It’s the biggest takeover battle in Canada right now. Adam Waterous returns to In the Money with Amber Kanwar to make his case for why MEG Energy shareholders should vote for his offer. As Founder & Executive Chairman of Strathcona Resources he’s going head-to-head against Cenovus in a high-stakes bidding war. Listen now on Apple, Spotify or here!
CP-oh my: US futures are higher after US inflation came in exactly as expected: headline inflation rose to 2.9% while core inflation remained sticky at 3.1%. On it’s own, these are not great numbers but the market is just relieved they aren’t much worse. This is the final piece of the inflation puzzle before the Fed’s rate decision next week. They are widely expected to cut after seemingly overnight the US job market has deteriorated exponentially. Despite the flailing macro, the US markets remain robust with the S&P 500 hitting a new record yesterday. This was thanks in large part to a 35% rally in Oracle which led to Larry Ellison becoming the richest person on the planet. Interesting that while Oracle threw an AI bash, the Magnificent 7 actually fell because of weakness in Apple and Amazon. Apple’s new product launch yesterday was thin – both the phone and the details on AI features. Still, it underlines the point that the Magnificent 7 continues to lag sectors like gold and show signs of exhaustion even as results from Oracle show that AI spending is anything but tired.
Open army: Shares of Opendoor are surging 35% in the pre-market after announcing Shopify’s COO would be joining as the company’s CEO, founder Keith Rabois would be re-joining as chair, and founder Eric Wu would re-join the board. It’s an incredible win for shareholders and in particular Eric Jackson (our first guest on In the Money with Amber Kanwar back in January) who has been campaigning (he sits outside of Drake’s house hoping to compel him to buy stock) for changes at the company. Opendoor is down more than 80% from its 2020 high as the digital platform for buying and selling houses found itself on the wrong side of housing market downturn. Jackson came back to the story a few months ago saying it could be the next Carvana if it gets his house in order. While the operations are still struggling, the stock has seen an eye watering 1,000% gain from the June lows. However since then there have also been four pullbacks of 10% or more, so it is not for the faint of heart. There is just one buy on the stock (JPMorgan) while everyone else is either neutral or sell. The average price target is $1/share – well below the $8/share the stock is poised to open at this morning. However, that was true of Carvana back in the early days of its recovery. Now more than half of the analysts who cover it rate it a buy. Eric Jackson will re-join the podcast later on this month!
Bye, Canada: Barrick Gold is selling its Hemlo gold mine in Ontario, exiting from it’s last active gold mine in Canada. Barrick was founded in Canada and CEO Mark Bristow says it remains an “important jurisdiction” with a number of earlier stage prospects. Practically, however, it marks a continued shift toward tier 1 gold assets and increasing preference for copper exposure. Barrick is netting $1.1 billion from the sale, which combined with other asset sales, could support buybacks according to TD’s Steven Green. “Given Barrick‘s strong balance sheet position, with net cash of $73mm as of Q2, we expect a significant portion of the proceeds will go toward bolstering their share buyback program,” wrote Green in a note to clients. Barrick shares are flat in the pre-market.
De maximus: Shares of FedEx and UPS are under pressure this morning after Bank of America downgraded both stocks (UPS to underperform, FedEx to neutral) citing the end of de minimis tariff exemption for small packages. Up until this year, packages under $800 in value were exempt from tariffs. Trump ended that and the fear is that this will lead to less demand because those kind of goods got more expensive. “The removal of the de minimis exemption is expected to result in a muted air peak season in ’25 as the tight peak markets in ’23/’24 were driven by air demand from Chinese e-commerce players using the de minimis loophole,” wrote BOFA’s Ken Hoexter.
Bad trip: Watch shares of Transat after profit missed expectations and the leisure airliner warned their ability to fill planes next quarter would be lower than expected. While sales grew 4% and beat expectations, the company’s CEO said that “economic uncertainty” was weighing on growth prospects while fuel costs won’t provide the same tailwind it did earlier this year. “Q3 results were below forecast (although much improved versus a year ago) and while the Q4 yields so far look solid, the downward trend currently is not overly encouraging,” wrote National Bank’s Cameron Doerksen who called the report negative. Interestingly, he rates the stock a hold in part because of the chance that one of Transat’s shareholders come through with a takeout offer. In July, Pierre Karl Peladeau said he was still interested in pursuing a takeover of Transat.
Don’t miss our next episode with value manager Kim Shannon!
