Monthly Message

The Wutherich & Co. Composite was down 0.4% in April. This compares with the S&P/TSX up 0.4%, the BMO Small Cap Index down 2.3%, S&P 500 (US$) up 1.0%, the DJIA (US$) up 1.4%, while the NASDAQ (US$) was up 2.3%.

It is interesting to watch what is happening to Home Capital Group (HCG), a former market darling that is now being savaged by short-sellers. No, we don’t own the name but we have experienced something similar with our holding of CRH Medical. As you might recall, we added CRH to our portfolio in August of last year. We paid about $4.60 per share at that time. We trimmed the position on two occasions. Once at $8 and again at $11.90. We own less than half of our original position now. After a run-up to over $12, the stock has retreated to less than $8. Why? You guessed it, short-sellers. But that is where any comparison to HCG ends. As near as I can tell, the management of CRH has committed no illicit or questionable activities. The shorts make many claims but what they may have correctly identified is that valuation had gotten well ahead of the story. We agree. This is why we trimmed more than half of the position and illustrates the focus that we put on valuing the names in our portfolio.

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