An easier way for Canadians to buy into Warren Buffet’s empire. Plus, two tasty stock bargains and a trillion-dollar wager that interest rates won’t rise far

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We get it — tech stocks are super-popular among investors these days.

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But it is good to see some non-technical names added to the list of US stocks that can be purchased as Canadian Depository Receipts. Traded on the Canadian NEO exchange, a CDR is basically a fractional investment in an underlying US company with an underlying currency hedge. This is what your CDR does, no matter how much US stocks go up or down. There is no constant change in the Canada-US exchange rate.

The latest batch of eight new CDRs includes some tech companies, but also big names in other sectors. (PFE-NEO), the pharmaceutical giant behind one of the major COVID-19 vaccines, along with big box retailer Costco Wholesale Corp (COST-NEO) and credit card company Mastercard Inc. (MA-NEO) . The most interesting addition for investors with a contrasting view may be Warren Buffett’s legendary holding company, Berkshire Hathaway Inc. (BRK-NEO).


On the New York Stock Exchange, shares of Berkshire traded below $280 in early December. The CDR version traded at just under $22 Canadian. This price comparison highlights how CDRs make stocks of large US companies more accessible to Canadian investors. Another advantage is cost efficiency – retail investors get a more favorable Canada-US exchange rate when buying BRK-NEO than if they used an online broker to buy BRK.B on the NYSE. There is a profit center for forex brokers for clients who buy and sell US stocks.

List of BRK Subsidiary companies has long and varied – insurers, as well as brickers, manufacturers of batteries, industrial lubricants, underwear, candy and furniture. There isn’t a lot of technology in the mix, which helps explain why BRK hasn’t been the S&P 500-beating juggernaut in recent years it once was.

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With an overall increase of about 24 per cent in the last two years, BRK has not been beaten at all. But in the face of the tech-heavy S&P 500’s 44-percent gain, BRK appears to be somewhat out of favor. The six-month numbers sum up this take — BRK was down 4.3 percent, while the S&P 500 was up 8 percent.

One legal concern if you’re eyeing CDRs is whether they hold enough to ensure a tight bid-ask spread when buying and selling. With low-volume stocks and exchange-traded funds, you may have to pay more than the current market price to complete the purchase of the shares, and accept less than the market price to sell.

CIBC reports that the average number of client trades per day in CDRs has increased from 700 in September to 5,500 in early November, with assets increasing to more than $290 million. It’s not blown-out growth, but it’s enough to suggest that investors are definitely interested in CDRs. Only broadening the selection of available stock can help.

–Rob Carrick, personal finance columnist

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stock to consider

Oatly Group AB (OTLY-Q) and Beyond Meat Inc. (BYND-Q): Investors are treating plant-based food producers as if they were week-old kale lettuce. Maybe it’s time he stopped blowing his nose. As bad as things look right now, the long-term case of betting on plant-based food has not changed. Environmental pressures, health concerns and growing outrage about animal suffering may still drive people to eat more green stuff and less bloody stuff in the years to come. Somebody is going to benefit from this trend. To be sure, there are many uncertainties, especially when it comes to timing. To that, add some ugly recent results. But as Ian McGugan argues, the decline in stock prices of two major makers of vegetarian grub suggests the market may be overshadowed by temporary factors.

Elementation Couch-Tard Inc., (ATD-BT): On November 18, the stock price closed at a record high of $52.30. However, it has fallen 12 percent since then, closing below $46 on December 1. The stock is currently trading at an attractive valuation with a price-to-earnings (P/E) multiplier of 14.7 times the consensus earnings estimate for fiscal year 2023. Far below its historical average multiplier. The stock is forecast to deliver 12-month returns of 24 per cent and 13 buy recommendations from analysts. Jennifer Downey looks at the investment case for buying stocks on the recent decline.

the rundown

Looking for protection from market volatility? Here’s something that’s not working anymore

Investors have followed a playbook during the recent period of pandemic-related market volatility. When major indices are faltering, jettison airlines, energy stocks and anything associated with a return to normal. For safety, buy technology heavyweights that can withstand more lockdowns. But some observers have found that at least one specific response to volatility has disappeared: the reputation of the US dollar in times of crisis. David Berman explains.

Canadian dollar seen higher if Bank of Canada takes lead on rate hike

Analyst Omicron is sticking to a bullish forecast on the Canadian dollar despite uncertainty related to the COVID-19 version, oil prices expected to bounce back and the Bank of Canada expecting a hike in interest rates before the US Federal Reserve. Here’s what a Reuters poll of 32 strategists revealed.

See also: Global stocks rally next year, likely to improve: Poll

A trillion-dollar bet that interest rates won’t rise very far

Bond markets are betting that interest rates could end before the Fed’s 2 percent inflation target is reached before the Federal Reserve’s policy tightens. And all this may happen in the not so distant future. Reuters’ Yoruk Bahceli explains.

Other (for customers)

The highest-yielding stocks on the TSX, plus risk data

John Heinzel’s Model Dividend Growth Portfolio as of November 30, 2021

Number Cruncher: 10 Well-Valued US Industrial Stocks in a Correction Zone

Friday’s Analyst Upgrades and Downgrades

Thursday’s Analyst Upgrades and Downgrades

Friday insider report: Director invested more than $1 million in this small-cap stock

Thursday Insider Report: Chairman Seizes Buying Opportunity in This REIT Amid Market Volatility

Granthshala consultant

Omicron-led market volatility could provide great deals in tax-loss selling season

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Compiled by Granthshala Investor Staff


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