We won’t follow Fairfax’s lead

Article Excerpt

STELCO HOLDINGS $15 (Toronto symbol STLC) is a steel producer focused on high-strength steel for the automotive and construction industries. It went public in November 2017 at $17. In November 2018, Fairfax Financial Holdings (Toronto symbol FFH) announced that it had taken 13.7% ownership interest in the Hamilton, Ontario, steel producer. It bought 12.2 million shares at $20.50 each. Fairfax used a private share purchase agreement to buy the stake from Bedrock Industries. Bedrock now holds roughly 46.4% of Stelco’s outstanding common shares, down from 60.1% before the sale. In the quarter ended September 30, 2018, Stelco’s revenue jumped 84.2%, to $619.0 million from $336.0 million a year earlier. Sales were up due to higher steel prices. These resulted from Canada imposing retaliative tariffs on U.S. steel. The company earned $131.0 million, or $1.52 a share. That’s compared to a loss of $9.0 million, or $0.15. Despite the improved results, Stelco shares have fallen 40% since August 2018. That’s mostly due to investor concerns that steel…

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