BLOCKBUSTERS & BOMBS IN YEAR THAT WAS 2017
Here’s a look back at some of the best and worst investments — and surprising performers
For investors, 2017 started with a seemingly precarious Trump Rally, but ended as one of the best across-the-board years in recent memory. Strong global growth numbers helped push North America’s major indices to all-time highs, while lighting the fuse on an investing mania or two for good measure. Here, we count down some of the best and worst investments of 2017.
BITCOIN
Some people love it, some people hate it, but no one can deny that the cryptocurrency of mysterious origins was one of the most spectacular investment opportunities of 2017. Even bitcoin’s biggest skeptics are, like everyone else, no doubt secretly wishing they had dabbled at the beginning, a year before the price of a single digital token shot up nearly 2,000 per cent to a mid-December high just short of US$20,000. The rise came as bitcoin and its crypto imitators gained mainstream acceptance, with the Chicago-based CME, launching bitcoin futures in December. How long the good times last is another matter: Friday’s 30-per-cent plunge, crackdowns on initial coin offerings and JPMorgan Chase boss Jamie Dimon’s now-infamous proclamation that bitcoin is a “fraud” all cast shadows over crypto mania.
BIG TECH
U.S. stock markets ran with the bulls all year, and they had tech stocks to thank for it. While the S&P 500 gained more than 20 per cent for the year, the S&P 500’s tech constituents were up approximately 40 per cent, led by the biggest players of them all: Apple Inc., marching towards a trilliondollar market valuation, was up more than 50 per cent; Alphabet Inc. shrugged off a massive European Union fine to gain 35 per cent; Amazon.com Inc. cemented its grip on e-commerce, surging 56 per cent; and Facebook’s mobile advertising dominance sent it up 55 per cent. Discontent over Russian election meddling and antitrust concerns continue to bubble, but it’s hard to imagine tech’s biggest players coming back to Earth anytime soon.
BOMBARDIER AND BRP
On the business front, frequently embattled Bombardier Inc. experienced another turbulent year in 2017. First it struggled to find orders for its signature CSeries jets. Then it was dragged into a punishing international trade battle with The Boeing Co., which saw U.S. authorities slap the CSeries with tariffs approaching 300 per cent. That forced it to ultimately cede control of the CSeries program to Europe’s Airbus SE, in the hopes of salvaging some value. A rough ride for the company, to be sure, but for investors brave enough to hop on board it has been well worth it. The Airbus deal ultimately revived the planeand train-maker’s share price — it is now up more than 40 per cent for the year, with shares trading north of $3 as of mid-December. Meanwhile, BRP, Bombardier’s former recreational products division, has seen customers around the world continue to snap up its Ski- and SeaDoos. Shares of BRP have leaped more than 70 per cent for the year, with the firm announcing plans to expand global production capacity.
AUTO PARTS
One might imagine that the ongoing sabre-rattling that passes for the renegotiation of the North American Free Trade Agreement would have wreaked havoc on the shares of auto parts makers. One would have been wrong. Magna International Inc. (up more than 25 per cent as of mid-December), Martinrea International Inc. (up more than 81 per cent), and Linamar Corp. (up more than 26 per cent) have all been buoyed by a steady demand for new vehicles (helped by hurricanes that destroyed plenty of cars in the southern U.S.) and interesting opportunities, such as with electric and autonomous vehicles.
PALLADIUM
Metals that can be used in electric vehicles, such as cobalt and lithium, may have received most of the publicity, but it was another auto component, palladium, that quietly racked up the biggest win in 2017. Prices of the precious metal have doubled since January and hit a 17-year high this month, according to Reuters, becoming pricier than platinum, its close cousin. Palladium is used in catalytic converters, also known as the things that make toxic gases from car engines less toxic; the rising price of the metal has coincided with increasing demand for gas-powered vehicles in China. Shares of miners that produce palladium have shot up this year as well, such as those of Anglo American PLC, which saw its stock price increase by nearly 30 per cent for the year. The move toward electric vehicles could eventually put an end to the palladium boom, but there are few signs that years of shortages will reverse in 2018.
HOME CAPITAL GROUP INC.
It was a humbling year, to say the least, for Canada’s largest alternative mortgage lender. Allegations of misleading disclosure levelled in April by the Ontario Securities Commission sent depositors scrambling for the exits with investors right behind them. The company’s stock price fell 65 per cent in a single day on April 26, amid reports that it was seeking an emergency $2-billion line of credit to stanch the bleeding. A settlement with the OSC and the surprise intervention of legendary investor Warren Buffett, whose Berkshire Hathaway Inc. took a nearly-20-per-cent stake in the company, helped stabilize things, but challenges remain. A cooling Canadian real estate market and tougher mortgage rules coming into effect in January are likely to complicate attempts to reignite growth in mortgage originations.
MOVIE THEATRES
Talk about a box-office bomb. Shares of North America’s major movie theatre operators fell this year as people stayed away from Hollywood’s duds — or just stayed home and watched Netflix. Shares of AMC Entertainment Holdings Inc. and Cineplex Inc. tumbled more than 55 per cent and 24 per cent, respectively. In announcing his company’s third-quarter results, Cineplex chief executive Ellis Jacob noted revenue had declined “primarily due to decreased attendance as a result of weaker film product during the period.” Diversifying away from Hollywood fare could be the only option; Cineplex has already made moves in that direction, showing a big-ticket boxing match and announcing a deal with the National Football League to air the Super Bowl.
CENOVUS ENERGY
Canadian energy companies had a rough 2017 overall, but for Cenovus, the pain was at least partly self-inflicted. Shares of the oilsands company were already sliding when it announced in March that it was buying the majority of Canadian assets once owned by ConocoPhillips Co. for approximately $17.7 billion. The dilutive effect of the deal and Cenovus’ debt load didn’t go down well with shareholders, who sent the stock into a swoon. Cenovus has been selling assets ever since. After plunging more than 50 per cent to under $9, the shares were trading at $11.23 in mid-December.