When a company's employees go on strike, its stock is in trouble. But when a company's credit rating is upgraded to investment grade status - oh, the horrors! - then the real problems begin.
Viterra Inc., the Regina-based grain handling company formerly known as Saskatchewan Wheat Pool, has been hit with both developments. Earlier in the month, 200 workers went on strike over a contract dispute. Then, yesterday, DBRS upgraded the company's credit rating largely because it had achieved its merger targets after acquiring Agricore last year.
The stock fell 3.6 per cent yesterday, bringing it to its lowest level since November. It has fallen 25 per cent since mid-June.
What is going on here? It could be that the strike is overshadowing the upgrade, since it will likely have a more immediate impact on Viterra's results. As well, short-term investors could be moving out of the stock on the premise that the upgrade means that there is now just too much good news built into the stock.
More likely, though, Viterra is the victim of a general retreat from commodity stocks in general and "agri-business" stocks in particular.
See David Berman's Market Blog at ReportonBusiness.com
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