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Cape Mudge Lighthouse, British Columbia, Canada
This lighthouse is located on the east coast of Vancouver Island. The lighthouse was built in 1898, and the current lighthouse opened in 1916. The lighthouse stands at 12 meters tall.
Discovery Island Lighthouse, British Columbia, Canada
This lighthouse is an active lighthouse that was built in 1886. The lighthouse stands at 38 feet tall and is located just south of Vancouver Island.
*Feel free to send us your photos of Lighthouses to be featured in our weekly market observations. *
An ode to a great
On Saturday, Warren Buffett announced he would be stepping down from being the CEO of Berkshire Hathaway at the end of 25. The 95-year-old announced this at Berkshire’s annual shareholder meeting in Omaha. Buffett announced that he would recommend that Greg Abel take the CEO position. Abel is a Canadian businessman with a wealth of experience. He has been a Vice-Chairman for non-insurance operations and a Board member at Berkshire since 2018. On Sunday, Berkshire’s board approved Buffett’s recommendation unanimously. Buffett will remain the Chairman of the Board and will be an advisor to Abel when needed.
Buffett’s retirement comes a year and a half after his best friend and business partner, Charlie Munger, passed away.
The surprise announcement moved Berkshire shares down by almost 5% on Monday morning. The drop in the stock is no surprise as Buffett and Berkshire have become synonymous. Buffett has led Berkshire since 1965 to tremendous success. Over the past 20 years, Berkshire shares are up 818% vs the S&P 500, which is up 384%. Since 1964, when Buffett took over Berkshire, shares have risen a whopping 5,502,284% versus the S&P 500, which has risen 39,054%. Ironically, Buffett’s biggest winner in terms of dollars, not percentage points, is Apple, which he bought approximately 10 years ago. Even one of the grandfathers of value investing got in on the technology boom.
Here is the annual performance of Berkshire shares over the last 30 years:
Quite the run. If you look closely, he did not always beat the S&P 500, but over time, his consistency paid off by a wide margin.
According to Berkshire’s recent filings, the company has even more cash on its balance sheet than last quarter ($335-348 billion in cash and cash equivalents). It currently owns 3.1% of the Treasury market. We will say that this is the company’s first quarter earnings and does not reflect any activities from Berkshire during the volatile month of April. Abel will more than likely have a large stockpile of dry powder when he begins leading Berkshire. Some speculated that Berkshire could pay shareholders dividends with their cash as Abel’s experience is in management, not investments. Buffett long opposed dividends, believing the cash is better in his and Berkshire’s hands than in shareholders’ hands.
Berkshire’s largest holdings other than cash and Treasuries are Apple, American Express, Coca-Cola, Bank of America, Chevron, Moody’s, and Occidental Petroleum (as of December 31, 2024).
In terms of Berkshire’s earnings, operating profits, revenue, and earnings-per-share came up short of analyst expectations for the first quarter.
We are not sure what is next for Berkshire, but we wish Warren Buffett the best in his retirement.
Negotiations begin
Just a week after the Canadian Federal election and Prime Minister Mark Carney is visiting Washington; this trip is big for numerous reasons. Carney campaigned hard on being a “tough negotiator” and “strong on the economics”. Canadians are struggling, and the economy is limping along. The tariffs that were recently announced by the U.S. could have a large impact on our country and worsen economic conditions. Trump enacted 25% tariffs on steel and aluminum, 10% on energy, and 25% on Canadian imports not covered by the U.S.-Mexico-Canada (USMCA) Agreement. Canada responded with its own 25% tariffs on U.S. goods.
Due to today’s uncertainty, it is more important than ever to stamp out a trade deal with our largest ally and come to common ground rather than turn our backs on each other. We understand we have other allies, but none will compare with the U.S in terms of demographics, economic prosperity, and market size. The other thing to think about is think of how much higher prices will be if we ship goods from Europe or Asia, or South America instead of the U.S.? That could be very inflationary.
We certainly do not want Carney to bow to Trump this week. However, we want solid progress when it comes to trade discussions and no escalation regarding the tariffs. The negotiations will have given and taken, and Canadians need to be ready for this.
The outcome of any talks is particularly important for the U.S. and Canadian automotive industries, which have been integrated for decades. Canada is also a key provider of lumber, fertilizer, and energy to the U.S.
Oil M&A
On Monday morning, Sunoco LP announced it would be acquiring all the outstanding shares of Parkland in a cash and equity transaction valued at $9.1 billion.
As part of this transaction, Sunoco will form a new publicly traded limited liability company, SUNCorp LLC.
Sunoco is paying a 25% premium for Parkland. Under the terms of the agreement, Parkland shareholders will receive 0.295 SUNCorp shares and $19.8 (CAD) for each Parkland share. Parkland shareholders can also elect to receive $44 per share in cash or 0.536 SUNCorp units, subject to proration to ensure that the aggregate consideration payable in connection with the transaction does not exceed C$19.80 in cash per Parkland share outstanding as of immediately before close and 0.295 SUNCorp units per Parkland share outstanding as of immediately before close. Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
Calgary-based Parkland operates 4,000 retail and commercial fuel stations. Parkland’s brands include Esso, Chevron, Ultramar, and Pioneer gas station brands across Canada.
Sunoco LP is a leading energy infrastructure and fuel distribution company that operates across 40 states, Europe, and Mexico. Sunoco’s network includes 14,000 miles of pipeline, 7,400 fuel stations, and over 100 terminals.
The acquisition will bring an end to a longstanding feud between Parkland and its largest shareholder, Simpson Oil. Simpson Oil holds 20% of Parkland’s shares and has been a vocal critic of Parkland’s poor performance in recent years and was pushing to replace numerous parkland directors in an election that was originally scheduled for this past week at their AGM (the AGM was moved to June after this deal was announced).
We think Simpson Oil could reject the deal and request a higher premium. Parkland has been a bit of a mess for a few years, which is why we do not own the company. Parkland shares are currently trading more than 10% lower than the proposed deal price, reflecting some risk that the deal could fall through. Simpson Oil is not the only party that could stall the deal, the deal must pass regulatory approval, which includes the Canadian government, which could block the deal. Certain politicians have said they will block the acquisition of Canadian companies by American firms amidst the trade war. Could this all be noise? Yes, but it needs to be taken into consideration. If Parkland’s board and largest shareholder want to sell, a few Canadian firms could swoop in if this Sunoco deal falls through.
This week, Parkland also released its first quarter earnings, which came in stronger than expected. The company posted a first-quarter profit increase and strong revenue growth in its international segment.
We told our readers that M&A activity would heat up under the Trump administration, and that is especially true for the energy sector, which has numerous attractive targets that trade at reasonable multiples.
A new type of tariff
When is Trump in doubt? He seems to “tariff” it out. This week, Trump announced a new tariff that is extremely niche. It is a 100% tariff on movies made outside the U.S. The move reportedly will push production studios to film domestically rather than internationally.
The UK and Canada are the top foreign locations for studio productions. According to data, 40% of Hollywood films that have America as a country of origin on IMDb had at least one day of filming in the UK or Canada.
This move by Trump could negatively impact the Vancouver and Toronto job markets, which are both major film destinations. According to the Mayor of Toronto, U.S. film production creates 30,000 jobs and has a $2.6 billion economic impact on Canada’s largest city alone.
We are purposely not spending a lot of time on this topic as
- We do own “movie” or studio stocks, and
- Have no clue how this will unfold and do not want to make a guess.
Tariff progress
Late on Tuesday afternoon, it was reported that Secretary Bessent would be meeting with Chinese officials regarding trade. The meetings will take place over the coming weekend and will be in Switzerland. These meetings will be the first major talks between the world’s two largest economies since President Trump invoked tariffs on China.
Trump had claimed previously that the U.S. and China were negotiating on lowering tariffs, which Beijing has denied, saying Trump must first lower his stiff tariffs.
Investors cautiously welcomed this news on Wednesday as a trade war between China and the U.S. could upend the global economy and cause major supply chain disruptions. Any progress is a good sign for investors and consumers.
We will warn our readers that this meeting will not guarantee a trade deal, as Secretary Bessent has hinted at both nations de-escalating before they move forward with discussions. Chinese analysts also cautioned that a final deal could take months and, ideally, would need to be sealed by a meeting between Trump and Chinese President Xi Jinping.
Perhaps this weekend is the first step of many in turning down the temperature on what potentially could be a “cold war 2.0”.
Uber’s mixed results
On Wednesday morning, the ride-hailing platform we all know and utilize, Uber, reported first-quarter earnings. The company reported mixed results. Earnings-per-share topped street expectations, but revenue narrowly missed. Gross bookings increased year-over-year but also came up short of analyst expectations. Uber One subscriptions grew significantly during the quarter, and members of this service accounted for over 60% of Uber Eats orders. Uber also reported a 66% increase in their free cash flow over the last year.
Uber shares opened lower on their mixed results on Wednesday. The company also announced an acquisition this week, announcing they acquired an 85% controlling interest in Trendyol GO, an online meal and grocery service based in Turkey. The $700 million deal comes as Uber continues to seek expansion in the food delivery market across the globe.
Uber’s push into the self-driving market continued this quarter with the platform allowing for users to book robotaxis in numerous U.S. markets. The CEO reiterated that this market is the “single greatest opportunity ahead for Uber.” Uber’s CEO stated that the company reached an annual run rate of 1.5 million self-driving vehicle trips during the last quarter. Last month, Uber began offering riders in Austin, Texas, the option to hail a robotaxi through Waymo, which is owned by Alphabet.
Besides its Waymo partnership, Uber has also agreed to work with Volkswagen, Avride, May Mobility, and the autonomous trucking company Aurora for autonomous ride-hailing and freight services in the U.S. Uber has additional partnerships with AV companies internationally, including with WeRide, Pony.AI, and Momenta.
Uber shares have surged this year on improving margins, profitability metrics, and the potential of the self-driving market.
The strong results and growth reported by Uber this week reflect that consumers are still spending on experiences.
Retail clients buying the dip
Retail investors have been aggressively buying into 2025’s market dip. They have been net buyers of U.S. equities for 21 weeks straight, the longest streak ever.
This significantly beats the previous record of 10 weeks in a row in 2022.
At the same time, hedge funds have been dumping U.S. equities and have piled into other asset classes or global equities. Trump’s populism has seemingly bled into financial markets, where smaller investors have benefited from recent market action and institutions have not.
MacNicol & Associates Asset Management
May 9, 2025
