Market win streak, Nuttall opposes hostile bid for MEG, 13F roundup, Applied Materials falls, South Bow earnings
I brough my mom on the work trip and a number of people have asked me: If I’m here and my mother is here, who is watching the kids? According to the distress messages I got this morning about Child 1 wanting to make her own pancakes, it appears it would be their very stressed father.
Markets are swinging on tariffs, recession talk is everywhere and investors are left wondering what’s real and what’s noise. In this episode of In the Money with Amber Kanwar, Brent Joyce, Chief Investment Strategist and Managing Director at BMO Private Investment Counsel (who oversees $50 billion in assets), shares how he’s navigating today’s uncertainty. Watch here:
Green week: Futures are looking to build on gains this week with the S&P 500 attempting a fifth session in a row of gains while the TSX is on a 8-session win streak. For the TSX that is the longest win streak since the beginning of the year. The difference is that this time around the rally is being driven by tech, industrials, energy and financials. While the rally at the start of the year was characterized by strength in gold. This time, gold is the worst performing sector. Even the Dow Jones Industrial Average is poised to put in a weekly gain which is even more impressive when you consider the largest weight in the index, UnitedHealth, is down 27% so far this week. “While the DJIA is still 6% below its recent high, without UNH, it would be just 2% from its high,” wrote Bespoke Investment Group.
Let the dance begin: Strathcona announced a hostile bid for MEG Energy in a cash at stock deal that is barely a 10% premium to where the stock closed yesterday. The offer on the table is values the company at $23.27/share in a mix of cash and Strathcona stock. MEG has long been thought to be a takeover candidate, but no doubt the lack of premium will raise eyebrows. The question for investors is whether this is the floor or the ceiling for the stock. The third largest shareholder, Eric Nuttall of Ninepoint, tells me he is opposed to the deal. “I’m opposed to it. Massively misvalues the company. Opportunistic with energy sentiment funk. In a better oil price this is a $35+ stock. Premium is nowhere close to fair value,” he wrote in an email. Strathcona is a 9% shareholder in MEG and at the end of April offered to buy the company. MEG rejected the offer a few days ago and now Strathcona says it will come forward with a hostile takeover bid in a few weeks. This will bring in other bidders says Desjardins. “We expect MEG to sell at a material premium relative to the initial SCR offer, either through the emergence of a white knight or a sweetened bid,” wrote Desjardin’s Chris MacCulloch. Recall, Cole Smead on the podcast said MEG is a natural takeout candidate.
What the 13F: My favourite season is upon us, 13F filings. This is where anyone who manages over $100 million in the US reveals their positions 45 days after the end of the quarter. Here are the highlights for the 1st quarter of 2025:
Warren Buffett: Continued to sell financials, trimming his position in Bank of America and Capital One while selling Citigroup completely. Position increases include Constellation Brands and Pool.
Bill Ackman: Completely sold Nike, which raised some eyebrows given how bullish he has been. He took to X to clarify that while he sold the stock, he bought call options of the same notional value. Ackman also continued to increase his stake in Brookfield, which he has consistently said is undervalued. It is now the second largest holding in Ackman’s fund. The largest holding is Uber which is a new buy for Ackman.
Jeffery Smith: Starboard sold about half of its stake in Pfizer amidst its failed activist push. Smith tried unsuccessfully to force the CEO out amidst terrible stock performance. The CEO is still there, but the stock performance is still pretty terrible and it looks like Smith is retreating. Maybe I should take the hint, still nursing this one in my portfolio.
Michal Burry: Known from his “Big Short” fame, Burry lived up to that reputation by selling every single stock he owned in the fund and only owning Estee Lauder (which has been decimated over the last year down 52%). He also bought puts on Nvidia.
Stan Druckenmiller: Dumped Alphabet, trimmed Amazon and Tesla. New position in AppLovin and added to Taiwan Semiconductor.
Applied pressure: Shares of Applied Materials are under pressure in the pre-market after warning sales will be less than expected because of restrictions on sales to China. It is a very important market for Applied Materials, but it has been hit by restrictions under the Biden Administration and now under the Trump administration. Sales to China were 43% of the business and have dropped to a still substantial 25% of the business. Demand for AI capabilities has not been enough to offset the declines in their major market.
Keystone: Watch shares of South Bow at the open after the Keystone pipeline operator reported an 11% drop in profit. While profit was down, it was in line with expectations. “Lower EBITDA from Keystone was the primary driver for the y/y and q/q declines with both lower throughput and demand for uncommitted capacity despite a 98% system operating factor for the quarter,” wrote ATB’s Nate Heywood.
