Canada Stocks Erase Gains as Grocers Rise, Valeant Rally Fizzles

  • Couche-Tard caps an all-time high after raising dividend
  • Valeant rebound from early loss fades in afternoon trading

Canadian stocks were little changed as a rebound in Valeant Pharmaceuticals International Inc. fizzled in afternoon trading, offsetting gains in consumer shares and Bombardier Inc.

Consumer-staples companies advanced 1.4 percent. Alimentation Couche-Tard Inc. added 1.7 percent to a record after the gas-bar and convenience store retailer raised its dividend and posted second-quarter earnings ahead of estimates yesterday. George Weston Ltd., parent of supermarket chain Loblaw Cos., jumped 2.9 percent, bringing its two-day gain to 4.2 percent, the most in a year.

The Standard & Poor’s/TSX Composite Index fell 4.41 points, or less than 0.1 percent, to 13,403.42 at 4 p.m. in Toronto. The index was up as much has 0.6 percent earlier in the day. It has dropped 8.4 percent this year, trailed only by Singapore and Greece among developed markets. 

Valeant retreated 0.9 percent, after surging as much as 3.3 percent to recover from a loss of 5 percent early in the day. Sydney-based Bronte Capital in a blog posting identified 78 pharmacies with names alluding to chess moves or to Stephen King novels it claims are probably tied to the drugmaker. The hedge fund has a short-selling position against Valeant that would let it profit on the stock’s decline, the company confirmed in an e-mail.

Briefly the largest company in Canada by market capitalization this year, Valeant has plunged 67 percent from an Aug. 5 all-time high amid scrutiny over its drug pricing practices and relationship with mail-order pharmacies such as Philidor RX Services, first highlighted by short-seller Andrew Left’s Citron Research.

Activist investor Bill Ackman has been a staunch backer of the company, increasing his fund’s stake in Valeant to 9.9 percent, from 5.7 percent as of Sept. 30, in a series of transactions starting in October, according to a Monday regulatory filing. Ackman also defended Valeant at length in a marathon conference call Oct. 30.

Oil producers fell 0.7 percent, halting a two-day advance, after a government report showed that U.S. crude, gasoline and distillate fuel stockpiles increased.

Energy and raw-materials producers, along with health-care stocks, have fallen at least 21 percent this year to lead declines in the S&P/TSX. A combination of slowing economic growth in China and a rally in the U.S. dollar due to impending interest-rate increases from the Federal Reserve as soon as December have crimped commodities prices.

Bombardier jumped 12 percent, the most in seven weeks, after a three-day decline brought it to the lowest level in almost three months. While profit and sales could fall next year, recent investments from within the company’s home province of Quebec have improved liquidity and buoyed the outlook for aircraft-development programs, Bombardier said Tuesday at its annual investor day in New York.

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