TFI International’s announcement within its Q4 earnings report that it will redomicile to the U.S. won’t have a significant impact on the company’s operations, its CEO and chairman Alain Bedard told analysts this morning.

He confirmed Canada’s largest trucking firm will relocate its headquarters to the U.S., “to better align with our shareholder base and commercial presence.”

The announcement drew quick condemnation from Quebec pension fund, the Caisse de Depot et Placement du Quebec. It told Bloomberg on Feb. 19, “The company has not informed us of its intentions, and we will express our dissatisfaction. Quebec’s interests are always at the heart of our priorities as a shareholder.”

The pension fund took a 4% ownership position in TFI International last year, Bloomberg reported.

But Bedard said this morning the move won’t result in the closure of existing corporate offices in Canada, and marks part of the evolution of the company, which listed on the NYSE in 2020. It did so at the time using an instrument dubbed the multi-jurisdictional disclosure system (MJDS), an exemption that effectively fast-tracks a foreign-owned company’s ability to list on a U.S. exchange by accepting Canadian filings and meeting other conditions.

The MJDS provision has a ceiling on U.S. ownership which, once exceeded, requires more onerous reporting requirements if the company continues to be domiciled outside the U.S., Bedard explained. As of last summer, 49.9% of TFI International shareholders were American.

“This exception disappears the minute our shares owned by U.S. shareholders go above 50%. Then this is not going to work,” he said of the MJDS procedure.

Bedard noted the company has corporate offices in Montreal, Toronto, Calgary, Chicago, Minneapolis and elsewhere as it continues to evolve and grow its U.S. operations.

“To me, it’s like an evolution,” Bedard said. “Our business today is about 70% U.S. domestic, 25% Canadian domestic and 3-4% transborder.”

About 80% of its revenue now comes from U.S. operations. “We are not moving people from Toronto to Chicago,” Bedard insisted. “Every member of the TFI head office is staying where they are.”

Bedard also confirmed the company won’t delist its stock from the Toronto Stock Exchange. Still, the move requires shareholder approval. Further motivating the move, TFI International last year acquired flatdecker Daseke in a $1 billion-plus acquisition. That company came with U.S. military contracts that are easier to renew as a U.S.-domiciled business.

And, he added, being U.S.-domiciled opens the company up for inclusion in various stock indices it otherwise wouldn’t qualify for. Bedard also reiterated most of its future growth by acquisition will come in the U.S.

“The U.S. is the best place to be in the world in terms of business,” he said. “I feel really good about the U.S. economy. To me, it’s time to invest in the U.S.”

Muted outlook for freight markets

Even so, Bedard isn’t expecting a quick turnaround to freight markets, which remain mired in recession.

“It’s still a very difficult environment,” Bedard told analysts, noting further work must be done to reduce costs. “What we see in Q1 is, we’re still in a very deep freight recession. Volumes are not there, so it’s going to be a difficult 2025, I think…We don’t see anything changing over the course of 2025.”

Financial results

TFI’s Q4 earnings reflected a tough market, one which Bedard referred to as “a disaster.” Revenue climbed from $1.97 billion to $2.08 (all figures USD) thanks to the Daseke acquisition, but reduced overall volumes and weak demand drove net income down from $131.4 million to $88.1 million year over year.

For the full year, revenue was $8.4 billion, up from $7.52 billion the year before. But net income slid from $504.9 million to $422.5 million.

What is Norbert’s Gambit?

Norbert Schlenker, the president of Libra Investment Management, reportedly came up with the idea for Norbert’s Gambit nearly 40 years ago. The concept became more prevalent over the past 20 years.

Schlenker used his idea to convert currency between Canadian and U.S. dollars using inter-listed stocks. For example, some Canadian stocks listed on the Toronto Stock Exchange (TSX) are also listed in U.S. dollars on the New York Stock Exchange (NYSE). This inter-listing can allow an investor to buy in one currency and sell in the other currency, effectively converting dollars for only the cost of trading commissions.

An example of Norbert’s Gambit with RBC shares

On Feb. 14, 2025, Royal Bank of Canada (RBC) shares closed at $168.67 per share on the TSX. On the NYSE, they closed at $119.04. The price difference represents the foreign exchange rate between the two currencies. The Canadian-dollar shares were trading at about a 1.417 premium to the U.S.-dollar shares because the U.S. dollar closed at 1.418 Canadian dollars on Feb. 14, 2025.

As the currencies move, the shares on the two exchanges should be worth almost the same, after accounting for the foreign exchange rate at the time.

An investor may be able to purchase Royal Bank shares in Canadian dollars on the TSX and then “journal” the dual-listed shares to NYSE-listed Royal Bank shares, selling them in U.S. dollars. “Journaling” refers to transferring equivalent shares from one exchange to another.

A better solution: DLR ETF units

One problem with buying inter-listed common shares is that the shares can fluctuate in value.

Norbert’s Gambit can also be implemented using an exchange-traded fund (ETF) like the Global X US Dollar Currency ETF, which trades in Canadian and U.S. dollars on the TSX. The ticker symbol is DLR (Canadian dollar) or DLR.U (U.S. dollar).

The DLR/DLR.U ETF tracks the value of the U.S. dollar in either U.S. dollars or Canadian dollars, so the investor may be less exposed to changes in an underlying stock price that can be volatile.

Canada’s TSX closes down; energy, gold shares help pare losses

CANADA-STOCKS/ (UPDATE 2):CANADA STOCKS-Canada’s TSX closes down; energy, gold shares help pare losses

Reuters

Published20 Feb 2025, 03:36 AM IST

*

Toronto Stock Exchange closes down 23 points or 0.09%

*

Market fell almost a percentage point in early trade

*

Energy stocks up 0.87%, mining stocks gain up 0.1%

*

Barrick Gold shares up 2.5% after Mali government deal

(New throughout)

By Promit Mukherjee and Pranav Kashyap

Feb 19 (Reuters) –

Canada’s main stock index closed marginally lower on Wednesday, after a global equity sell-off was largely cushioned by energy shares, recovery in mining stocks and minutes of the U.S. Federal Reserve’s January meeting.

The S&P/TSX Composite index lost 0.09%, or close to 22.68 points, to end at 25,626.16.

U.S. President Donald Trump on Tuesday announced

tariffs on automotive imports

“in the neighborhood of 25%” and said that more details will be revealed on April 2. Duties will be slapped on pharmaceutical and semiconductor imports, he added.

Asian and European markets closed sharply lower on Wednesday, with the pan-European STOXX 600 index

falling 0.9%

, its biggest single-day drop this year.

U.S. shares

closed higher in a rebound after the Federal Reserve released the

minutes of its meeting

, with the S&P 500 posting its second straight all-time closing high.

Fed policymakers expressed concern about U.S. economic growth due to Trump’s policies, the minutes showed.

“The big picture here is that the markets continue to exhibit a surprising degree of resilience to all the headline risk,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth.

Investors in this bull market do not want to miss any buying opportunity, he said.

Some analysts said the Fed’s concerns on growth hint at a potential interest rate cut, boosting investor optimism.

In Canada, the financial sector, with a weight of nearly one-third of the composite index, lost 0.27%. Royal Bank of Canada, the biggest company by market capitalization, fell 0.02%.

The sell-off was largely softened by energy stocks , which rose 0.87% as oil prices held near a one-week high of $76 per barrel on worries about supply disruptions in Russia and the U.S.

Mining stocks also helped to contain the slide in the main index, led by higher gold prices and an over 2.5% jump in Barrick Gold shares.

Reuters reported that the

miner has signed

a new agreement with the Mali government to end an almost two-year-old dispute over its mining assets. (Reporting by Promit Mukherjee in Ottawa and Pranav Kashyap in Bangalore; Editing by Sahal Muhammed and Richard Chang)

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First Published:20 Feb 2025, 03:36 AM IST

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