tag:blogger.com,1999:blog-4631423976894080706.post1220139958712014735..comments2023-10-17T06:55:06.255-04:00Comments on the red corner: Enterprise Group - Q3 Updatered.http://www.blogger.com/profile/04089263693762295793noreply@blogger.comBlogger56125tag:blogger.com,1999:blog-4631423976894080706.post-19136730618892863912015-04-01T19:56:54.157-04:002015-04-01T19:56:54.157-04:00Many examples of insider ownership being no bar at...Many examples of insider ownership being no bar at all to pressing the destruct button. If you flip back (in this blog) to Dolan Media, for example, the eponymous owner-manager built it up over many years before hitting the button. <br /><br />In the case of E, Len, as you know, is on the Board of more than one other TSX Venture co. If one blows up there are others and there will be still others in the future. The trick (in this scenario) would be to be able to sweep it under "the commodity price collapse" blanket so as to be able to raise Other People's Money in the future. <br /><br />Right. Enough about this grubby little company. We'll see how the next few Qs play out.<br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-44054280603329176922015-04-01T18:50:36.520-04:002015-04-01T18:50:36.520-04:00How do you think high inside ownership plays into ...How do you think high inside ownership plays into this? If they blow a lot of money on a acquisition, and it blows up the company, that would be really bad for insiders as they lose millions? So you would have to assume they are pretty incompetent then.<br /><br />If they are only shady and not stupid, they will still look out for themselves and not risk blowing up the company?<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-66540900960853005412015-04-01T17:36:56.152-04:002015-04-01T17:36:56.152-04:00Actually I wouldn't initiate a position at thi...Actually I wouldn't initiate a position at this price. I don't like even the perception of shadiness. I would never, for example, participate in any of John Malone's games so you can imagine how I feel about this. There are cleaner, more honorable ways of making money. (I do understand,however, that Malone's approach is considered heroic and I understand why).<br /><br />Now that I've gotten myself involved in E, however, there are four things to weigh:<br /><br />1) It is trading at a low multiple, maybe 2x owner earnings;<br /><br />2) They say they won't engage in more than 5MM of capex so the truth may be the opposite:they'll blow a lot of money on an acquisition. <br /><br />It's unlikely that they can raise equity since bridges must surely (?) have been burned by now and so the acquisitions, if they occur, would have to be funded by debt and cash. <br /><br />If O&G doesn't pick up, the stock is toast.<br /><br />3) If they issue themselves options we'll have a good idea of what they were up to. If they instead buy stock then maybe their subsequent behavior will be exemplary, at least in the short term.<br /><br />4) Most inopportune sell decisions<br />happen at moments of maximum fear or disgust. I am not particularly susceptible to fear but I am prone to disgust. So I am giving myself time to process that sentiment before I do anything.<br /><br />The thing about these situations -- where one has questions management behavior -- is that the correct course of action for the investor is sometimes not clear cut. This could end up being a 6x and could also easily end up being a zero.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-62025445822762503622015-04-01T17:13:22.106-04:002015-04-01T17:13:22.106-04:00Hmm how does the resignation of the COO plays into...Hmm how does the resignation of the COO plays into this? And how likely do you think it is that value is unlocked from now on?<br /><br />I guess the implication of your theory is that it is better to hold the shares then, as value being unlocked is probably very likely in the near future then?<br /><br />Thanks for giving your thoughts btw, always apreciate it. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-79235869915671559432015-04-01T11:21:30.500-04:002015-04-01T11:21:30.500-04:00Well let's say that it's a theory that fit...Well let's say that it's a theory that fits better than incompetence.<br /><br />Remember that each subsidiary is operated by its founders while capital allocation decisions are made at the holdco level.<br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-74288122128573546722015-04-01T11:16:58.034-04:002015-04-01T11:16:58.034-04:00You mean they posted mediocre results on purpose t...You mean they posted mediocre results on purpose to tank the stock price? That is quite devious. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-37461432269080446962015-04-01T10:19:39.478-04:002015-04-01T10:19:39.478-04:00Nah. More likely that they're looking to issue...Nah. More likely that they're looking to issue themselves options on the cheap. They've already wiped out most of the warrants with their previous misses so this would be a logical next step.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-13499965207494770652015-04-01T10:15:26.801-04:002015-04-01T10:15:26.801-04:00My guess is mismanagement then? A good sign that t...My guess is mismanagement then? A good sign that their COO is retiring. In principal Jaruszak should have a huge incentive to hire a good COO now and unlock value?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-67157568104876648912015-03-31T09:39:53.154-04:002015-03-31T09:39:53.154-04:00Well they're saying now that TC Backhoe expens...Well they're saying now that TC Backhoe expensed a lot of maintenance capex in this Q. <br /><br />However they said 3 months ago that this Q was going to be the one where they show us the full force of their earnings power.<br /><br />So we are being asked to believe that this MCx was unexpected. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-4575772816542543592015-03-31T09:31:36.827-04:002015-03-31T09:31:36.827-04:00What is most likely cause of margin drop in utilit...What is most likely cause of margin drop in utility section? Seems strange that they invest so much, and then less ebitda then Q1. Or were those extra hydrovac trucks a complete waste? Since revenue is barely up as well.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-39380792703177624982015-03-30T18:52:36.932-04:002015-03-30T18:52:36.932-04:00Saw it, thx. More excuses. Jam tomorrow, etc. Slea...Saw it, thx. More excuses. Jam tomorrow, etc. Sleazy stuff.<br /><br />The conundrum is the same but more acute:<br /><br />-- Margin compression in 2015 and 5 in capex ought to translate to FCF/share of $0.11<br /><br />-- on the other hand,these are not people that I trust to do the right thing.<br /><br />We know now why they've been tweeting their share price rather than buying.<br /><br />I'm going to think about it some.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-79467528130872492252015-03-30T18:40:18.249-04:002015-03-30T18:40:18.249-04:00Results are out, and quite disappointing. Pretty b...Results are out, and quite disappointing. Pretty brutal margin compression in util/infrastructure. Hoping mostly due to the items they outlined and less due to pricing. At least they have a conservative capex outlook for 2015.<br /><br />Any thoughts on the results? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-3162500482871585462015-03-23T13:57:43.452-04:002015-03-23T13:57:43.452-04:00It is a bit frustrating dealing with overly promot...It is a bit frustrating dealing with overly promotional management teams. <br /><br />I've been looking over a company that may interest you-ESSX. It has been written up recently on SA and VIC. Liquidation story, seems right up your alley. Management does however paint a pretty picture, perhaps worthy of skepticism. <br /><br />I also wanted to thank you for your hints on Thorntons, I have taken a small position and ordered some of their products as well. My favorite form of research :)<br /><br />Gotta try some Tsui Wah next.Rubycapnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-38108824268476279252015-03-23T13:46:02.150-04:002015-03-23T13:46:02.150-04:00Thanks for this. Des & Keith are the power cou...Thanks for this. Des & Keith are the power couple of BS so I tend to ignore what they say.<br /><br />Bottom line = this is a business that should generate $0.11/share per year of FCF in a stressed environment. <br /><br />The risk is that they'll blow the FCF and dilute.<br /><br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-50983249753974150712015-03-23T13:04:05.631-04:002015-03-23T13:04:05.631-04:00Hey Red,
You have probably seen this, but just in...Hey Red,<br /><br />You have probably seen this, but just in case you missed it, the following is a December update from an oil and gas newsletter covering E.TO<br /><br />"ENTERPRISE GROUP – E:TSX; ETOLF-PINK A huge new hydro-electric dam in north-east BC—called Site C—was approved yesterday by the provincial government. This dam is supposed to power much of any LNG development that may come to the province in the coming years. Enterprise has a lot of leverage to this mega-project. Their Hart Rentals and more importantly their new Westar acquisition in Fort St. John would be able to supply everything from soup to nuts for this multi-billion dollar dam. (Of course they don’t sell food that’s just an expression). I had a chat with Des O’Kell, their Senior VP about Site C this morning. He said they would be need all kinds of light towers, heaters, generators and medic/command centres for first aid, office trailers…and it’s very near their Fort St. John acquisition late this year. Whenever I get management on the phone I try to keep them talking…talk talk talk talk. About any and everything. Just keep them talking; you never know what gold will fall out of their mouths. Keep agreeing with everything they say…uh huh..yep…ooooo, tell me more about that sounds really cool….(and they know I don't short...) O’Kell said their NAV is 53.5 cents a share, and generally stocks like Enterprise don’t have that big a discount to their NAV as we see today. He said that so far there has been no turndown for them at all; no projects have gone away. They like to think they’re in as good a shape as they were four months ago. Arctic Therm (ATI) is doing really well. This is the branch that heats up pipelines so they expand before the hot oil or gas goes in them—they have to go through this thermal expansion so they don’t burst. Last year their small ATI heater rigs numbered 105—this year it’s 175. Their big ATI machines are the focus for them as they’re unique. He said they have customers now like Encana, Husky and PennWest. It’s a very profitable product in winter—the highest I’ve ever heard—but the job now for them is to get these units working 12 months a year, not just in winter. Hart Rentals is now doing over double per day rental compared to same period last year, in January 2015 Hart and Westar be 100% utilized all through Q1."<br /><br />Looks like a strong few Q's this winter season. <br /><br /><br />Rubycapnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-54721970550613815152015-01-06T10:58:57.603-05:002015-01-06T10:58:57.603-05:00David, I'll be writing about Future Bright and...David, I'll be writing about Future Bright and my other important positions in the next few days. <br /><br />One can answer the question: How much is Future Bright worth without its casino restaurant operations from the company's financial statements. I remember you saying that you're starting out in your investing journey so, in the meantime, I think you might enjoy coming up with your own answer to that question. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-18567678051111375642015-01-05T02:55:48.267-05:002015-01-05T02:55:48.267-05:00Hi Red,
About Future Bright;
2014 has been a bad...Hi Red,<br /><br />About Future Bright;<br /><br />2014 has been a bad year for the revenues in Macau gaming with a decline of 2.4%, even in the month of december the decline respect last year was a 30%. <br /><br />The reasons of this drops maybe are in the last visit of the president of China to Macau, where he don´t see with good eyes the fast growth of the gaming in this region.<br /><br />How do you think this is going to affect revenues for Future Bright?<br /><br />Thanks.Davidnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-10781207676697360182014-12-31T15:14:44.567-05:002014-12-31T15:14:44.567-05:00I haven't but I will. Thanks for mentioning it...I haven't but I will. Thanks for mentioning it.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-87978366696261905942014-12-31T15:11:25.162-05:002014-12-31T15:11:25.162-05:00Have you looked at NRW Holdings? It was recently ...Have you looked at NRW Holdings? It was recently removed from the ASX 200, is having trouble with a major contract and, like other service providers to the extraction industries, is suffering a general slowdown. The combination of these events has pushed it down from about 1x tangible book to about .33x tangible book in the last fourth months. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-87793760879211508442014-12-30T19:40:22.272-05:002014-12-30T19:40:22.272-05:00Looks like it is trading at 6x forward EBITDA guid...Looks like it is trading at 6x forward EBITDA guidance? From initial scan, I think I like mine better -- I'd enjoy exiting at 6x EBITDA.<br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-67903822672070181702014-12-30T18:51:47.086-05:002014-12-30T18:51:47.086-05:00Red, would like to drop Civeo on your radar? Lot&#...Red, would like to drop Civeo on your radar? Lot's of similarities between emeco. Dropped tons in the past. Probably not more interesting then your current three mining/oil names though. But maybe you differ from opinion. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-57265215947811625752014-12-30T17:27:48.775-05:002014-12-30T17:27:48.775-05:00ADL,
Thanks for mentioning Italmobilare to me. I...ADL, <br /><br />Thanks for mentioning Italmobilare to me. I'll have a look at it.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-62419896055792915002014-12-30T17:25:23.395-05:002014-12-30T17:25:23.395-05:00Anon,
Nothing beats buying deeply discounted secu...Anon,<br /><br />Nothing beats buying deeply discounted securities. Macro is complicated -- unfathomable, really. <br /><br />I've (unfortunately) been following this particular narrative for a long time. There is a class of persons who, for various reasons to do with personal identity formation, wishes it to come true. It probably won't. If it does you'd have a hard time hiding from its consequences. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-77169074537843181422014-12-30T17:19:07.350-05:002014-12-30T17:19:07.350-05:00S Hughes,
It doesn't make sense to sell this ...S Hughes,<br /><br />It doesn't make sense to sell this particular business at this price. <br /><br />I think what you're seeing in the comments above is frustration that things are being made to look murkier than they in fact are. E is on of the better r/r propositions in my book. <br /><br />I am particularly encouraged by the popularity of the "oil sands are dead" narrative. <br /><br />David,<br /><br />You're right to suggest that low gas prices (etc) reduce the appeal of coal. What is interesting about Hargeaves, however, is that they are shutting down the Maltby coal mine, freeing up working capital, and returning that cash to investors. <br /><br />A reasonable person could look at the amounts involved and conclude that it constitutes 50% to 80% of the company's market cap.<br /><br />One would then be left with a stub that controls an impressively profitable and cash generative coal trading business at a very low multiple.<br /><br />Combine this with the company's promise to emphasize sustained capital return to investors (over investments in growth) and one could conclude that a share price of 1100p strikes the appropriate balance between risk and return.<br /><br />(And thanks for your earlier comment. I was on vacation and just saw it, Happy New Year)red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-8805143196843397412014-12-30T12:06:13.169-05:002014-12-30T12:06:13.169-05:00Folks bailing out of Enterprise?
While I didn'...Folks bailing out of Enterprise?<br /><br />While I didn't make it a 10% position, I did make it a 5% position, and so the decline has certainly hurt. This has been compounded by my overweighting in energy prior to the decline in oil prices. <br /><br />However, this should all be put in perspective...For 2014Q1-Q3, they did 12.8 million EBITDA. This includes the previous crap quarter. During 2013Q4 (before they acquired HART, and thus much of their revenue was derived from non-energy work), they did 10 million EBITDA. That is an 3.8 EV/EBITDA based on TTM quarter's earnings (current EV is $87 million USD). And it looks like it is trading for 70% of BV now...<br /><br />Not trying to say everything is peachy...obviously with the decline in crude pricing, we should expect some deflation in pricing for energy service work. (To put that in perspective, BP just instructed their recruiting offices in Aberdeen Scotland to reduce wage offers for offshore work by 15%).<br /><br />So the question is how Q4 EBITDA (and guidance for FY2015 EBITDA) will be impacted by recent capex and acquisitions, along with deflation in pricing for energy service work. <br /><br />The CEO selling shares obviously adds a wrinkle to this. For the poster who mentioned that there were rumors of analysts not liking management, could you elaborate a little?Stephenhttps://www.blogger.com/profile/05551829169517890230noreply@blogger.com