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Gold/Mining/Energy : Canadian Stocks Seem Scary
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To: LPasko who wrote (3)3/22/1998 2:39:00 AM
From: Serge Collins   of 33
 
LPasko, As an investor with 20 years experience, I must say I've heard many things over the years but not the one you claim to have heard. Some of the best Canadian companies, companies whose stock has rewarded their investors handsomely over the years, are listed only on Canadian exchanges. One such company is Bombardier. This company has grown tremendously over the last 20 years and its share price has kept pace. Someone that invested in this gem in the early 80s or even as recently as the early 90s has made a bundle without the volatility of NASDAQ interlisted companies.

There are many more examples like this. Generally, when investing in Canada one should stick with TSE or ME listed companies and avoid the garbage that is listed on the VSE or Alberta exchange. There is no doubt that the financial disclosure of companies listed on these two exchanges is a farce. Toronto and Montreal listed companies have disclosure that compares favourably to the NYSE, AMEX or NASDAQ National Market.

There are many excellent companies to invest in on the TSE and ME. The main problem in Canada is the lack of liquidity. That is probably what your acquaintances were referring to. Many companies that are listed only in Canada often trade at a discount to the interlisted companies. They also make excellent takeover targets as a result of this (ie. Synergistics (TSE) acquired recently by GEON (NYSE) at a 100% premium). This lack of liquidity is also the reason many Canadian companies have recently listed on American exchanges. The Canadian banks are a case in point. I've felt for some time that the incredible upsurge in the value of Canadian banks in the last two years, which coincided with their listing on the NYSE, would not have occurred to the extent that it did, without the added liquidity that is generated from interlisting. That plus the obvious fact that a much greater number of Americans invest directly in stocks than the more timid Canadians, thus they tend to not shy away from giving companies greater valuations.
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