Moderate and Mellow Market Methods

Sector Spotlight

Rail

Canada’s largest railway company CN Rail (TSX:CNR) posted some very positive Q4 earnings results this week. While that is good news for investors, you likely won’t be too keen on some of the factors that played a part in producing those results. Before we get into any of that though, here are the numbers:

CN Rail earned $1.42 billion in the three months ended Dec. 31, 2022, up from $1.2 billion in the fourth quarter of 2021.

Its fourth quarter earnings worked out to $2.10 per share, a 23% increase year over year.

They also reported fourth quarter revenues of $4.54 billion, an increase of $789 million or 21%.

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This is all good stuff, but the railroad attributed the increase in revenue to higher fuel surcharge revenue as a result of higher fuel prices, a weaker Canadian dollar, freight rate increases and higher volumes of Canadian grain. It was a strong quarter for the railway, but this is also a good representation of some of the challenges people are facing right now, such as higher prices for just about everything, as well as a weak Canadian dollar.

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Meme Stock Stalkers

Bonkers for Bed Bath

Retail stock Bed Bath & Beyond (Nasdaq:BBBY) continues to dominate the meme stock headlines. Retail traders are buying Bed Bath like it’s going out of style…And that’s because it is! Bed Bath recently warned of a potential bankruptcy and has even bolstered its legal team ahead of a possible filing. While this may be enough to scare off most investors, meme stock traders see the heavily shorted stock as a prime target for another short squeeze. Others who are buying up shares of the struggling retailer are speculating (or hoping) that Bed Bath gets bought out by a bigger fish, meaning they would be compensated for their shares.

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Traders’ optimism faded as later in the week Bed Bath warned it can’t pay down its debts and defaulted on its credit line, leading to the stock falling by more than 20%.

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ESG

OTTP Raises the Bar

One of Canada’s largest investors, Ontario Teachers’ Pension Plan (OTPP), recently took some strides in the S (social) and G (governance) aspects of ESG. As part of OTTP’s 2023 Proxy Voting Guidelines, large-cap companies on developed market indices will be expected to increase their board gender diversity to a minimum of 40% representation of directors identifying as women. This is up from the prior expectation of 30% which was set back in 2013.

“Although we still consider a 30% goal to be meaningful, we’re raising the threshold to challenge public companies in developed markets to keep improving as we strive for truly diverse and representative boards,” said Anna Murray, Senior Managing Director and Global Head of Sustainable Investing at OTTP.

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