Franco-Nevada, TMX and Loblaws: Canada’s Quiet Compounders Deliver
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What recent U.S. inflation data should investors be aware of?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors.
This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome back to the Canadian Investor Podcast. We've got a pretty full episode today with a mix of macro company earnings and a few interesting market stories.
Yeah, and it's one of those episodes where there's a lot going on beneath the surface. We've got inflation data, capital markets activity, AI disruption questions, commodity tailwinds, and some pretty strong quarters from Canadian companies.
We'll start with US CPI, obviously. This is a Canadian investing podcast, but what happens with inflation in the US still matters a whole lot for markets, rate currencies, and investor sentiment. The latest print was hotter and energy was a big part of that. Gasoline in particular was a major contributor. So the way I'd frame it is inflation looks much better if you exclude the categories people actually feel every day like food and energy. But for consumers, those are categories that matter most.
And that matters because the whole market narrative has been built around inflation continuing to cool and central banks having more room to ease. So if energy stays elevated, that complicates the story.
Exactly. And then we'll touch on GameStop and eBay again. eBay officially rejecting GameStop's proposal, which was not exactly shocking. The offer never really made much sense.
Yeah, that always felt like a strange one. And there was also some confusion around GameStop's exposure to eBay. Is that right?
Right, Ryan Cohen had talked about GameStop having the equivalent of a 5% stake, but it's important to point out that this was through derivatives like options. It's not the same thing as GameStop actually owning 5% of eBay's actual share. The other interesting piece here is Cohen's compensation structure at GameStop. He doesn't have a traditional salary as a CEO. His package is performance-based only and tied to some very ambitious market cap and EBITDA targets.
So there's definitely an incentive structure there that kind of helps explain why you might be pursuing a big, bold move like eBay. Whether that makes sense for shareholders is a different question. Exactly. And we'll also touch on TMX Group, which had a very strong quarter. This is one of those companies that gives you a pretty good read on the health of the Canadian capital markets. Revenue was strong, earnings were strong, and all the core segments of the business grew double digits. But the really interesting part was the capital formation segment, which is tied to IPOs, equity raises, and listing fees.
And when that part of the business is doing well, it usually tells you that the markets are more open, companies are more willing to raise capital, and investor sentiment is healthier.
Exactly. And that segment can be very cyclical. So when it starts to pick up, it's usually a sign that the capital markets are in much better shape. The other big news was TMX announcing the acquisitions of CBOE Canada and CBOE Australia. The Australian side probably has a smoother path. But the Canadian side could attract more regulatory attention just because TMX is already so dominant here in Canada.
And that's the big question. TMX already owns so much of the Canadian exchange infrastructure. So adding CBOE Canada is not exactly a small deal from a competition standpoint.
Right. But overall, it was a very good quarter. And while there are some AI related fears around parts of its recurring revenue business, those concerns look overblown, at least for now.
Then we'll move to Thomson Reuters, which also had a solid quarter. Organic revenue growth was strong, especially across its three key segments, legal professional, corporates, and tax and accounting.
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Chapters
8 chapters
1
What recent U.S. inflation data should investors be aware of?
0:01–4:51
2
Why was GameStop's proposal to eBay rejected?
4:51–14:47
3
What were the highlights from TMX Group's latest quarter?
14:47–21:19
4
How is Thomson Reuters navigating AI disruption risks?
21:19–26:52
5
What drove Franco-Nevada's record quarter performance?
26:52–30:12
6
What factors are influencing Loblaws' grocery business growth?
30:12–34:31
7
How is Exchange Income Corporation performing in the aviation sector?
34:31–39:12
8
What recent developments have affected GoEasy's financial results?
39:12–51:41
Speakers
3 identifiedMore from The Canadian Investor
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