Monthly Message
The Wutherich & Co. Composite was up 0.1% in May. This compares with the S&P/TSX being up 3.4%.
The portfolio came off the boil a little in May. While most of our names reported exceptional numbers for their most recent quarters, a few sold off on this as their good numbers were mostly anticipated. “Buy on rumour, sell on news”, as the old Wall Street adage goes? One excellent example is Hibbett Sports Inc. (HIBB-Q). The company reported an 89% increase in sales in their first quarter and expects full year earnings to double versus last year. The stock sold off 3% that day and was off 9% from its recent highs. Though the company may have had exceptional demand through, and coming out, of the pandemic, we see them as being sustainable growers for many years to come. The market is concerned that their pandemic driven growth is petering out. We think the pandemic has broadened and deepened their relationship with their customers, providing a larger platform for growth.
This pandemic has been a test for all of us. It has also been an education. We have learned just how strong many of the businesses are that we own in the portfolio. While some may have gotten a little expensive, most of them still offer years of good returns.
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