Monthly Message

The Wutherich & Co. Composite was down 0.9% in September. This compares with the S&P/TSX down 0.9% and the BMO Small Cap Index down 0.9%.
The Organic, Gluten Free Portfolio (look at last month’s Newsletter for an explanation) took a small breather in September. There is no particular news behind this. September is typically the weakest month for stocks and this may have driven the portfolio down somewhat.

Goeasy (GSY-T) is our largest position. The company has been growing its consumer loan business at an extremely rapid rate over the last few years. All the while, the company has been fairly disciplined about issuing equity to support this growth, using debt instead. This has resulted in mid-teens return-on-equity, a decent result for a financial company. But debt alone can take them only so far. They continue to see a huge opportunity to address the sub-prime loan market in Canada and so they have recently done the largest equity issue in their history. This will allow them to grow their loan book even more quickly, resulting in a substantial increase in earnings over the next few years.

JF and I would like to remind you that we are hosting the Wutherich & Co. Annual Update on November 15 at the Mount Stephen Hotel, 1440 Drummond Street. Cocktails at 17:30, presentation at 18:00. RSVP to jf@wutherich.ca or 514-924-4438.

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