40	Fiera Capital Corporation	FSZ	997	Financial Services
41	Rogers Sugar Inc.	RSI	723	Consumer Staples
42	Heroux-Devtek Inc.	HRX	636	Industrial Products & Services
43	Aimia Inc.	AIM	576	Consumer Discretionary
44	Transat A.T. Inc.	TRZ	574	Consumer Discretionary
45	Lassonde Industries Inc.	LAS	559	Consumer Staples
46	Savaria Corporation	SIS	552	Industrial Products & Services
47	Resolute Forest Products Inc.	RFP	516	Forest Products & Paper
48	New Look Vision Group Inc.	BCI	504	Consumer Discretionary
49	Neptune Wellness Solutions Inc.	NEPT	497	Cannabis
50	Logistec Corporation	LGT	483	Industrial Products & Services
51	Uni-Select Inc.	UNS	457	Consumer Discretionary
52	Stingray Group Inc.	RAY	440	Comm & Media
53	Senvest Capital Inc.	SEC	436	Financial Services
54	Theratechnologies Inc.	TH	435	Life Sciences
55	BELLUS Health Inc.	BLU	413	Life Sciences
56	GDI Integrated Facility Services Inc.	GDI	372	Industrial Products & Services
57	BMTC Group Inc.	GBT	358	Consumer Discretionary
58	BTB Real Estate Investment Trust	BTB	342	Real Estate
59	Dorel Industries Inc.	DII	299	Consumer Discretionary
60	ProMetic Life Sciences Inc.	PLI	270	Life Sciences
61	PRO Real Estate Investment Trust	PRV	261	Real Estate
62	Yellow Pages Limited	Y	233	Comm & Media
63	5N Plus Inc.	VNP	195	Industrial Products & Services
64	Alithya Group Inc.	ALYA	179	IT Consulting & Services
65	TECSYS Inc.	TCS	175	Technology
66	Goodfood Market Corp.	FOOD	156	Consumer Staples
67	Colabor Group Inc.	GCL	128	Consumer Staples
68	EXFO Inc.	EXF	115	Communication Technology
69	Yellow Pages Digital & Media Solutions Limited	YPG	111	Comm & Media
70	Mediagrif Interactive Technologies Inc.	MDF	78	Internet Software & Services
71	Opsens Inc.	OPS	75	Hardware & Equipment
72	Supremex Inc.	SXP	74	Forest Products & Paper
73	TVA Group Inc.	TVA	73	Comm & Media
74	AEterna Zentaris Inc.	AEZS	50	Life Sciences
75	Velan Inc.	VLN	42	Industrial Products & Services
76	TSO3 Inc.	TOS	40	Life Sciences
77	Goodfellow Inc.	GDL	38	Forest Products & Paper
78	Orbit Garant Drilling Inc.	OGD	37	Mining Services
79	D-Box Technologies Inc.	DBO	24	Hardware & Equipment
80	ADF Group Inc.	DRX	21	Industrial Products & Services

TSX Exchange-traded debt review

I have made some corrections to my initial TSX Exchange-traded debt spreadsheet. So far, this is turning out to be a great replacement for the old one that used to be at the old Financial Post website before it got taken down.

In terms of valuations, none of them appear to be errantly priced where I am tempted to dive in. The ones trading well under par are either visibly insolvent or marijuana companies. In either instance, purchasers of the debentures are likely to lose capital. The best of the worst of them appear to be DHX Media (TSX: DHX.DB) and Just Energy (TSX: JE.DB.C/D) but both of these businesses have issues which make the double-digit YTM warranted.

If your goal with these instruments is to make a relatively easy 5%, however, there are plenty of quality selections to be made, although I’d make the argument that for a non-tax sheltered account you would be much better off with preferred shares.

TSX 30: Momentum Index – Thoughts

The TSX created a new index, the TSX 30, which is formed under the basis of total return over the past three years for the top 30 companies in the TSX.

The first batch of index constituents are the following and this is an interesting list:

TSX 30: June 30, 2016 to 2019

Note the "3Yr" column is TOTAL return, dividend/distributions adjusted.

Rank	Issuer Name	Ticker	3Yr
1	Canopy Growth Corporation	TSX:WEED	1823%
2	Shopify Inc.	TSX:SHOP	883%
3	Village Farms International Inc.	TSX:VFF	868%
4	Kirkland Lake Gold Ltd.	TSX:KL	605%
5	Trilogy Metals Inc.	TSX:TMQ	503%
6	Aphria Inc.	TSX:APHA	479%
7	Air Canada	TSX:AC	346%
8	Neptune Wellness Solutions Inc.	TSX:NEPT	322%
9	Ivanhoe Mines Ltd.	TSX:IVN	312%
10	North American Construction Group Ltd.	TSX:NOA	304%
11	Labrador Iron Ore Royalty Corporation	TSX:LIF	282%
12	Ballard Power Systems Inc.	TSX:BLDP	232%
13	Pollard Banknote Limited	TSX:PBL	210%
14	goeasy Ltd.	TSX:GSY	209%
15	Anglo Pacific Group PLC	TSX:APY	185%
16	North American Palladium Ltd.	TSX:PDL	183%
17	Gran Colombia Gold Corp.	TSX:GCM	178%
18	Resverlogix Corp.	TSX:RVX	174%
19	Wesdome Gold Mines Ltd.	TSX:WDO	172%
20	Cargojet Inc.	TSX:CJT	166%
21	Theratechnologies Inc.	TSX:TH	161%
22	Summit Industrial Income REIT	TSX:SMU	160%
23	Constellation Software Inc.	TSX:CSU	158%
24	Tucows Inc.	TSX:TC	152%
25	Great Canadian Gaming Corporation	TSX:GC	147%
26	CAE Inc.	TSX:CAE	136%
27	Park Lawn Corporation	TSX:PLC	131%
28	TerraVest Industries Inc.	TSX:TVK	131%
29	BRP Inc.	TSX:DOO	131%
30	Boyd Group Income Fund	TSX:BYD	126%

I have a few observations.

My initial gut reaction is that anybody investing in this index is nuts simply because it is a momentum index – people would be buying in and more or less facilitating the cash-out of the top players. Buying something solely on the basis of previous price appreciation is a questionable investing strategy.

Indeed, items 1, 3, 6, 7, and 8 on the table above were built on the basis of the cannabis industry (of which readers here should know I am highly skeptical of). I think most of these companies have had their hey-day and are now realizing that getting remotely close to justifying their valuation is not going to be an easy endeavour.

On second glance, the TSX 30 index is actually reasonably diversified among industries, except finance. Considering that the main TSX 60 index is dominated by finance (37% of the index at present), the lack of financials is not a terrible characteristic.

There are a few companies on this list that made me go “really?” and when looking at their stock charts they indeed were able to deliver said returns. Ivanhoe Mines? Seriously!!?? (answer: they got really lucky with the June 30, 2016 to June 30, 2019 date ranges – go take a look at their stock chart).

My other observation is: so few companies appreciated +125% in the past three years. There are a few staple companies where it is really worth buy-and-holding (Constellation Software comes to mind here, although future returns are very likely not to be nearly as good as previous ones), but is one really going to buy and hold any of the marijuana companies or Shopify from here on in? It goes as one more data point to show that being nimble in trading continues to be a key characteristic in being able to outperform – a passive investor does not see the converse index which is the “TSX negative 30”, which contains the list of non-bankrupt companies which have depreciated the most over the past three years – that in itself would be an interesting future exercise.

Taking an investing break until after the election

So far, this has been a crappy quarter to date. Although thankfully it isn’t a quarter where I should have gone all-index (the S&P 500 is down ever so slightly), I really feel like I have badly unperformed – so far I’m underwater about 150bps or so, which is not a good feeling. My decision-making faculties have not been in focus. For the year, I’m still barely in the black, but my relative performance benchmark has been horrific. If I was an 8 cylinder engine, I’m firing on about 2 of them.

That said, I have sold off and cashed a lot of the portfolio and I will only start to consider re-deploying after the upcoming Canadian election. There will be a lot at stake, especially with respect to the oil and gas industry.

It is pretty evident by the non-presence of the Canadian government at the Trans-Mountain pipeline appeal that the incumbent Liberals are not really interested in seeing the project proceed – or at least they’re happy to stall it out. The six motions (concerning the second round of consultations with First Nations) received no evidence from the government – it seemed pretty likely that if the government did provide evidence, the appeal court would have likely struck down the appeal application.

So this is a pretty polarizing election. If the Conservatives don’t get a majority government, it is likely that status quo will continue – avoiding Western Canadian investments will generally be wise as Liberal governments tend to focus on Toronto and everything east of it (Bombardier, SNC Lavalin, etc.).

The oddsmakers at 338 right now are projecting a 70% chance that the Liberals will get the most seats, but this will undoubtedly change through the campaign. In 2015, at this point the NDP were leading polls nationally, but this changed pretty quickly!

In 2019 we have the following:

In other words – the campaign will matter. Those lines will shift trajectory as people start to dial in – I figure around mid to late September.

A comprehensive list of TSX Exchange Traded Debt

(Most recent post on this was September 4, 2020)

Over two years ago I lamented there was no good consolidated list of TSX-traded debentures available.

I’ll give Felix Choo some credit for resurrecting a digital version of this. In general, his lists are about half of the exchange traded debentures on the TSX.

After consolidating a bunch of information together and going through a hundred documents or so on SEDAR, I am finally in a position to publish an authoritative list of debentures (109) and notes (3) that are trading on the TSX.

I have not included TSX Venture, but in case if you were wondering what you were missing on the TSXV, only a handful – 22 tickers among 18 issuers. Maybe I’ll add them in the future.

The entire list (as of September 3, 2019) of TSX-listed debt instruments (convertible debentures, exchange-traded notes) can be accessed at the following shared Google Sheet linked here.

I’ll give the standard disclaimer: I have tried to make it very accurate, but things can slip through the cracks.

Other than trying to make this a “real-time” sheet (can anybody give me a good automated source of debenture quotations that doesn’t involve a $2,000/month Bloomberg Terminal?), comments to improve this would be appreciated.