For the first time since the LSI was created in February of this year, the index has overtaken its two benchmarks — S&P/TSX Capped Composite Index Fund and SPDR S&P 500 ETF — delivering another standout month up 3.9 percent in October, excluding currency, compared to 0.34 percent for the two benchmarks.
The LSI has now beaten its benchmarks for five consecutive months and sits up 10.5 percent year-to-date, excluding currency, compared to 9.7 percent for the benchmarks.
Interestingly, the LSI’s advantage when you include currency is just 0.13 percent, far less than without.
You couldn’t have asked for a more balanced attack in October.
The 10 Canadian stocks and the 10 American stocks, when currency is factored in, both delivered monthly returns of 4.1 percent, a statistical dead heat.
The benchmarks meanwhile were like night and day with the American ETF gaining 2.7 percent on the month (including currency) while the Canadian ETF lost exactly 2 percent.
Amazingly, October saw all 20 stocks achieving positive gains in the month with seven (four U.S., three Canadian) up 5 percent or more. The best performing stock in October was Canadian Tire, up 7.7 percent on the month and 25.9 percent since February. It’s not the best performer since inception but it’s pretty darn close.
The next best in terms of performance is Remax, up 7.6 in October, just missing out on top honours.
The LSI now has nine months worth of performance in the books; at this point the runaway winner for best stock has got to be Tim Hortons, up almost 59 percent. However, it’s got nowhere to go with the Burger King merger expected to close by the end of the year.
Meanwhile, Alimentation Couche- Tard is up 44.5 percent since February with two months left on the calendar. It’s probably a stretch to catch Timmy’s at this point but the convenience store behemoth will likely make things interesting just the same.
In terms of negatives there are no Canadian stocks in losing territory thus far in 2014; four American stocks are in the red with Best Buy dragging up the rear down 13.3 percent and Vitamin Shoppe (VitaPath’s parent) off slightly less than 10 percent.
The remaining two losers are Starbucks and Dunkin Brands and both are within striking distance of positive returns on the year. By the end of 2014 there very well could be just one or two of the American stocks in negative territory.
Soon, the index will have to make one of three choices when it comes to Tim Hortons: Accept $65.50 in cash plus 0.8025 shares in the merged company in exchange for each share of the coffee chain; take $88.50 in cash; or accept 3.0879 shares in the new company each share held in the Oakville company.
If the index accepts 100 percent in cash we’ll have to come up with a replacement for Tim Hortons. Metro and Pizza Pizza are just two of the potential candidates that come to mind. We’d love to hear from you via email should you have a possibility for us to consider. You can reach us at with Tim Hortons stock replacement in the subject line.