Canadians Love Costco & CPP’s Fire Sale

[00:00:00] Welcome back to the Canadian Investor Podcast, I'm here back with Dan, we're here doing

[00:00:20] our Thursday news and earnings recording. Dan has a new look going on, he's bringing

[00:00:26] out as gaming headsets so he's going to get into the professional gaming career right

[00:00:31] now. Yeah, my AirPods died like five minutes before this recording so I had to pull a dusty

[00:00:38] headset out of the closet it's probably 10 years old and I look like an alien right now.

[00:00:46] Yeah, so basically we started and Dan's like okay, my AirPods are dying let me reconnect

[00:00:52] with this headset. I had a completely different visual prepared in my head and when you popped

[00:00:58] up with that but hey, the sound quality seems pretty good so that's all we can ask.

[00:01:03] Okay well we have a pretty jam pack, I mean we typically do on the Thursday episode

[00:01:10] in terms of news and earnings especially now earning seasons starting to wind down a little

[00:01:15] bit but last week we had the Bank of Canada that announced that was keeping its policy

[00:01:20] rate at 5%. We also had this morning US CPI so we'll talk about both of these right off the

[00:01:26] pad kind of get the macro a little bit out of the way here and Dan I'll be interested in hearing

[00:01:34] what you have to say as well. Now the Bank of Canada, so they said that during their press conference

[00:01:40] that growth remains weak in Canada while the US has stronger than expected growth. Labor markets

[00:01:46] have become in a better balance and job vacancies have returned to more normal levels and although

[00:01:53] inflation is cooling, shelter price inflation is still elevated and remains the biggest contributor

[00:01:59] to overall inflation. So obviously shelter price there's some pressure happening because

[00:02:04] amongst other things but mortgages that are being renewed because the interest is higher than it was

[00:02:10] with their previous term so it's putting some upwards pressure there but also rents are staying

[00:02:15] quite elevated and shelter price pressures are likely to persist and it is something that they

[00:02:21] are aware and is putting pressure on the overall headline CPI. They expect inflation to be close

[00:02:28] to 3% until the middle of this year and easing in the second half of the year, the path will be

[00:02:35] slow that's what they said and the progress will be uneven which obviously goes without saying

[00:02:41] inflation is not linear so it kind of goes up and down very rarely do you have you know inflation

[00:02:46] going in one straight line in terms of a direction or the other and they don't want to lower rates

[00:02:52] too early but also don't want to keep them elevated longer than necessary. I mean, okay I mean that's

[00:02:59] kind of given right you that's kind of what you're supposed to do and then they had several questions

[00:03:06] how these goes usually they'll have their statements here that was Tiff McClemm with the

[00:03:12] Carolyn Rogers who's the I think deputy or senior deputy I'm not quite your title. I find that she's

[00:03:18] pretty senior deputy okay yeah before I keep going here like I do find that she is quite good I

[00:03:26] find at answering questions typically she seems to have a better knack at explaining it properly

[00:03:32] maybe she's a little more charismatic sorry Tiff but that's just the sense I get when listening to her

[00:03:38] and I feel like they probably know that because I have a feeling that we'll be seeing her almost at

[00:03:43] every rate announcement that that wasn't always the case they said that now they will be doing

[00:03:49] essentially a press conference every time there's a rate decision whether it remains unchanged

[00:03:54] lower or higher whichever it is and I suspect that she'll be there more often than not I mean

[00:03:59] I've been saying that all along that she does a much better job than him explaining where the bank

[00:04:05] stands on various issues yeah I actually haven't had a chance to watch this one but she's usually

[00:04:11] generally more open I mean in regards to I guess the the weakening Canadian economy it was

[00:04:16] interesting because I just I did a video this morning for our YouTube and I was kind of comparing

[00:04:22] like the S&P versus the TSX and the overall expected growth rate in terms of earnings for the TSX

[00:04:30] 60 this year is actually negative so negative they expect the TSX 60s earnings to drop by half a

[00:04:36] percent whereas the S&P was like growth of 11 and a half or 12% so you can just tell the massive

[00:04:43] massive difference in that and I think a lot of it is due to the fact that you know a lot of the

[00:04:48] companies in the TSX 60 are also super sensitive they interest rates so I mean we'll speak on US CPI

[00:04:56] after this but I think I think the US CPI was a fairly bad result for Canada because I think

[00:05:03] they need to cut much faster than the US it seems yeah and speaking of the TSX so I had a

[00:05:10] tweet that went pretty viral about a letter that was sent by CEOs of big Canadian companies to the

[00:05:17] deputy prime minister Christie Freeland asking her to look into ways to force pension plans to

[00:05:23] actually invest in to more Canadian companies one of the ways that they were suggesting this is

[00:05:29] essentially penalizing in terms of expected returns investments that would be outside of Canada

[00:05:35] I'm over simplifying it but that's what they were suggesting they're saying well we don't want

[00:05:39] regulations but you know if we penalize them with the different discount rate that's essentially

[00:05:45] what they were saying which would affect the valuation and the funding ratios of these large

[00:05:50] pension plan so they sent a letter and I think that's incredibly stupid I've had some people

[00:05:55] push back a little bit but pension I know pension plans extremely well and pension plans have one

[00:06:02] duty and they have a fiduciary duty to their plan members and beneficiaries it's not to help companies

[00:06:08] like in Rogers communication was one of the headline but let's be honest it's not to help

[00:06:13] mismanaged companies like Rogers communication that are in a all the gopally

[00:06:19] situation and we've known the drama with Rogers with the whole family and so on so I was pretty

[00:06:25] I was not impressed by that letter I do hope that the federal government doesn't act on that

[00:06:31] and you know you just said it with the TSEX expected earnings I mean at the end of the day if

[00:06:36] you're contributing to pension plan you want to make sure that you have a good retirement you don't

[00:06:41] like it's not your job to be propping up Canadian companies but anyways that's sorry it was a

[00:06:48] little bit of a rant just there but did you see that open letter or did you see my tweet regarding

[00:06:52] that I was looking as you were talking I was looking for the tweet I can't find it but I mean it is

[00:06:57] a bit odd like as somebody who you know invest in the pension you want the pension to earn the

[00:07:02] most it can you wouldn't want it to just invest in Canadian companies just for the sake of propping up

[00:07:08] Canadian companies it's actually like yeah exactly like very weird not that the large pension plans

[00:07:15] don't make questionable investments from time to time not that this doesn't happen but

[00:07:21] I don't think they should be constrained to have like an outsized Canadian amount if they don't see

[00:07:26] that as being a good investment but back to the Bank of Canada the last thing here that I'll mention

[00:07:31] is there was also a very interesting question it was the first question can't remember who the reporter

[00:07:38] was but props because he did not ask a question about interest rate cuts because clearly they were

[00:07:43] not willing to answer that later on in the press conference but I'll paraphrase here but the reporter

[00:07:48] ask about if they are seeing potential issues in the commercial real estate space in Canada referencing

[00:07:56] comments from the US Fed about CRE so commercial real estate problems in the US and it's clearly the

[00:08:03] Fed said that it is a problem but they think it can be contained now Carolyn Rogers answered this

[00:08:09] question and was quite interesting what she answered she said it was something that they are watching

[00:08:14] closely she also mentioned that they didn't see a reset evaluation in Canada although she didn't

[00:08:21] that elaborate on this but the more I read on the subject the more I'm inclined to say that sure

[00:08:25] there isn't a reset in valuation but that's because there's a lack of transaction and you have

[00:08:32] these are typically large transactions and you have these institutional investors investor A

[00:08:41] may have an idea of a certain valuation especially for an office real estate versus the buyer who

[00:08:48] has a completely different idea and there's no transaction because they can't agree on the

[00:08:52] price so it is very hard to value right now without a decent sample so to say that there's not a

[00:08:58] reset in valuation I would kind of question or comment there because you need a decent sample to be

[00:09:04] able to establish a valuation and that's not any different from you know buying a home for people

[00:09:10] alone at home how do you know how your home is value well you compare it you have comps

[00:09:15] against you know similar homes in a similar area that's how it's done and it's the same thing

[00:09:20] for commercial real estate and she also mentioned that they already started working on financial

[00:09:26] the financial stability report this is actually doing early mate and it is an area so commercial

[00:09:32] real estate that they will be taking a deep look into it and that we should expect to hear more on

[00:09:39] it when it does come out so it's clearly on the radar for them from what I got from her answering

[00:09:45] that is that clearly obviously it's something that's on the radar could be a potential issue they don't

[00:09:50] want to elaborate too much they are they seem to be keenly aware of what's going on the US where

[00:09:55] there's been some pretty sharp drop in valuation actually the Canada pension plan made headlines which

[00:10:02] I'll be talking about a bit earlier about selling a stake in a project for a dollar that's a bit

[00:10:07] misleading I will say what exactly happened but the headlines were kind of everywhere and that just

[00:10:13] goes to show that there's some big pressure there and I think they're probably starting to see

[00:10:18] something but she didn't want to go into too much detail without having all the information that's

[00:10:23] a sense I got from it yeah it makes complete sense when like it's harder to see the value of a

[00:10:29] piece of commercial real estate because there's not as much I mean movement in the market like you

[00:10:34] can get a pretty good idea on a residential property whether or not you know what it's worth whereas

[00:10:39] these big buildings and these you know large commercial properties they don't really move that

[00:10:43] often so it's really hard to understand you know how bad the market is going whereas residential I

[00:10:49] mean it's very easy to watch trends and see which direction it's heading yeah exactly and you can

[00:10:54] get a pretty good idea of how like the market is valuating those assets just by looking at reads

[00:11:00] so look at reads that are in the commercial real estate space and clearly that is a big space so

[00:11:06] there are subcategories I won't go into detail because people just wrote commercial real estate and

[00:11:10] they tend to just say like as a synonym of office there's way more there are some areas that are

[00:11:15] doing quite well like data reads are doing very well right now that's a commercial real estate property

[00:11:21] but if we just look at what's happening on the public side clearly the market is less optimistic I'll

[00:11:28] just say that about valuations so yeah there's there's a bit of a disconnect there and I'll be

[00:11:33] interested in keeping an eye on that in the next few years to see if there's more and more transactions

[00:11:38] that we start seeing to go now to the US CPI the print just came out this morning and I'll just go

[00:11:47] through some quick numbers here and then Dan you can tell us a bit what this what you think this

[00:11:53] means for Canada so the print just came out the headline numbers are were that inflation rose 3.2

[00:11:59] percent year over year and 0.4 percent month over month consensus was actually a bit lower at

[00:12:05] 3.1 percent year over year and if you take the month over month data and annualize it so that

[00:12:10] would mean inflation of 4.8 percent again to what TIF was saying it's not going to be a linear you

[00:12:17] know kind of downwards pad it will go up and down so take the annualized data here with a grain of

[00:12:23] salt the biggest increases on month over month basis were tied to energy I'll do it was still

[00:12:29] down on a year over year basis so it's still putting downward pressure compared to last year that same

[00:12:34] time and a big concern I think with is that core rose 3.8 percent year over year which excludes energy

[00:12:42] and food it also rose 0.4 percent month over month and services remain extremely sticky in terms of

[00:12:49] the inflation so inflation for services excluding an energy services was at 5.2 percent year over year

[00:12:57] and 0.5 percent month over month now following the data released there's definitely been a shift in

[00:13:03] the market expectation regarding US interest rates so compared to yesterday as of about 10 a.m.

[00:13:10] for the March Fed meeting there's basically no chance of a cut which is in line with probabilities

[00:13:16] from yesterday so it's a 99 percent chance that day will stand path 1 percent chance for a cut

[00:13:22] usually the 1 percent as if something I would say blows up and they have to do an emergency cut

[00:13:28] for the main meeting there's a 11 percent chance of a rate cut compared to 18 percent yesterday so

[00:13:34] we've seen a pretty big shift in expectation and one day there and the June meeting there's a 70

[00:13:41] percent chance of 1 or 2 rate cuts versus 72 percent yesterday so not that much of a change for

[00:13:48] the June meeting but where it gets interesting for the June meeting is the market pricing in

[00:13:53] two rate cuts it's actually changed from 12 percent to 7 percent so there is definitely we're

[00:14:00] starting to say a bit of a trend where the market is starting to say okay maybe rates will stay

[00:14:05] higher for longer and I will just add one last thing here before I ask you what you think this means

[00:14:10] for Canada but markets have been pretty much overly optimistic I would say in the last like year

[00:14:18] year and a half maybe even two years on rates coming down in terms of what the Fed would do so

[00:14:24] take this with a grain of salt maybe the markets are still too optimistic and we will not see rate cuts

[00:14:30] until later this year maybe Q2 Q3 who knows but then you factor into the US election maybe they'll want

[00:14:37] to avoid doing cuts or starting cuts around that time so it remains to be seen yeah just I actually

[00:14:43] just dug up like an older because we actually take these tables every time yeah it's happened

[00:14:49] fun to look at yeah it is like you look at so I can't remember when this would have been a few

[00:14:54] months ago but they would have figured there was a 55 percent chance of a rate cut in May and now

[00:15:00] it's 87 percent chance of no rate cut so I mean it's it's changed so dramatically I mean it seems

[00:15:07] like they just keep kind of kicking the can down the road I mean I the one thing that I'm surprised

[00:15:12] of is how like even after this it was higher than consensus like it wasn't really all that good of

[00:15:19] an inflation print yet the NASDAQ is up like a percent the S&P's up like three quarters of a

[00:15:24] percent it seemed to me like when this came out that the markets would have went down but they seem

[00:15:30] pretty crazy right now oh yeah just regarding the markets I mean it's been zigzagging almost all

[00:15:35] they kind of started negative then went up and then still up as we're talking as we're recording

[00:15:40] right now but it's been up and I think the market's not quite sure what to make of it at least

[00:15:44] the equity market haven't looked at the bond market to see what change today haven't had the chance

[00:15:50] but that would be interesting to see if there's a big big difference between what the the stock market

[00:15:55] and bond markets have reacted well that definitely is just looking at it now so it opened it went down

[00:16:01] the NASDAQ was down about a quarter percent then it went up as high as almost one and a half percent

[00:16:06] and now it's gone back down so yeah people can't make up their mind I guess I mean in regards

[00:16:11] in regards to Canada it's ultimately not good because it's kind of showing that the US economy

[00:16:17] can function fairly well at these rates whereas like Canada's clearly can't which is probably

[00:16:23] you would think a large portion of that is dedicated to you know the overall real estate situation

[00:16:29] I think it's putting a lot more pressure on the Canadian consumer who you know either has to

[00:16:35] renew soon or you know renew has already renewed and is facing significantly higher costs whereas

[00:16:42] somebody in the States I mean they have their mortgage rate locked in for 30 years so their costs

[00:16:47] aren't increasing quite as much I mean there's probably more to it than just that I think the Canadian

[00:16:51] consumer is on average isn't it they're in much worse shape than the American consumer in terms

[00:16:57] of you know household debt yeah yeah not exactly sure the exact numbers but we're in a lot

[00:17:03] I don't have the numbers front of me but it's there's a pretty right wide one difference I

[00:17:08] think the US would end up happening is after the great financial crisis US household really

[00:17:14] delivered like delivered so they got rid of a lot of their debt and Canada I mean just we got

[00:17:20] let's just say we got high on debt pretty much since yeah yeah so I think that's pretty much

[00:17:25] what's happening and the last thing I'll mention here is yeah bond yields have definitely jumped

[00:17:29] they've jumped about 10 basis points on the US 10 year which is it's a pretty significant

[00:17:36] that's a big job yes CPI print so the bond markets are saying that maybe rates will stay hot

[00:17:42] like they're they're pricing it slightly higher rates at the very least compared to yesterday

[00:17:49] yeah then just like in the simplest way possible when you have you know the Bank of Canada

[00:17:54] who may need to cut before the US you have more money flowing to the US rather than the Canadian

[00:18:00] dollar which will put pressure on our dollar which ultimately makes imports more expensive which could

[00:18:07] end up making inflation worse here so it's not really a good situation for for the Bank of Canada

[00:18:14] because I can't see them keeping rates at this high for you know the foreseeable future I mean they

[00:18:22] have they have a lot of people who are going to be renewing their mortgages at what triple

[00:18:28] triple the rate probably pretty close to yeah yeah I mean at least double for the most part

[00:18:33] right now like we're renewing next year and we're going into the the high twos and depending like

[00:18:40] next year what the rates are could be looking at five six percent maybe a last who knows but

[00:18:45] that's a pretty big jump yeah but yeah that's all huh it's all I had to say if you got any other

[00:18:52] well just add to that right like people sometimes don't realize it so okay let's say the Bank of

[00:18:58] Canada cuts does couple cuts 25 basis points so 0.25% being one cuts so let's say they cut you know

[00:19:06] 50 basis points and the Fed still hasn't cut well like you were saying there's going to be more

[00:19:12] the man for the US dollar it's going to weaken the Canadian dollar and even though we do trade with

[00:19:17] more than the US most of the trades are priced and denominated in US dollars so it's definitely would

[00:19:24] add some inflationary pressures and people would still be renewing the mortgages at a very high rate

[00:19:30] yeah so there's would still be some pressure some inflationary pressure on the shelter prices

[00:19:36] at a pretty high rate because what's 50 basis points right I'll I'll be renewing if it's 50

[00:19:41] basis point less I'm still probably going to be renewing at 4.5% and my mortgage payments are

[00:19:47] going to be higher so I think a lot of people don't realize the implications I know I'm probably

[00:19:52] making a lot of realtors pretty sad right now saying that are angry all but that's just a reality

[00:19:59] they're kind of stuck between a rock in a hard place yeah like even when I back when I built

[00:20:06] my house so you can't lock in a mortgage rate until three or four months before it's being built

[00:20:12] and I remember like every every time they hiked 50 basis points our mortgage payment went up like

[00:20:17] 170 dollars a month and we had we had 40% down and it was going up that much like it was just

[00:20:24] ridiculous I ended up having to put more money down in order to try and reduce the payment but

[00:20:30] I mean there's a lot of people I know a few people who are in the in the high 1% range on a fixed

[00:20:36] rate mortgage and they're going to have to renew in the next year here at probably five plus

[00:20:41] because unless something happens quickly but I mean I think you would see if the US situation was

[00:20:47] you know the same they had these you know different term mortgages I think they would be in a lot

[00:20:53] rougher shape with the fact that you can just lock in a rate for 30 years is definitely helping

[00:20:58] the US consumer much more than the than the Canadian consumer yeah yeah definitely now we'll

[00:21:05] enough about macro and the bank of Canada the Fed you want to start us off with some earnings yes

[00:21:11] talk about scratch tickets so Pollard is Pollard bank note they're pretty relatively unknown company

[00:21:19] so they're a Canadian small cap but they're they're actually I think the second largest producer

[00:21:25] of scratch off tickets in the world so it generates a bulk of its revenue in the United States

[00:21:31] and the company actually did report some pretty strong headline numbers so revenue of 135 million

[00:21:37] was in line with expectations and earnings for share of 33.2 cents beat expectations of 30 cents

[00:21:44] so I kind of thought this would be an interesting company go over because usually you know when

[00:21:48] the economy gets tough things like alcohol tobacco gambling you know the stocks tend to do quite well

[00:21:56] and if you had been following what's that sin stocks this is stocks yeah yeah scratch tickets become

[00:22:01] the new the new investment but if you've been following this company in any fashion during

[00:22:07] the pandemic I mean it was a pretty strong performer pre-pandemic with the pandemic it absolutely

[00:22:13] exploded in popularity but when inflation hit it like it was a complete disaster for Pollard so

[00:22:20] this is a company that typically has operating margins in the 8 to 10% range at least it had

[00:22:26] for the decade previous to when inflation started going up but inflation in 2022 and 22

[00:22:34] 23 absolutely killed their margins so they they're operating margins sunk from 10% to 0.9%

[00:22:40] and at one point the stock was 75% off the highs like the lows it got too seemed to be a pretty

[00:22:46] good time to add but I mean it took an absolute beating so the reasoning for this you would think

[00:22:52] that the company would be able to simply pass on the cost to the clients and I mean you wouldn't

[00:22:56] think of much input prices when it comes to scratch tickets but there is and I guess the vast

[00:23:02] majority of their deals with those clients were long term fixed pricing so you know when the price

[00:23:09] of I would imagine like maybe pulp and paper like what they have to use the cards on yeah just

[00:23:15] when I came to mind yeah it went through the roof and it just a lot 10% operating margins to

[00:23:22] practically break even operating margins so it just absolutely killed them I remember they had

[00:23:26] to pull guidance earnings just collapsed so sales really aren't the issue here for Pollard so it's

[00:23:33] grown revenue at a 7% pace annually over the last decade and prior to inflation pressures in 2022

[00:23:41] they had grown their earnings at a 22% annualized clip from 2014 to the end of 2020

[00:23:48] and 2023 was a pretty strong rebound year so earnings improved materially growing 62% year over

[00:23:54] year and they seem to be getting you know a bit back on track primarily because more of those

[00:23:59] contracts are coming do I would imagine and they're and they're being able to pass on some of

[00:24:04] those costs to the consumer and it seems to be getting you know management seems to be getting back on

[00:24:09] track as well or at least has confidence they will because they announced a pretty big increase

[00:24:13] to the dividend they went from 16 cents to 20 cents a year so they bumped it up 25% it's definitely

[00:24:19] going to be interesting where the company goes in 2024 as more of its contracts get renewed it should

[00:24:25] be able to offset some costs with higher higher material prices and it is actually stated that

[00:24:32] it has had to start outright denying work that it used to have it used to do because

[00:24:39] they just can't make up those margins in terms of passing costs on they didn't exactly go into

[00:24:44] detail on what work that would be exactly but they're starting to pass over those projects

[00:24:50] analysts pretty bullish as well so they figure that Pollard will increase earnings by nearly

[00:24:54] 50% in 2024 and a further 25% to 2025 it kind of makes sense if they can offset costs

[00:25:03] I get new contracts in I mean you wouldn't have to see revenue grow to see earnings grow just

[00:25:07] because margins will improve it's probably not one that I pull the trigger on right now but it's

[00:25:12] it's an interesting business nonetheless and I mean as I mentioned it's only got a market cap of

[00:25:17] around 900 million I think but it is the second largest producer of scratch off tickets in the world

[00:25:22] and they do I think they do VLTs as well I mean they have like e-gaming stuff in bars and

[00:25:29] colleges and all that kind of stuff okay it's a pretty interesting company it was a very good

[00:25:33] performer up until up until 2022 and then it got hit pretty hard yeah isn't like pen gaming or

[00:25:41] something the biggest in the kind of slot machine type of deal pen gaming or something I don't know

[00:25:48] if they do I didn't know I don't know that they do gaming like slot machines or anything oh dude

[00:25:54] like like you know how these days you can't like it's so weird but you can go online and buy

[00:25:59] like a scratch off ticket and like click it and I've never done it myself but things like that

[00:26:05] and I do think they have like little e-gaming gambling things in the bars and stuff I don't know

[00:26:10] if they're full of VLTs but okay that's fair that's fair oh man I can probably tell you how much

[00:26:16] like scratch off tickets I do but no that's I mean that's interesting I wasn't really familiar with

[00:26:22] this business and what I have pulled up here is their free cash flow per share so it seems like

[00:26:28] from this free cash flow as remain decent over the time period maybe it's not showing in the operating

[00:26:36] margins so yeah there must be some other kind of accounting you know items accounting charges

[00:26:43] that are not affecting the actual cash coming in or it could be very well that well Y-charts is

[00:26:49] usually pretty consistent with this stuff it says that they fell to about 0.9% but yeah they

[00:26:55] they had a rough go we could see free cash flow went down by 66% during like in 2022 when

[00:27:03] those costs were hitting up pretty hard and the stock went from almost 65 bucks a share down to 16

[00:27:11] over that same time period so yeah I have it up now so definitely yeah free cash flow took a bit

[00:27:16] of a draw but per share has dropped as well but it's back up at least for last year so I guess it'll

[00:27:22] be interesting to keep an eye on especially if they can start passing those increased cost to

[00:27:27] to customers yeah that's all I had for it I just figured it's it's a company that even I hadn't

[00:27:33] looked into for a few years just because of this and then I kind of notice they reported earnings

[00:27:38] and dig into them and it was a pretty good quarter so they seem to be rebounding quite nicely

[00:27:43] yeah I also have a smaller company on the dock I'm not sure we'll get we'll get to it because

[00:27:48] we're already half an hour in but we'll see we'll see I had towards the end so

[00:27:55] the next on the slate here is New York Community Bank so there was an update basically the day after

[00:28:03] we were courted so you and I were talking about it last week and we said oh it doesn't look good

[00:28:09] and I think there was some actual real question whether the bank could stay solvent or not well

[00:28:14] things move the day after so a day later trading halted and it was announced that they would get

[00:28:19] a capital infusion of $1 billion in exchange for equity in NYCB and this is a private deal and

[00:28:27] it's not surprising because a public offering would have taken some time and honestly they probably

[00:28:32] did not have that amount of time because deposits they're probably would have been a mass exodus

[00:28:39] of deposits happening I mean that's essentially what happened with SVB last year so they did this deal

[00:28:46] now the deal is a mix of warrants for common shares and convertible preferred stocks

[00:28:53] and they also reduced the dividend to a cent per share I'm not sure why they just didn't cut it at

[00:28:59] that time yeah I mean I think it's still like a 1% yield just because the stock is so low at this

[00:29:06] point because yeah that's a cent per quarter so it would be 4 cents per year this talks about

[00:29:11] 3 bucks 3 something so it's about a 1% yield that just a cent per share so I don't know maybe some

[00:29:20] people wanted to make sure they still get income from them now the headline was that Steve

[00:29:25] who heads the Liberty Strategic Capital Fund was part of the deal and for those who are not

[00:29:31] familiar with the name or maybe the name rings a bell he was the secretary of the Treasury under

[00:29:37] President Trump and the other parties involved in the deal are Hudson Bay Capital and Reference

[00:29:43] Capital on the announcement the markets seemed to like the deal aside from being Treasury under

[00:29:49] Trump and Mnuchin had been part of a group who bought assets from Indy Mac back in during the

[00:29:55] financial crisis and ended up making some pretty good returns out of it now as part of the deal

[00:30:02] there is a new CEO Joseph Awthing so they've gone through three CEOs in the span of a couple weeks

[00:30:10] that's pretty good yeah so they demoted the one guy then promoted another and now this guy

[00:30:16] where is he now yeah so we'll see you for two weeks yeah so Alessandro Dinello this CEO

[00:30:23] for less than two weeks is now the non executive chairman so at least he can say no to the CEO

[00:30:32] yeah exactly I'll see you for a couple of weeks there are four new members to the board including

[00:30:38] Steve Mnuchin and Joseph Awthing Oding I'm not sure how to pronounce his name anyways then

[00:30:44] you CEO well we'll see if the deal ends up working out but I still personally wouldn't touch

[00:30:51] just with a 10 foot pole I mean even if this groups saw the financials and obviously they saw

[00:30:57] the up-to-date financials if they were willing to put a billion dollars of fresh capital on

[00:31:02] I think there's some real question to be asked because they came out with a presentation

[00:31:06] the day after this was announced on March 7 and on that presentation and I went back to the

[00:31:12] a slightly older presentation of a month prior so on that presentation they said that the total

[00:31:18] deposits were at 77.2 billion as of March I believe six or seven that's compared to 83 billion

[00:31:26] as of February 5 so let's just say a month apart that's a drop of 7% within a month in deposits

[00:31:33] and based on the presentation it looks like three quarters of their deposits are demand deposits

[00:31:38] so demand deposit just means that depositors can you know anytime they want they can withdraw

[00:31:44] their money so think about your savings account at your bank or checking's accounts stuff like that

[00:31:49] so those are definitely deposits that are at risk there's also term deposit these are typically

[00:31:55] like CDIC's in Canada and the US it's CDs where there's a fixed term to it so for those deposit

[00:32:01] there's more certainty about them but to say that there's three quarters and there's already been

[00:32:07] a significant flight of deposits I mean 7% amount is pretty significant to me this is just something

[00:32:15] I'm happy to look on the sideline if they end up making a buck you know with this play over

[00:32:20] you know several years good for them but it's not something that I would want to take any part of

[00:32:27] even with this fresh infusion capital no this seems like a borderline scratch off ticket as well

[00:32:33] just buy it and hope I mean it doesn't seem like a billion dollars is even that much

[00:32:38] well I think it was just a prop of the liquidity ratios right that are required so because

[00:32:43] at the end of the day right banks are all fractional reserves so yeah that's who knows how much cash

[00:32:48] on hand like I didn't see the financials up to date that they have but clearly they needed an

[00:32:54] extra billion in capital to meet those capital ratios but again will that be enough to reassure the

[00:33:01] positives I don't know I mean for me no yeah me neither I'd still be getting out of there yeah and

[00:33:09] even people that are not super well versed in banks I mean you just need to hear that there's 77

[00:33:14] billion in deposit and there's a billion dollar cash infusion even though obviously it's too make

[00:33:19] sure that there's capital ratio but if people don't know this well I mean they'll be like okay so

[00:33:24] what does that do for me like if there's a bank run we're still screwed right so I think it's

[00:33:31] it'll be interesting to keep an eye on clearly it shows that there's still I think some issues

[00:33:36] happening in the regional bank in the US yeah it's a much better situation up here in Canada with

[00:33:44] our major institutions less regional chaos but less regional chaos yeah just you know just

[00:33:52] higher fees and stuff but hey yeah exactly they just take advantage of Canadians and Canadians can't

[00:33:59] do anything about it yeah not exactly yeah I'm so you want to go with park lawn corporation that

[00:34:06] reporting reported some earnings and they're not a landscaping company for those that are not

[00:34:11] aware of them well I guess yeah sometimes yeah so I figure I'd do a segment on this is at the

[00:34:20] stock I've been buying like quite a bit I've owned it for a very long time I think like eight

[00:34:24] nine years probably but I've been adding quite a bit over the last while just because of how cheap

[00:34:30] it's gotten so there are funeral home company so they do crematoriums like cemeteries funeral homes

[00:34:38] things like that so it's a pretty high margin business and they grow so they pretty much aim to

[00:34:44] grow around 70% through acquisitions and 30% organically once they kind of merge those acquisitions

[00:34:51] into the fold but they reported some strong headline numbers so revenue came in at 119 million which

[00:34:57] was in line and earnings be estimates by about 22% so this probably saved the company from a pretty

[00:35:04] large drawdown as their guidance was I mean I would say very weak moving forward in 2024 and it

[00:35:09] actually ended up outright pulling it's five-year targets so they always had a five-year target of

[00:35:16] $150 million in EBITDA like US dollars so they ended up just pulling that and to like the

[00:35:23] gist of it is is this company has a lot of floating rate credit facilities so it uses a lot of those

[00:35:29] credit facilities to acquire companies and you know over the last few years interest rates have

[00:35:35] skyrocketed in that impacts floating rate facilities and they've ended up like financing costs

[00:35:40] have just crushed this company I think they were trading at 45 bucks a share during the pandemic

[00:35:45] and now they're down to like 18 bucks yeah and maybe just to clarify just quickly floating rate

[00:35:51] facilities just mean they're essentially I think it's like just what line of credit would be

[00:35:55] the best yeah exactly to say it it's like a business line of credit and it varies based on the

[00:36:01] interest rates you know as they go up and down with the central banks that's going to be affecting

[00:36:05] this line of credit yeah yeah so it'll be a prime prime plus whatever you know whatever the

[00:36:10] bank's prime rate is and they usually tack on some it's probably less for a company than it would

[00:36:15] be for a consumer but it still has gotten really really expensive for this company so on a year

[00:36:20] over your basis revenue grew by 6.6 percent adjusted EBITDA by 5.1 and earnings actually declined 10

[00:36:27] and a half percent so this is a company that is consistently delivered double digit growth on

[00:36:32] practically all fronts so it's definitely a bit of a surprise to see the company growing the top

[00:36:37] line that slow but the bottom line is not really that surprising just because of how hard it's

[00:36:44] getting hit by interest expenses it was a few quarters ago but I kind of looked at the decline in

[00:36:50] net income and I figured out that about 75 percent of the decline in net income was solely due to

[00:36:56] financing costs so it's just like its strategy of just you know financing a bunch of these on

[00:37:03] floating rate credit just hasn't worked out that good so in addition to the interest expenses

[00:37:10] it's likely that pre-need sales and and possibly added spending towards funerals is dipping so

[00:37:16] what this company will do as well so they rely a lot on pre-need sales so that would be somebody

[00:37:22] before they're passing just kind of organizing and prepaying for their funeral so they use a lot

[00:37:26] of this capital to acquire other companies as well so that's the business is relatively foolproof

[00:37:34] like recession wise but this pre-need area is one that definitely does get hit so I think it's

[00:37:39] dipping now which is causing you know they may have to acquire they have to acquire companies to

[00:37:44] grow and if they have to finance it more than you know use that pre-need capital it's definitely

[00:37:48] going to hit them as well so again I had mentioned that they had pretty lofty targets 150 million

[00:37:55] US and a bit then earnings per share of two dollars so the company pulled that guidance they pretty

[00:38:00] much said the material increase in interest rates just makes it not feasible especially on the

[00:38:03] earnings front so they're now going to be issuing just short-term annual guidance and this

[00:38:10] year wasn't all that bright so they expect a just a bit of 70 million at the low end and 80 million

[00:38:15] at the high point and earnings of 90 cents and 80 90 at the high 80 at the low so this is pretty much

[00:38:23] at the midpoint of guidance just flat growth and if they if they hit the lower end it's actually shrinking

[00:38:27] so I expected them to kind of bomb after this interest after this earnings report but it held on

[00:38:33] quite well and I'm still pretty bullish so this was kind of my play over the last three four months

[00:38:38] on just lowering policy rates I think it's like it's losing so much money to interest expenses that

[00:38:43] when policy rates do come down seems like a company that you know should be able to improve earnings

[00:38:48] almost instantly when when they start dropping but I don't have any plans to sell but it definitely

[00:38:55] was not a good quarter and they did not issue good guidance which probably means they don't expect

[00:39:00] rates to decline materially either and the one interesting thing about this they operate mostly in

[00:39:05] the US so that's probably you know a lot of their a lot of their credit facilities are probably

[00:39:10] that could be with the US banks as well so that could change the environment if the US you know can

[00:39:15] stay steady but the bank of Canada has to cut so yeah not a good quarter but I still own

[00:39:21] yeah and for a joint TCI listener as I pulled up here just the interest expense how it's grown over

[00:39:26] the years and you can clearly see what you're saying essentially I mean started growing slightly in 2018

[00:39:33] but really as picked up since 2020 I would say 2020 I'm sure they probably made some acquisitions

[00:39:40] around there and then 2021 2022 and then last year big jump in interest expense so I agree with you

[00:39:47] whenever you have those credit lines or revolving credit facilities you know it's going to be a bit

[00:39:53] of an issue when rates are going up but you know if they want to expand an acquiring Canada population growth

[00:40:01] yeah I mean I know it's pretty more bid but at some point you know the higher the population

[00:40:06] the more people will eventually pass away and would benefit for a business like that clearly

[00:40:11] it's probably not going to see the benefits for several decades but that is a potential bullish case

[00:40:17] as population grows not only in Canada but in the US as well and you have a bigger pool of people

[00:40:23] that will need to use the services eventually yeah I mean it's there's what do they say there's only

[00:40:28] two things in life that are certain death and taxes there you go yeah that's it and that's a question

[00:40:34] right in terms of interest rate when is it going to happen I'll just say my bold prediction is not

[00:40:39] looking good for this year we'll see what happens but I think I was looking at what like 150 to

[00:40:45] 100 basis point cut I can't remember exactly but I'm not sure it's going to happen at this point

[00:40:50] no it's not I think I said I might have even said more than you

[00:40:55] and yeah I think you thought I was being too conservative yeah I uh I've already given up on that

[00:41:02] unless you know there's some sort of credit event or something yeah no exactly now I'll go back

[00:41:09] to something that I had mentioned earlier so we had the headlines couple weeks ago I know Dan

[00:41:16] foes from our Canadian real estate investor podcast tagged me on Twitter he's like oh my god

[00:41:21] like he's like can you make sense of this so cpp i b so it's the Canadian pension plan investment board

[00:41:27] sold a stake in a Manhattan project for one dollar so you some people may have seen a variation

[00:41:33] of this headline I think it was on Bloomberg it was I think a financial post as well in Canada

[00:41:39] now to be clear it did not sell the project for one dollar it sold a project for one dollar plus

[00:41:46] that against it and I think that's really important because the value of this sell was more and

[00:41:52] it was a office building project so clearly it's a space that's been struggling in certain

[00:41:58] geographies in the US it's been well publicized and the transaction was done at the end of last year

[00:42:04] but it made the headlines just a couple weeks ago and cpp i b sold it's taking the Manhattan project

[00:42:09] two Boston properties ink which also agreed to take on cpp i b share of the projects debt like I

[00:42:16] mentioned and that's a really good reminder and I know people are busy but make sure when you see

[00:42:23] a headline you actually read the article and you know I think it's important to also verify

[00:42:30] the article sometimes with some of the data they're providing because I think there's a big incentive

[00:42:35] right now with journalism I think there's some really good journalists but they're also some that

[00:42:39] just want to pump headlines and pump content and sometimes it's not the best vetted and I'll give

[00:42:46] the example here so Dan say I have a house that's worth 500,000 and I have a $400,000 mortgage against

[00:42:54] it if I sell the house for a dollar but the buyer agrees to take on my mortgage if I sold the

[00:43:01] house for a dollar or 400,000 and $1,000 it'd be $400,000 and $1 because if you sold the house for

[00:43:08] just $1 you'd still have the $400,000 mortgage exactly say I think so essentially yes they took

[00:43:15] I think it's safe to say that they took a pretty significant haircut or discount for the state

[00:43:20] that they sold but you know I think you just have to take it with a grain of salt when you see

[00:43:26] those headlines and from what I've read it sounds like the project needed investment and CPP

[00:43:32] IB just preferred to sell its stake instead of making those additional investments so that's the

[00:43:37] calculus that they took and it's also not the first divestiture they've done in the last year when

[00:43:42] it comes to office real estate as of March 2023 I did some crunching I went through the latest

[00:43:50] financial statements a final annual financial report from CPP IB and I will be interested by

[00:43:56] the way to see how it looks when their new one comes out I think it'll come out sometime in

[00:44:00] May this year's and couple months so their commercial real estate exposure was just shy of 60 billion

[00:44:06] when including commercial real estate debt that day on so they do own private debt so that's why

[00:44:13] I included that because to me it makes sense it's all related to real estate and that's slightly more

[00:44:18] than 10% of their total assets I know a lot of people have been wondering what pension plans have

[00:44:22] in terms of exposure so CPP this would be about 10% and I'll start digging into the other big

[00:44:29] pension plans in Canada just to get an idea what it is for the large pension plans maybe those who

[00:44:35] have above 100 billion in asset under management I think there's like probably seven or eight in

[00:44:41] Canada if I remember correctly and office representatives office specifically represented 12.2 billion

[00:44:48] of their assets or 2.1% of their total assets under management and I think that's just important

[00:44:56] to keep in mind 2% I mean depending on who you are that may be a lot that might not be a lot

[00:45:03] I'm not trying to sound the alarm here but it's definitely worth keeping an eye on the problem with

[00:45:07] some of these asset is like we mentioned before and when we talked about Carolyn Rogers comments is

[00:45:15] there just aren't many transactions that happen on the private markets and it's often hard to get a

[00:45:20] large enough sample to establish that value and they also seem reluctant to compare the value of

[00:45:26] these assets with REITs in the same space although they do say they do I don't think they do because

[00:45:33] I question the value that's assigned to their portfolio in terms of private real estate because

[00:45:39] I'm well aware of what REITs have done and I can tell you that REITs are not being value as highly

[00:45:46] as these private real estate in the same type of asset class and it's not a NOC specifically on CPP

[00:45:52] IB but on a lot of pension plan that owns these types of assets and CPP IB has been the ones kind

[00:46:00] of leading the charge with real estate investment to go over the past decade even potentially

[00:46:05] longer than that and it'll be interesting to see the difference when they release their most up-to-date

[00:46:11] financial annual financial report I'm assuming they'll probably be talking about the transaction

[00:46:17] I just outlined and I also reach out to them to know what exposure they have by country because

[00:46:22] they don't provide that they provide general exposure for all their asset classes but they don't

[00:46:29] provide the actual exposure that they have for specific real estate for example office by country

[00:46:37] and I also ask them if they could give me some example of what they consider the fair market

[00:46:43] value in 2019 for those assets compared to the same assets that stay still on today because

[00:46:49] I'm curious to see if they're assigning the same value and if they are assigning the same value

[00:46:54] to office real estate then I think there's some real questions to be add about you know how

[00:46:59] accurate some of these numbers are and I know it's not a perfect science to evaluate these and

[00:47:04] put a valuation on them but if you assign office real estate the exact same value from 2019 to today

[00:47:12] I think there's some big questions because I don't think in most spaces in most cities and countries

[00:47:19] I don't think that value is the same there was pre pandemic

[00:47:23] no I think they've all I don't know if you could find a city that would be maintained or grown

[00:47:28] at all I mean it's definitely fallen I was looking I was trying to look at for a purchase price

[00:47:34] of this but I can't like the only thing I could find was this like the units that they bought

[00:47:39] like 10 13 years ago or do you know that no I don't know I don't know when they bought it I mean

[00:47:44] there wasn't that much detail and again like they'll probably post some detail about the transaction

[00:47:49] because I made headlines I'm assuming they will probably touch on it or annual report for

[00:47:55] fiscal year 2024 which is like I said is coming up but something I'm really interested in

[00:48:00] I know someone was kind of coming at me this CFA kind of guy on Twitter like go while you're

[00:48:06] wasting your time and then I came in a lengthy response as to like oh well have you looked at this

[00:48:12] this this and this would references quotes never heard back from them so I guess it's not

[00:48:17] surprising yeah it was just basically saying oh these you should trust the CPPIB they're professionals

[00:48:25] they know what they're you doing worry about your own investments you know I'll show that back to

[00:48:29] him and just say okay so how many investment professionals God completely crushed in 2008 2009

[00:48:37] yeah and they were supposed to be the best and were considered professional like I I'm not

[00:48:44] trying to sound the alarm there but I think it's fair to question when there is definitely

[00:48:50] some questions to be asked yeah I mean it's it's kind of odd like somebody telling you that you

[00:48:56] should just ask nothing that's pretty much ask nothing let them do their thing like the one

[00:49:01] thing like the one thing I could find here is that it was a couple joint properties in Manhattan

[00:49:08] like a 50,000 square foot office property like I would imagine that's what it was the one of those

[00:49:14] they acquired a 32% interest in it but this was back in 2011 and it doesn't really have a

[00:49:19] purchase price yeah I think that could be it I think it was around one third if I remember correctly

[00:49:23] so it could be very well that one yeah it was kind of like a release in 2011 where they acquired

[00:49:29] a bunch of interests and properties and every single one of them has a purchase price except this

[00:49:34] one so it's kind of weird there was no purchase price on this but they you know they acquired

[00:49:39] something in Seattle that they had no problem saying it was 138 million that it cost them but

[00:49:45] this one they they never mentioned anything so I mean a 50,000 dollar office space sold for 400 grand

[00:49:52] well I guess you have a 31 third interest but yeah I don't know yeah it'll be interesting to see the

[00:49:57] full details on that yeah I think so too but no sorry if I was a little rant I mean I will try to

[00:50:03] put more content on pensions so if people are interesting in that like I know pensions pretty well

[00:50:09] I don't know everything about pensions I'm not an actuary obviously I know you know a bit how

[00:50:14] actuarial valuations work I know a decent amount but I think there's not that much content on Twitter

[00:50:21] on the subject that's what I've noticed I even Dan Foch and I were talking and he's like yeah

[00:50:25] there's like no one that talks about this stuff and I think there's a lot of misconceptions as well

[00:50:30] so I'll try to be posting a little bit so if you want to you know you know learn more about that

[00:50:35] just follow me at Fiat underscore on their score iceberg but enough about the boring world of pensions

[00:50:42] and let's talk about where I went yesterday morning at Costco which I found a good Costco in Ottawa

[00:50:48] that's not super crazy busy and there's ample parking spot because the one we used to

[00:50:55] to go to it was just a zoo every single time the new one is much newer a bit more in the suburbs but

[00:51:02] it makes my blood pressure not go as high as the one I used to go to well the ones around Calgary so

[00:51:08] they always like there's I think the one they call it it's in like Dearfoot Meadows it's one of

[00:51:13] the busiest Costco's in North America so then they kept they kept building like out so you would go

[00:51:19] they would build a new one and you would go there for a bit because nobody would go there but then

[00:51:22] it would catch on and that would become just packed and then you just bounce around and now all of them

[00:51:27] are just they're crazy crazy busy I mean even that even Costco says like their stores are too busy

[00:51:35] which is just crazy I mean they showed the thing is they show weakness for like the first time

[00:51:40] in quite a while so revenue fell short of estimates by about 70 million earning still beat by like

[00:51:46] almost 10% on street estimates but the stock ended up falling I think seven or eight percent

[00:51:51] after it missed revenue expectations so same store sales are still strong they're up 5.8% on the

[00:51:58] quarter the surprising thing here or maybe not that surprising to some is the Canadian same store sales

[00:52:03] so they're the highest out of any other segment and they came in significantly higher than expectations

[00:52:08] so same store sales in Canada grew by 9% we're analysts were only expecting 6.3% and I think this

[00:52:16] is probably a result of Canadians just attempting to pinch pennies find bargains where they can

[00:52:21] I shop at Costco a ton now I didn't really go there I went I still went there pre pandemic but

[00:52:25] now I go there like I'm there probably 10 12 times a year and it's a huge shift

[00:52:32] we when we went yesterday 800 dollars yeah oh yeah it's not nothing nothing special but I mean if

[00:52:40] you have a baby diapers are really good deal at Costco and we bought like a bunch of diapers yesterday

[00:52:46] so the baby stuff alone was like $150 but will be good for two three months easily but it's just

[00:52:52] stuff like that right it just it kind of adds up but we try to buy especially stuff that does in

[00:52:58] gold bad yeah whether it's household items and stuff like that I think you end up saving quite a

[00:53:04] bit yeah yeah I mean we just we kind of buy even the meat and stuff there I mean you buy it if

[00:53:08] you have the ability to vacuum seal it and throw it in the freezer like last forever and you say

[00:53:14] yeah yeah like a lot of people kind of wonder if you save any money there but I truly think you

[00:53:19] do you have to buy more which is kind of business model you buy more they get cheaper prices through

[00:53:25] you know high volumes which but in the end I think you do save quite a bit of money just have to

[00:53:30] be strategic right if you buy perishables make sure you eat a lot of it or you know if it freezes

[00:53:35] well like you said you freeze it yeah and then like you you save quite a bit of money and I mean

[00:53:40] it's fairly evident they're growing like they're growing like crazy so e-commerce the shift

[00:53:46] the online shopping is definitely here to stay despite the pandemic being over so same store sales

[00:53:52] 18.2% growth on the quarter when we look to the first six months of the year compared to last it's

[00:53:58] up 12.2 membership revenue 8% growth on the quarter so this is a pretty profitable segment for Costco

[00:54:05] they drive a ton of profits through the memberships and just offer you know lower margin products to

[00:54:10] the consumer to kind of make it a bit more sticky it also gives a bit of an indication on how many

[00:54:14] people are sticking around and how many you know brand new people are heading there so most retailers

[00:54:20] are kind of seeing flat growth in terms of foot traffic and how they're driving growth is through

[00:54:24] higher ticket prices but Costco is actually seeing I would say for a massive retailer like them a

[00:54:30] large amount of increased foot traffic so they reported 5.3% growth in year over year traffic

[00:54:36] this is further amplified in Canada it's 8.2% so they're seeing huge huge growth in Canada

[00:54:43] renewal rates in Canada and the US are at 92.8% internationally they came out at 90.5 so

[00:54:50] the companies explain this in the past their international renewal rates are typically lower

[00:54:56] because of how fast they're expanding internationally so when they open up new stores which

[00:55:01] again they're doing faster internationally than domestically they get a huge influx of new members

[00:55:07] many of which don't renew so the initial renewal rates are lower until you know and then they

[00:55:12] gradually creep up as you know more and more mainstays stick with them and they sold in the low 90s

[00:55:19] like pretty consistent in terms of renewal yeah can Canada and US is like 92% plus relatively

[00:55:25] consistently I mean as soon as people get a membership they very very rarely give it up the

[00:55:30] the companies I was at another interesting thing is a company sold a hundred million dollars worth

[00:55:37] of gold bars in the quarter they started selling gold I think it was like a year ago yeah

[00:55:43] 100 million dollars I looked them up I think they were sold down and one thing too they've been

[00:55:47] selling I think you can buy on the website I know they you could a couple years ago but was this like

[00:55:53] apocalypse prepkip basically where you like it was like several thousand dollars and it was like

[00:55:59] a palette of just like non-perishable foods like if there's basically a zombie apocalypse that you're

[00:56:06] ready to go they actually offered that whatever whatever they could do this I mean they had

[00:56:13] I was listening while reading the conference call but I actually had to run and I didn't get

[00:56:17] to finish reading it but there's some weird like they're selling baseball cards you can buy like

[00:56:22] really old baseball cards and the price tags like 20 25 thousand dollars on them I might be wrong

[00:56:27] about that I'll have to go back and maybe touch base on it next week but yeah they were selling

[00:56:31] something really weird like a collectible that was worth a ton of money in terms of their so it

[00:56:37] reports inflation numbers so they predicted that inflation would be in the 1 to 2 percent range in

[00:56:43] 2023 but they came out and said that it was in the year 0 to 1 percent range and they I believe

[00:56:50] this is store wide maybe and they even they reported that there was even 20 to 30 percent deflation

[00:56:56] on some of its bulkier items so like furniture and all that type of stuff just because of reduced

[00:57:02] reduced freight prices and I mean overall it just kind of seems like a pretty big over reaction

[00:57:07] for such a small miss but like Costco on a like just straight up valuation basis is so expensive it's

[00:57:14] it kind of makes sense for some people to take profits on a quarter miss when you know it's gone up

[00:57:19] I don't even know how much it's up it's got to be up nearly 60 70 percent over the last year

[00:57:24] yeah it's pretty crazy that like they've performed really well yeah I mean it's uh

[00:57:29] I think it's doubled over the last three years yes since 2021 so it's been it's been

[00:57:34] definitely good returns and for Canada I mean I have it for a joint TCI listener is in 2018

[00:57:40] revenue is compounded for Canada only at around 10 percent per year so we're really a

[00:57:47] stark increase uh yeah in 2021 but yeah you were definitely right I mean it's been doing quite

[00:57:54] well in terms of yeah in terms of Canada and then if you look at for people

[00:58:01] if they want to see those gold bars I'll just show uh for you can uh I think they seem to be in stock

[00:58:08] for a little bit oh a few of them so there you go so yeah I was aware of that I mean I'm not logged

[00:58:13] in with my memberships I don't see I think these are for members only so it'll be interesting

[00:58:18] what the prices are but this is announced the top one yeah yeah but they do have some that are not

[00:58:23] members only so you can uh I guess you can get this uh bar necklace I guess

[00:58:32] oh Costco they just keep on surprising us yeah yeah I was trying to find the I'm almost positive

[00:58:38] as baseball cards but I'll have to look it up and mention it next week because it was something

[00:58:44] really weird yeah and was that was that all for Costco before we get side-tracked too much

[00:58:50] but I would they're selling and I think I'll keep the the last one I had on this slate I know

[00:58:55] as earnings are slowing down there's a couple of companies that we had prepared for the podcast

[00:59:01] that we just didn't get to so I think probably in the next few weeks we'll be revisiting some

[00:59:05] companies that we wanted to talk about but uh to make sure that the podcast wasn't an hour and a

[00:59:10] half we ended up cutting it short so we'll end up doing that and then aside from that anything

[00:59:15] else you uh you have for listeners or I think that that's pretty pretty good episode good place

[00:59:20] to wrap it up no that's it but I did I did find it they are selling Mickey Mantle autographed baseball

[00:59:27] cards yeah that would not be cheap right I know enough about baseball this so yeah I don't think

[00:59:33] it's a really good thing yeah no auto grade 10 yeah okay yeah yeah yeah I know enough about

[00:59:41] baseball collectibles or hockey cards so typically you'll get them graded I think it's a scale

[00:59:46] up to 10 and the higher the scale the more you can get for it especially the extra rare ones

[00:59:51] but if they're not graded usually like you really can't get as much you need to get them certified

[00:59:56] I actually sent uh if you notice on the back rack there I sent in a bunch of those cards that

[01:00:00] I have to get graded like on the back rack I usually have them all layered out there but

[01:00:06] I sent them in a whole bunch of them in to get graded well people have to do the you know

[01:00:12] join join TCI when they do come up so they see them but uh well yeah that was a great episode then

[01:00:19] for people that are new to the podcast we do appreciate you joining in tuning in to hear us

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[01:00:49] doing that aside from that I mean you can give me like I said earlier if you want to see what

[01:00:54] I'm posting at underscore at fiat underscore iceberg on x-slash twitter and then then

[01:01:01] stock trades underscore c a perfect so we'll sign off on this note thanks again for listening and

[01:01:07] we'll talk to you soon the Canadian investor podcast should not be construed as investment or

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