Firstly, however, as I write we have just crossed the halfway mark of 2025, and a quick recap of our two markets is in order. The U.S. S&P 500 cratered 21 per cent between Feb. 19 and April 7. It then staged a remarkable rebound, recovering all its losses and reaching a new all-time high. While a 21 per cent decline meets the classic definition of a bear market, this behaved more like a major correction, with a quick drop followed by a quick recovery. Bear markets tend to start slowly and build over time. Canada’s TSX, which generally exhibits more stability than the S&P 500, was down a modest 13 per cent before fully recovering.

From a year-to-date perspective, the TSX was up 8.6 per cent at the halfway point, with the S&P 500 up 5.5 per cent — remarkable performances, given the levels of uncertainty in trade and geopolitics. That said, I remain concerned from valuation, political and economic standpoints, bringing me back to the main focus of this article: other countries in the world.

I found a great website, Worldperatio.com, that lists many countries and the price/earnings (p/e) average for their publicly traded companies. As a refresher, the p/e is the price you pay for a dollar of earnings. Would you sooner pay $20 per dollar of earnings, or $10? The lower the number, the better the valuation. The website also shows the current p/e in relation to the historic average p/e. For example, New Zealand has the most expensive stocks in the world, with an average p/e of 31.3, but surprisingly that is only 2.0 higher than its 20-year average p/e of 29.3 (31.3 minus 2.0). I don’t know why this market is so expensive and I’m not interested in buying New Zealand at this valuation.

More than 95 per cent of my investments are in Canada and the U.S. From the table shown here, you can see they both have high valuations and are trading well above their long-term averages. While Canada has a lower p/e than the U.S., it has the highest p/e of any country relative to its long-term average, now trading with a p/e of 20.9 compared to its long-term average of 14.7 (20.9 minus 6.2).

The columns for GDP growth, inflation and central bank rate were pulled from another terrific website, Tradingeconomics.com, which I use regularly. We need to be cognizant of these factors when considering investments in other countries. I searched up the current population of each country to add to the overall picture and included a ticker symbol for a U.S.-based exchange-traded fund (ETF) on each country. I plan on doing a little more work on Canadian-based worldwide ETFs.

Areas of interest

Argentina is an interesting country. Milei has been in power for just 18 months and has wrestled inflation down from 300 per cent to 43.5 per cent over the past year. This annual rate overstates the rapidly decreasing month-over-month rate now in the two per cent range. Italy is also interesting as Meloni has provided leadership stability to the historic musical-chair aspect of Italian politics. Both politicians appear to be providing sane economic policies to countries that had been economic basket-cases. Interestingly, both were labelled “far-right” by legacy media.

Ireland is also interesting in that it has had one of the strongest economies in the world over the past 10 years, partly due to low corporate tax rates attracting corporate head offices. However, it appears to have a volatile economy, with its current supersized growth following a significant recession.

China has attractive stock valuations, but I have no interest investing in this autocratic regime for numerous reasons. India is considered the new world growth driver, but its stock valuations are as expensive as those in the U.S. I will also pass on it.

Norway has an energy-based economy like Canada’s, but stock valuations almost half of Canada’s, trading very close to its long-term averages. It has managed its energy wealth exceptionally well and has a sovereign wealth fund of about $1.8 trillion. It looks attractive.

Other areas that look interesting are the populous Asian nations of Vietnam, Thailand, Indonesia and the Philippines. They trade at reasonable valuations, have good growth, inflation and interest rates.

Lastly, Latin America looks interesting. Mexico, Argentina, Chile, Peru and Brazil have good valuations, trading in line with their long-term averages. They are resource-driven economies, like Canada. I recently purchased iShares Latin America 40 ETF (ILF) that holds the largest 40 companies in Latin America. I generally use ETFs when investing outside of Canada and the U.S.

Emerging economies are considered to have higher political risk than developed economies, but I might argue that point in the current environment. Political risk is evident everywhere.

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However, what’s missing in this thought process is the reason why the currency is weak in the first place: a lack of investing confidence in a country, and a weak underlying economy. Over the past decade, per capita business investment in Canada has declined by over 20 per cent while it has grown by approximately 30 per cent in the U.S. That is an extreme divergence of two traditionally linked economies.

Additionally, over a five-year period from 2019 to 2023, public-sector employment has grown 3.6 times faster than private-sector employment. Only two provinces experienced private-sector job growth greater than public sector: Alberta and Nova Scotia. British Columbia, arguably the most socialistic of the provinces, had a public sector job growth rate 44 times greater than private sector, according to the Fraser Institute. In other words, almost all jobs created in the province over a five-year period were government jobs. The dramatic growth in public-sector employment is a huge increase in economic overhead for the private sector (read: taxpayers) to carry.

The Canadian currency at time of writing is flirting with its lowest level in over 20 years. It has twice been at a similar low point, in March 2020 and January 2016. From 1998 to 2003 we experienced a weaker currency, but otherwise this is as low as it’s been in over 50 years. Those of you old enough and with a long enough memory will recall the excruciatingly weak commodity prices during that period, with oil in the $20-$25 range, corn in the $2-$2.50 range, and canola and soybeans in the $5-6 range. It wasn’t fun for commodity producers.

Canada’s TSX has had an exceptional year, with a 22.4 per cent gain to the end of November, but this still trails the U.S. S&P 500’s gain of 26.5 per cent. Over the past decade, the TSX has dramatically underperformed the S&P 500.

Given this backdrop, I took a deeper dive into currency, valuation and market performance over the past 20 years, through the cycle of weak, strong and back to weak.

The table shown here was compiled at the end of November 2024, listing the price/earnings (P/E) ratio and currency in November of each given year. As a quick reminder, P/E is how much you pay for a dollar of earnings. Currently in Canada the average price for a dollar of earnings is $19.70 and, in the U.S., it is $26.20. Thus the U.S. market is trading at a 33 per cent valuation premium to Canada. It currently costs Cdn$1.40 to buy US$1. Combining currency and valuation, it takes Cdn$36.68 to buy $1 of U.S. earnings, which is 1.86 times what it costs for a dollar of Canadian earnings.

Please note: while I prefer price-to-cash-flow metrics, P/E is the commonly reported metric for average market valuations. The table shows the comparative valuation and currency premiums in November of each year back to 1995.

For clarification, peak market valuations with a P/E of 24.7 occurred in January 2000 in the U.S., prior to being recently eclipsed, and in March 2000 in Canada with a P/E of 25.4. The strongest Canadian dollar per U.S. dollar was 94 cents in both October of 2007 and again in April of 2011. As these numbers didn’t occur in November, they don’t show on the chart.

It might be hard to envision that just 15 years ago, you could buy U.S. stocks trading at a discount to Canadian stocks, with a currency that was stronger than the U.S currency. It was during this five- to six-year period I focused my investments almost entirely in the U.S. The U.S. was the epicentre of the Great Financial Crisis and at the time Canada was considered a bastion of financial stability. That was clearly against-the-grain investing.

The peak combined U.S. premium was 1.95 in 1998 and an almost identical 1.94 in 2022. The combined U.S. premium is currently almost exactly twice the low of 0.94 that occurred in 2011 and 2012. After the 1998 U.S. premium peak, the TSX outperformed the S&P 500 in 10 out of the next 12 years. After the 2011 U.S. valuation and currency low (Canadian peak), the reverse occurred, with the U.S. outperforming in 10 out of 12 years. Is that a coincidence?

I will be formulating my 2025 predictions as year-end approaches, to be discussed in the first column written in January. What I can say at this time is I will be very hesitant converting Canadian dollars to U.S. dollars and investing in U.S stocks at this time. I will be much more likely to convert some U.S. gains into Canadian investments. I realize I have been calling for the Canadian market to slightly outperform the last couple of years, while also being bullish on U.S stocks. After putting the chart together, I believe that will be the right track. It’s just difficult to predict when a clear transition will occur. This will once again be against the current grain (sentiment).

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Another year has come and gone, and I wanted to verify or refute last year’s observations. I was less surprised by the results this year as they mirrored last year’s pathetic accuracy.

Like last year, I compared the top three-rated companies with the bottom three-rated companies within a sector. The chart also includes an average for the entire sector, but with those averages large errors on the positive side are often offset by large errors on the negative side.

Last year, the bottom three-rated companies outperformed the top three-rated companies in five out of 11 sectors. This year, only four sectors had the bottom three outperform the top three but two more were effectively tied. Even where the top three performed better than the bottom three, there was often a huge gap between expected returns and actual returns. In communication services, for one, the average expected return was 40.4 per cent and the actual return was 2.3 per cent.

The prize for inaccuracy on the negative side was Lithium Americas, which had an expected gain of 120 per cent but achieved a loss of 76 per cent. If there were only a couple of analysts, the variation could be a random error, but 16 analysts contributed to the embarrassment. The biggest positive error occurred with Celestica, which was expected to decline by four per cent but went up by 275 per cent. Seven analysts contributed to that egregious miss. As I concluded last year, I will continue to ignore analyst target prices when making decisions.

This kind of prognostication miss isn’t the exclusive purview of Canadian analysts. It is a little too early, at time of writing in late November, to do a complete debrief on last year’s predictions. However, barring an incredibly fast correction in December, Wall Street analysts missed the mark by a wide margin for the second year in a row. The average of the big bank projections was for the S&P 500 to gain 1.9 per cent, with a range from negative 12 per cent to positive 13.2 per cent. At the time of writing the S&P 500 was up 25.5 per cent. While I didn’t nail it like in 2023, my prediction was still amongst the best of the U.S. analysts.

In 2023, the Wall Street average prediction was a loss of two per cent, and in 2024 the average was a gain of 1.9 per cent. Any investor that sat out both years because of these pessimistic projections would have sat out gains of 55.9 per cent as of late November. Knowing no one, including myself, can make accurate predictions with regularity, I simply remain fully invested all the time. On a long-term basis, stocks blow the doors off bonds and cash, as long as we can tolerate the fluctuations.

My main prediction every year is that most predictions will be wrong. I nailed that one! In the words of Ray Dalio, founder of Bridgewater Associates, “He who lives by the crystal ball will eat shattered glass.”

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One of my favorite prediction quotes comes by way of the legendary baseball player, manager and philosopher, Yogi Berra. This quote, like many of his famous quips, incorporates a meaningful paradox.

Following up on my previous column, the TSX ended 2023 with a total return — price appreciation plus dividends — of 11.8 per cent, while the S&P 500 finished with outstanding returns of 26.3 per cent, hugely different than the two per cent decline predicted.

The bulk of S&P gains came from a handful of large tech companies, while Shopify alone represented one-quarter of TSX gains. Only in the last two months of the year did the rest of the market catch a spark.

Never has the S&P 500 been so skewed to such a small number of companies. The top 10 companies, just two per cent of the total companies in the index, now represent an outsized 32 per cent of the entire index. The five largest companies have the same market cap as the U.K., China, France and Japan combined. Dividend-paying value companies were out of favour until late in the year.

My fearless predictions for 2023 were easy to make after repeatedly reading negative commentary, leading to my optimism. This year’s predictions are more difficult, given the wide variations in what the pros are saying. S&P 500 predictions I’ve read have varied as much as down 15 to up 25 per cent. Whereas last year’s predictions were clustered together and negative, this year’s are all over the map. A year ago, a recession was a foregone conclusion. Now, even though we’re 12 months further into the interest rate-tightening cycle, many are retracting recession predictions and it’s a 50-50 mix as to whether the U.S. will experience recession. Market forecasters are predicting a 1.3 per cent Fed funds rate decline.

With this backdrop, the following is how I see 2024 playing out.

Fearless prediction 1: Most predictions will be wrong.

Again!

Fearless prediction 2: A recession in Canada, but not the U.S.

I went back 100 years to look at when recessions started relative to the U.S. election cycle. In 24 previous cycles, recessions started in an election year only four times, with two being anomalies. The COVID recession came when the economy was strong, and a 1948 recession started coincident but not before the election. Incumbent governments will do what they can to stay in power, priming the economic pump with fiscal stimulus if necessary. Not surprisingly, seven recessions started the year after an election year, although that trend was more evident pre-1980. Economic growth is currently strong and U.S. consumers remain in good shape and are not as immediately impacted by rising interest rates, with 30-year mortgages the norm. Additionally, U.S. manufacturing construction spending has more than doubled over the past two years as re-shoring takes place.

The Canadian economy, on the other hand, is weak, especially considering a record of 430,000 new immigrants in the third quarter alone. Per capita GDP (gross domestic product) fell by 4.4 per cent. While an overall economic recession is uncertain, there is no question Canadian families are in recession. More mortgages will be renewed at higher rates in 2024, adding further financial stress. While corporate debt levels are reasonable, personal and government debt levels are high to out of control.

Normally our two economies go into recession together, making my forecast an unusual situation. Given the importance of our trading relationship, if the U.S. avoids recession, ours will probably be shallow.

Fearless prediction 3: Interest rates will not drop as much as expected.

If the U.S. avoids recession, the Fed funds rate may not drop as expected. While considered “elevated” by many, current rates are more the norm than the ultra-low rates of the last decade. A Canadian recession without a U.S recession will be a challenge for the Bank of Canada. Our already-weak currency will handcuff its ability to respond to recession with unilateral rate cuts.

Fearless prediction 4: I remain bullish on energy.

There is currently a lot of bearish sentiment in oil. World inventories remain low while U.S. inventories are growing modestly. The U.S. government will continue to work levers to keep prices down, to improve the odds of re-election. Another warm winter is adding to the bearish sentiment, as are the ever-present recession fears. Energy stocks appear to be good value even if oil stays around $70, which I think will be the low end of where it trades over the next year, but big price appreciation has been pushed into the future.

Fearless prediction 5: Markets will experience modest gains.

Last year I was very bullish, given the dour sentiment, but current investor sentiment is robust. I find sentiment a good contraindicator. Today’s near-record market levels are on much firmer ground than two years ago when meme stocks and SPACs (special purpose acquisition companies) were all the rage. While most of the big 10 companies have high valuations, they are not speculative stocks. Participation in the year-end rally by non-tech stocks is encouraging. I think the big tech companies may rest for a while, and other companies will take the lead. I predict the S&P 500 will end the year up five to 10 per cent, with the TSX up maybe eight to 12. The U.S election promises to be interesting and tumultuous, causing market volatility.

Please always keep in mind the first prediction — and I rarely make decisions around predictions because of this.

As this is the first article written in the new year, an update of the titanium-strength portfolio is in order. We experienced modest gains of 7.5 per cent in 2023, given its conservative, dividend focus. As shown in the table here, it is now up 57.3 per cent in 5.5 years. I will use the Canadian dividends to add an additional 40 shares of Fortis at the year-end closing price of $54.51.

The post Economic and market outlook for 2024 appeared first on Grainews.

Last year in Grainews, I provided a synopsis of these predictions. They were written around Jan. 1 but appeared in the Feb. 7. issue. This column is being written in mid-December, and while there could be dramatic changes before year-end, the concrete is pretty hard on how it will turn out. For clarification, most of what I write about is based on the U.S. market, with a few Canadian thoughts thrown in. The reason for this is U.S. information is more readily available and the U.S. economy and markets dwarf ours.

Hits

My first prediction every year, and one that has always been correct, is that most predictions will be wrong. What sets 2023 apart is how wrong they were. Mine turned out decent and far better than most, but the financial industry was way off base.

As the calendar turned from 2022 to 2023, almost all economists and market prognosticators predicted a recession would occur in 2023. Many had predicted the same for 2022, which didn’t occur, making them adamant it was imminent in 2023. Wrong.

On the other hand, I predicted no recession. My rationale was simple: recessions usually occur a few years after the interest rate tightening cycle begins, and we were only one year into this cycle. I’m not sure why this simple fact escaped so many. Plus, the U.S. consumer was in good financial shape. The U.S. is experiencing the opposite of a recession, with booming third-quarter GDP (gross domestic product) growth of 5.2 per cent — one of the fastest growth rates in recent history. Canada, on the other hand, is flatlining. While still not technically in recession, our economy experienced almost zero growth in 2023.

With their recession predictions, most analysts also predicted inflation would decline, which was correct, and this would lead to significantly declining interest rates. I also predicted inflation would come down but that interest rates would continue to rise a little further. The Canadian bank rate has gone up by three-quarters of one per cent, while the U.S. Fed funds rate has gone up one per cent over the year.

My boldest prediction was that the S&P 500 would increase 15-20 per cent, while analysts on average were calling for a two per cent decline. At the time of writing the S&P 500 was up 20.3 per cent. The financial pros missed the mark by a mile. If you’re counting, I’m now four for four, with the pros zero for four.

Misses

Where did I miss? My call on oil was slightly off the mark. I predicted a significant recovery in oil, which did occur but didn’t hold. Oil ends the year where it started. Oil inventories remain low, but recession fears leading to price declines continue to permeate the market. The U.S. administration is doing its best to keep oil prices low, despite its supposed environmental storyline. Breaches in sanctions on Iran have allowed more terrorist-supporting Iranian oil onto world markets. The U.S. has also reinstituted efforts to secure Venezuelan oil. Hey, Joe — up here — you know we have a bit of the stuff, eh? And ours is less ethically challenged! Most Americans now feel Keystone XL should have been built.

Also, while public companies are maintaining capex discipline, private companies are pumping hard to take advantage of the pricing. Private companies face less political scrutiny.

My biggest miss, however, was the performance of the TSX. I predicted it would do slightly better than the S&P 500. It is currently up just 4.8 per cent. Adding dividends brings the total return to 8.1 per cent. That’s decent, but well behind the S&P 500.

There was a significant quirk in the U.S. market. Seven companies represent the bulk of the gain: Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla and Meta are on average up 70 per cent, while the other 493 companies are up a modest five per cent. The TSX performed comparably to the 493 companies.

Over the years my predictions have tended to be better than professional market prognosticators, but 2023 takes the cake for how well things turned out. It is important to note I don’t make many investment decisions around my predictions, knowing they can be erroneous as well. I might be a little more aggressive at times and a little more cautious at times, but overall, with market returns of about 10 per cent per year I simply stay invested and try to do a little better than the market.

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In early December 2022, the Globe and Mail published an article with analyst ratings and target prices for all 232 stocks listed on the TSX, Canada’s main benchmark. I printed the article and made a note to myself to evaluate a year later. How accurate were the predictions? This is the first time I had seen such a comprehensive list of projections, presenting an opportunity to either validate or invalidate my gut feeling.

I started the project looking up the current price of all companies listed. I then averaged the early December 2022 price of each company categorized by the 10 commonly used sectors. I then averaged analyst target prices for each company in the sector, and then the early December 2023 price.

I soon realized using an average of all companies wasn’t the best way to evaluate. Instances where analysts were way wrong on the optimistic side were offset by projections that were way wrong on the pessimistic side. I asked myself: “Self, I wonder how the stocks with the top three most optimistic projections compare with the bottom three most pessimistic projections?” Therein came the real story.

Please look first at the technology sector to best demonstrate how the wrong optimistic views could offset wrong pessimistic views. The all-company averages show analysts expected an average gain of 24.6 per cent and the stocks experienced a gain of 26.2 per cent. Pretty darn close!

However, the highest three rated companies had an average expected gain of 80.3 per cent but ended down 12.5 per cent, whereas the lowest three companies were only expected to gain 7.5 per cent but appreciated 31.4 per cent. The lowest-ranked companies dramatically outperformed the highest-ranked companies.

Was the technology sector an anomaly? In short: nope. I highlighted in green whether the top or bottom three companies outperformed, and in half the sectors the very-bottom-ranked companies outperformed the very-top-ranked companies. Even where the top three outperformed, there was often a huge gap between expectations and results. For example, the top three financial companies were expected to gain 70.3 per cent, while only gaining 15.3. The bottom three were expected to gain a modest 3.6 per cent and were up almost the same as the top three. Those are big misses.

This paragraph might bore you, so please feel free to skip it, but for technical accuracy I wanted to clarify something. Companies with higher dollar share prices have a larger influence on the averages than those with smaller dollar share prices. This is why I adjusted the two companies with share prices of over $1,000. Luckily, neither were in the top nor bottom three, but they would have had a distorting influence in the all-company analysis. After adjusting, they still had an outsized influence, but no more so than other companies with $200 share prices.

It is important to be mindful that this is only one year of information. Also, the target prices were an average of all analysts covering a stock and, as in all professions, there can be a wide variation in skill level. Finally, it would have been more accurate to do the entire analysis in percentage terms, but that would have required another day of number-crunching, and I can confidently say it wouldn’t have had a meaningful impact on the overall picture. The results are simply that stark, and even surprised the skeptic in me.

I will continue to ignore analyst target prices in my purchase or sale decisions.

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Farmers Edge, founded in 2005 in Pilot Mound, Man. by agronomists Wade Barnes and Curtis MacKinnon, has carved out a niche using field-centric data, artificial intelligence and its FarmCommand data management platform.

CEO Wade Barnes called it an exciting day during an online press conference Wednesday marking the event from the firm’s Winnipeg headquarters.

“It’s a transformational day for Farmers Edge and a huge change for all of agriculture as we see the digitization of the most important industry in the world,” Barnes said.

Barnes added that the company will use the new funding — totalling $125,001,000, based on 7,353,000 common shares issued at $17 per share — to build on its vision of digital farming.

“We’ll be scaling up our teams to grow the business,” he said. “We’ll also be developing new products.”

In many ways the IPO process represents the maturation of any company, he said, but added that it accomplished some specific things for Farmers Edge.

Most of the venture capital that’s been raised over the past few years has now been converted into shares, he noted.

“It leaves us with a really clean balance sheet, and lots of dry powder to go out and grow the business organically,” he said. “This is at a time when digital agriculture is growing rapidly.”

Responding to questions from financial journalists during the virtual question-and-answer session following company presentations, David Patrick, Farmers Edge’s chief financial officer, said interest was strong in the offering.

“Our underwriting partners told us there was about nine times the interest as there were available shares,” he said.

By 2 p.m. on the day of the IPO, share prices had already climbed to $19.64, rising $2.64 from the IPO price of $17 per share.

The company initially aimed to sell a 16 per cent stake with shares priced between $10 and $17 each, according to Feb. 9 sale documents.

National Bank of Canada and Canadian Imperial Bank of Commerce led a group of five investment banks on the IPO, and have an option to acquire an additional 15 per cent of the offering.

The company will trade on the TSX under the symbol FDGE.

— Gord Gilmour is editor of the Manitoba Co-operator in Winnipeg.

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Edmonton-based cannabis retailer Fire + Flower announced Wednesday it has issued a $25.99 million debenture, convertible to a 9.9 per cent ownership stake, to Quebec’s Alimentation Couche-Tard.

The Laval-based firm said its planned investment “will provide Fire + Flower with additional capital to further accelerate their expansion strategy.”

However, Couche-Tard said it has also received warrants which, if exercised in full, would allow it to boost its stake in Fire + Flower to 50.1 per cent.

Fire + Flower today operates 15 cannabis stores in Alberta, six in Saskatchewan and two in Ontario, with plans in place to open four more shops in Edmonton, one in Whitehorse and one at Swan River, Man. It also runs a wholesale distribution arm in Saskatchewan and a digital retail platform under the name HyFire.

Fire + Flower on Wednesday also began trading on the TSX under the ticker symbol FAF, levelling up from the TSX Venture Exchange.

“Through this strategic investment, we reinforce our intention to become a key player in North America’s cannabis industry,” Couche-Tard CEO Brian Hannasch said in a release.

“We are excited to see what we can achieve together with Fire + Flower, as we further expand in Canada and look to leverage our presence in the United States and beyond.”

Couche-Tard is a major convenience store operator across Canada and the U.S. and in central and eastern Europe. In recent years it began rebranding its Canadian Couche-Tard and Mac’s convenience stores outside Quebec and all its stores elsewhere under the Circle K banner, while keeping the Couche-Tard banner on its Quebec stores.

“Combining Couche-Tard’s expertise in scaling retail stores with Fire + Flower’s retail experience and proprietary HiFyre digital platform positions our company extremely well to capitalize on new cannabis markets as they emerge,” Fire + Flower CEO Trevor Fencott said in the same release.

Couche-Tard in February announced a multi-year agreement with Ontario-based cannabis producer Canopy Growth. That deal so far includes a trademark license agreement with the operator of a London, Ont. store under Canopy Growth’s Tweed banner. — Glacier FarmMedia Network

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If all conditions are met, the deal is expected to go through in the first quarter of 2019.

The buyer group, including AGT CEO Murad Al-Katib, Fairfax Financial Holdings Limited and Point North Capital, will indirectly buy all issued and outstanding AGT common shares it doesn’t already own, for $18 per share in cash.

“Following a fairly lengthy process to consider the interests of all stakeholders of AGT and the future of the company, the management group, together with the other members of the buyer group, are excited at the prospect of a new chapter of AGT,” Al-Katib said in a release Tuesday.

The share purchase price represents a premium of 36.7 per cent above the closing price of AGT’s shares on the TSX on July 26, when the buyer group first announced its intent for the company.

As of Tuesday morning, AGT will stop paying any further dividends on its shares, whether the privatization is completed or not.

AGT stock hit its market high in May 2016 at over $40 a share but has since fallen steadily in value as trade issues have hit the pulse crop market. India, Canada’s largest pulse buyer, has placed tariffs on pulse imports into the country.

Regina-based AGT has diversified in recent years, acquiring railways and increasing its holdings in food processing. It also recently became part of the Arctic Gateway Group consortium, which now owns the Port of Churchill and Hudson Bay Railway.

A special AGT committee which reviewed the privatization deal, receiving advice from independent financial and legal advisors over the past few months, unanimously recommends the company’s board and shareholders approve the deal. It will require approval from at least two-thirds of votes cast by all common shareholders.

The buyer group represents about 17 per cent of AGT shares, according to its July 26 announcement.

TD Securities provided the special committee with an updated opinion that as of Monday, the fair market value of AGT’s common shares is between $17 and $21 per share. AGT stock closed Monday at $15.84 per share.

AGT shareholders had spoken out against the privatization when it was initially announced. Letko, Brosseau and Associates, a Montreal investment management firm, said in July it believed the proposal “significantly undervalued” AGT.

Letko Brosseau, which said it holds an 18.7 per cent stake in AGT, reiterated Tuesday it still plans to vote against the proposed going-private deal.

The investment firm said Tuesday it “continues to believe” the proposed deal undervalues the company and AGT “could generate greater value for its shareholders over the long term as a public entity.”

The deal will be subject to approval from the Ontario courts as well as regulatory approval in Canada, the U.S. and other countries where AGT operates or owns assets. According to AGT’s website, those include Turkey, Australia, China and South Africa.

The privatization agreement also prohibits AGT from soliciting competing bids and imposes a break fee of $11.5 million, payable to the buyer group, if the company instead pursues another offer or changes its recommendation to shareholders.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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AGT, in a release Thursday, said it has received a non-binding proposal from a senior management group, led by company CEO Murad Al-Katib, to acquire all its issued and outstanding common shares.

The proposal values AGT’s TSX-traded common shares at $18 each in cash, about a 37 per cent premium over Wednesday’s closing share price of $13.17, which was down $1.38 from Tuesday’s close. AGT shares closed Thursday at $17.76.

The proposal from the AGT management group — whose members today have combined control about 17 per cent of the company’s stock — also calls for investment firms Fairfax Financial Holdings and Point North Capital to retain their current combined stake of about 10.5 per cent.

The senior management team would also remain in their current positions with AGT once a transaction is completed.

AGT, in Thursday’s release, said its board has agreed to establish a committee of independent directors to consider the privatization proposal.

There is no timetable set for the independent committee’s review and AGT said it’s not planning to make any further public comment until the review is complete.

One of the company’s major stakeholders cautioned late Thursday it plans to vote against the management group’s proposal.

Letko, Brosseau and Associates, a Montreal investment management firm which says it has control of about 18.6 per cent of AGT shares, said in a separate release it believes the proposal “significantly undervalues” AGT.

The investment firm said it “remind(s) the company’s board of directors of its duty to consider the interests of all shareholders in reviewing the merits of this offer.”

AGT is a pulse and durum buyer, processor and exporter with locations around the world. The company has diversified in recent years, buying railways and increasing its food processing divisions.

AGT stock, which in May 2016 topped out at $42.05, has since generally fallen in value as trade issues have hit the pulse crop market, with India — Canada’s largest pulse buyer — having placed tariffs on pulse imports.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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