S&P/TSX Flat in Light Trading, Poised to Underperform U.S. by 17%

Money managers were window dressing their portfolios before year-end

| More on:

Canadian equities traded lower on light volume Monday, weighed down by gold mining and other commodity issues.

The S&P/TSX Composite Index (^OSPTX) fell 6.59 points, or 0.05%, to finish the day at 13,581. In the United States, the Dow Jones Industrial Average closed at another record high up 25.88 points, or 0.16%, at 16,504. Based on today’s close, the TSX is poised to underperform its American counterpart by over 17% this year.

Judging by today’s action, it was apparent Bay Street asset managers were dressing up their portfolios for the New Year. This technique involves selling underperforming securities and purchasing high flying stocks to improve the appearance of the fund’s holdings when reporting to clients.

The TSX was led higher by some of the best performing stocks all year including Constellation Software (TSX:CSU) and Valeant Pharmaceuticals (TSX:VRX) which were up 4.44% and 2.75% respectively.

Thompson Creek Metals (TSX:TCM) and Atlantic Power (TSX:ATP) led the market lower down 2.94% and 4.22% respectively. These have been some of the market’s worst performers.

Gold mining shares were the biggest drag on the index due to weak bullion prices. IAMGOLD (TSX:IMG) and Goldcorp (TSX:G, NYSE:GG) were the biggest laggards down 5.66% and 3.72% respectively.

Year-to-date the price of gold has fallen almost 30% and has been one of the biggest drags on the TSX. However there’s optimism amongst investors that low gold prices – now nearing US$1,200 per ounce – should led to mine closures in the new year. Hopefully, this should put a floor underneath the price of the yellow metal.

In corporate news, Quebec-based Transforce (TSX:TFI) looks like it has come out as the winner in a bidding war for trucking and logistics firms Vitran (TSX:VTN). Transforce offered to pay $6.50 per share in cash for the stock it doesn’t already own in a deal worth $136 million.

Transforce shares finished the day up 0.80% to $25.11. Vitran shares fell 0.25% to $6.88. This premium to the offer price suggests Vitran investors expect another bid to emerge.

Finally, BlackBerry (TSX:BB, NASDAQ:BBRY) Chief Executive John Chen published in Op-Ed on CNBC.com where he outlined the company’s strong position and his vision for the future, ‘It’s been easy for competitors to promote negative stories about BlackBerry focusing on the business of the past.’ he wrote, ‘But I’m not focused on who BlackBerry used to be—I’m focused on what BlackBerry will be today and in the future.’

In his letter, Mr. Chen highlighted the company’s strong cash position and internal talent. He also emphasised the firm’s strength in enterprise security, the company’s popular BBM messaging application, and its QNX operating system.

Any investors inspired by Mr. Chen’s message should probably give it a sober second thought. As other market commentators have pointed out, we heard this same bull thesis when the stock was at $20, $30, or $40 per share.

But the letter does give us another insight into Mr. Chen’s vision for the company. The fact that the the Z10 operating system received no mentioned once again indicates that mobile is not a critical pillar of the company’s turnaround strategy. If this firm emerges from the ashes, it likely won’t resemble its predecessor.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Disclosure: Robert Baillieul has no positions in any of the stocks mentioned in this post.

More on Investing

Investing

$1,000 Ready to Deploy? 3 Quality TSX Stocks for Canadian Investors

Amid improving investors sentiments, the following three Canadian stocks offer excellent buying opportunities.

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

RRSP Investors: 3 Canadian Dividend Stocks to Buy on Dips

These stocks have strong track records of dividend growth and now trade at discounted prices.

Read more »

concept of real estate evaluation
Dividend Stocks

Beyond Real Estate: These TSX Income Generators Could Deliver Superior Passive Income for Canadians

These two TSX dividend stocks could offer Canadian investors a reliable income stream and strong long-term upside, without relying on…

Read more »

Confused person shrugging
Dividend Stocks

Better TSX Dividend Stock to Own: Manulife or Sun Life?

While Sun Life stock has outpaced Manulife in the last two decades, which dividend-paying insurance giant is a good buy…

Read more »

A plant grows from coins.
Energy Stocks

Got $25,000? Turn it Into $200,000 in a TFSA as Canadian Dollar Gains

This energy stock may not have a high dividend, but it certainly has a high rate of growth to look…

Read more »

coins jump into piggy bank
Dividend Stocks

How to Use Your TFSA to Earn $1,057/Year in Tax-Free Income

Investing $5,000 in each of these high-yield dividend stocks can help you earn over $1,057 per year in tax-free income.

Read more »

data analyze research
Tech Stocks

Is BlackBerry (TSX:BB) a Buy in May 2025?

While its recent downturn might not look pretty, it might be the best opportunity to buy BlackBerry (TSX:BB) stock and…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Investing

Where I’d Invest the New $7,000 TFSA Contribution Limit in 2025

If you have $7,000 for the new TFSA contribution increase, here are three stocks I would contemplate adding to the…

Read more »