Best and worst performing assets in May
Investors abiding by the old “sell in May and go away” adage would have been burned by Canada’s largest airline this year. While the TSX Composite slid 1.45 per cent in the month, trailing its developed-market peers, Air Canada surged after the airline announced it was kicking Aimia to the curb – albeit in three years. Below, the best and worst performers amid the May showers.
Air Canada (AC.TO): +37.98 per cent
Air Canada has been on a relentless run over the course of the last month, highlighted by a 10.5 per cent pop in the wake of the Aimia announcement on May 11. The carrier announced it will launch its own loyalty rewards program in 2020, eschewing the Aeroplan rewards its spun-out division has operated for over a decade.
Home Capital Group (HCG.TO): +31.32 per cent
Home Capital Group shareholders were on a wild ride in the month of May, with the stock posting eight days of double-digit moves – four up, and four down. A quintet of newly-minted board members are attempting to staunch the bleeding of the company’s deposits in the wake of the crisis of confidence spurred by an Ontario Securities Commission probe of the company’s disclosure practices.
Kinross Gold (K.TO): +25.86 per cent
The world’s fifth-largest gold producer by volume rode a blowout first-quarter to the third spot on the TSX leaderboard in May. Kinross trimmed all-in sustaining costs in its latest quarter, and reaffirmed its full-year operational forecasts. The company said its phase one expansion of the Tasiast mine in Mauritania is on-time and on-budget, with full production at the facility expected in the second quarter of 2018.
Valeant Pharmaceuticals (VRX.TO): +24.05 per cent
Valeant Pharmaceuticals posted a nearly 25 per cent gain in May, after the embattled drugmaker posted its first profit in six quarters. Chief Executive Officer Joe Papa is still facing the challenge of reducing the company’s massive debt-load. He also referred to the company’s slate of products as a “melting ice cube” due to the erosion of market share for its name-brand treatments.
Bombardier (BBDb.TO): +19.61 per cent
Bombardier’s first-quarter profit beat helped drive shares higher, as the company reduced capital expenditures and maintained it full-year forecast. The plane and trainmaker also took steps to soothe investor anger over executive compensation, announcing Bombardier family scion Pierre Beaudoin would take a significant cut in pay and move to the role of non-executive chairman. Several of Canada’s largest pension funds, including CPPIB and the Caisse de dépôt, took issue with compensation at the firm and disputed Beaudoin’s independence as a member of the board.
Aimia (AIM.TO): -74.12 per cent
Aimia shareholders had a month to forget, after the stock was taken out at the knees by the Air Canada announcement. Aimia derives nearly 65 per cent of its gross billings from the Aeroplan-dominated Americas division, though newly-installed CEO David Johnston has shrugged off the sell-off, saying the market has overreacted to the Air Canada news.
Asanko Gold (AKG.TO): -32.2 per cent
The Ghana-focused gold miner tumbled 13 per cent on May 31 alone after finding itself in the crosshairs of short-seller Carson Block. Block, famed for his successful diagnosis of the Sino-Forest fraud, said Asanko’s management has been short-sighted in its operation of the Nkran mine in West Africa, alleging Asanko has neglected to secure the mine’s walls in favour of drilling deeper to bolster its short-term cash flow. Asanko denied the claims and said it will release a more fulsome mine feasibility report.
Element Fleet Management (EFN.TO): -30.18 per cent
Block’s influence also sideswiped Steve Hudson’s firm, which fell victim to market speculation that Muddy Waters’ new short target would be Element Fleet Management. Block dispelled the rumour immediately, but the announcement came too late to stop Element’s massive intraday drop. Element said it was unaware of any material, undisclosed information that would trigger the declines.
Badger Daylighting (BAD.TO): -28.55 per cent
Another target of short-sellers fell to the fourth-worst position on the Composite, with Badger Daylighting dropping nearly 30 per cent. The company has drawn the ire of independent short-seller Marc Cohodes, who alleges the excavator has engaged in questionable accounting practices. Badger categorically refutes Cohodes’s claims, though in a letter to shareholders said it needs to improve its communications.
Hudson’s Bay Company (HBC.TO): -18.83 per cent
Canada’s oldest company rounds out the bottom five, after HBC reported slumping sales across its banners in the first quarter. The retailer’s same-store sales fell nearly three per cent in the quarter, with the deepest damage felt at its Saks Off 5th and Gilt banners.
All returns above are for the period of May 1 – May 31.