Saturday, August 30, 2014

Macro Enterprises

I maintain a watch list of two hundred or so names that I have looked at and think are interesting in the expectation that the one or more will, sooner or later, come down to a price I'm comfortable paying. I use google drive.

Macro is a straightforward enough idea that it requires very little narrative and therefore provides a good opportunity to share the form and content of my watch list. 

It links to more detailed notes and to a spreadsheet whose essential elements look like this:


Disclosure: I am long MCR


  1. I enjoy reading your blog. Thanks! What website do you use to keep watchlists? I've been through a couple, and can't really decide which I like best.

  2. Thanks for visiting. I use google drive or google docs or whatever its called now.

  3. red,

    Awesome post! Thanks for getting it up promptly & sharing how much of what you do.

    A few followups if you would continue to be so kind...

    On MCR:
    - what do you mean by the "acquisition put" at $8 in 3 years? And the "implied pricing discount" in the excel tables?

    On the watchlist method:
    - what other "types" of investments do you classify besides turnarounds?

    - how do you determine the "Payoff" timeframe? Do you have payoff dates for every one of the watch list? This seems like such a hard part of investing (i.e. Ben Graham's answer to the SEC commission on when/why stocks become fairly valued "i have no idea.") What about stocks that are generally cheap, decent businesses but have no catalyst?

    - when does a stock get kicked out of the watch list? Don't you miss out on ideas if they leave?

    - Finally, how much research do you do on a biz before adding to the watchlist? Do you read every AR, transcript, analyst reports, etc? Could be a whole post on this I'm sure

    Definitely going back through archives, great blog and learning a bunch. Thanks.



    In 3 years the Western Canada LNG cap ex boom should be well underway and everyone's going to want to sell/rent equipment and services in that space.

    In that scenario one can imagine that a private buyer would calculate something like the following:

    86m net operating assets at 2x turnover ==> ~170m revenue at 17% EBIT margin ==> 30m in EBIT which can support 5m in interest payments at 6x cover.

    5m in interest payments implies ~85m in debt financing at a 6% rate. (6% probably okay assumption for an asset-backed loan)

    So buying the biz for 8/share implies 185 cash, 85 debt and a cash-on-cash return of 10%. Easier than starting from scratch and trying to drum up new business.

    This would be abstract/useless line of inquiry in the case of a majority owner but the CEO owns 30% and it's plausible that most shareholders would accept an $8 offer if the stock were still sub $4.

    I also do GARP, liquidations, spinoffs, etc. Anything mis-priced, really. I prefer GARP to any other.


    Sometimes it's not possible to know. My view is that investment returns are a function of Safety x Upside x Time x Taxes, so I tend to favor situations that score well on the first three variables.

    In MCR's case,mgmt suggested in the conference call that revenue & margins will return to normal in Q4 and beyond, so it seems likely that investors will pick it up again then or soon after.

    More generally, I'm looking for a breaking point. Genuinely attractive businesses doesn't trade at 5x earnings often or for long; plausible differences don't often trade at sub 2x earnings; and event-driven names often re-rate after whatever it is that has caused the overhang. If I know the stock well I think I should have a grasp of the what, how and when of the re-rating. Life's too short to mess with the others.

    Ben Graham: he may have said that but he was also a liquidator and an arb guy. Plus he said different things at different times. Worth looking more at what he did than what he said, imo.

    [I don't find everything Graham said convincing, however, and I'm not sure that he found himself convincing on some topics. I say this even though I want to avoid a hermeneutic discussion re: II or SA if I can:)]


    Some stocks see their share price fall below the trigger price and I just can't bring myself to buy, usually b/c I can't shake the feeling that I haven't grasped the whole story. Those stocks get removed altogether when that happens.

    Sometimes I find the same thing but better (better exposure to theme, better economics, better management, better price, better MOS, better time frame), so the weak link gets kicked out.

    I like to have a variety of styles going at the same time (GARP, turnaround, liquidation/partial liquidation, geographic exposure, pro- and anti-cyclical), so that acts to limit the sameness of the names in the watch list.

    Thx for reading and for the questions.

  5. Oh, and


    If it's on the list it's in theory ready to be bought so I've done as much work as I can on it. I update the numbers, run through the story again to see if its still sounds like "the truth", and that's more or less that.

    Different ideas require different levels of effort. HA took weeks of reading, number-crunching, thinking -- in daily 2 hr blocks.

    Not sure there's too much to contemplate in the case of MCR, so reading through the filings, transcripts, background materials etc took maybe four or five hours. I like to spread that time out over several days so that I'm thinking about it when I'm in various states of mind.


    I miss out on very many stocks that I've spent time on, wasn't sure of or didn't quite come down to my price. That's the nature of the game and especially so in a bull market. As long as I don't lose money on the ones that I do pick I don't mind.

  6. Hi Red,

    Could you please explain how do you estimate the value of the share? Do you say 10 $ for share but I don´t know which multiples do you use. And how do you get to there.


  7. I've said EPS of $0.78 so I'm suggesting that a P/E of 12.5x is fair for Macro.

  8. Thanks for the additional detail - much appreciated and learning a lot.

    Ever look at Hargreaves Services (HSP LN)? Down 9% today on strategic review & uncertain outlook for UK coal, 5x trailing earnings.

  9. I'm aware of HSP though I'm no expert. Always seemed to me that the safer way to bet on coal would be via Fenner, so never really dug into it properly. Am I missing something obvious/important do you think?

  10. On HSP:

    - excellent management (increased value of company 15x in 8 years with shrewd acquisitions (10 companies at avg of 6x pre-tax earnings). Now divesting non-core at attractive returns

    - Market focuses on bulk / power station coal market but real profits in specialty coal which are not affected by int'l coal prices

    - mid-to-high teens ROICs business with little price risk outside of production division (all competitors have went bankrupt on production side)

    - analyst (recently lowered) estimates are $1/share for 2015, so 7x earnings for biz that could be debt free by 2015/2016

    Would be interested in your thoughts if you take a look

  11. I'll have a look & let you know what I think in this thread. Thx for the heads up.

  12. Maybe I have not understood what you are trying to do in your pro forma table. Are you just netting out the failed pipeline project? If so why is (e.g.) your H1 2014 pro forma revenue not 106.9?

  13. Looks like I was caught in two minds -- between netting out and adding back. Rev should be 106.9. Thanks for pointing it out.

  14. @barry: I would be carefull about coal power. At least putting 10-15x multiples on coal companies. Musk says that solar could soon be a very large % of power. And he could be right. Efficiency is going up for solar and costs are coming down.

    Then you might say that you do not have a lot of sunny days in the UK, but 90% of the energy will go through the clouds anyway.

    I mean his argument on why solar could become very big is quite convicing. Before you invest in energy, read what that guy has to say about various things imo.

    The other interesting thing is also that costs of batteries will come down in the future, and that your electric car could function as your house battery pack at the same time. BYD cars already have this option.

    Could be wrong on all this, but I would be very careful to contradict someone as smart as Musk in this regard.

  15. Red- thanks for your post, if you adjust book value for the valuation of their re-valuation of the PPE in 2014, you're basically trading at 1x book. Clearly this isn't as pertinent as it would be to a financial but was wondering if you had used that in your valuation.

  16. Hi Ryan,
    Slightly less than ~1x book sounds about right to me:
    $44 in non-cash working capital + $81 in appraised PP&E - $2 in net debt = $124 NAV against a market cap of $103.

  17. Does this mean they might issue new shares?

    "In addition, the Company has engaged the advisory
    services of an investment bank to assist in evaluating its financial requirements for large scale projects.
    In this regard, the Company also commissioned an independent valuation of its existing fleet of
    equipment which provided for a fair market value in excess of $82 million before fiscal 2014 additions. "


  18. That is my assumption. Could be raising debt, though. Either way, it's likely the balance sheet gets upsized.

  19. And one more: why did revenue more than double in 2011? and EBIT margin more than double in 2012?
    What makes you confident that the mid-teen EBIT margin is realistic?

    thanks d

  20. issuing equity at today's prices would be bad. do you agree?

  21. Acquisition of NAEP, a nice pipeline integrity biz.

    B/c margins since '11 make sense for the business mix now in place and b/c that's the mgmt guide in the conference calls.


    Bad for whom?

  22. thanks. I didn't review the company in detail yet. Looks interesting.
    Ok NAEP acquisition & current business mix explain.
    Just one other question: will the move to large scale projects (temporarily) impact margins?
    Bad: for current shareholders? Don't like talk of share issue when stock price is low. Even if rights are distributed to existing shareholders.
    Not sure if you agree.

  23. Yeah, so it looks to me that ex big projects you'd see margins in the upper 20s. Large projects in the mix seem to bring overall margins down to the 23% to 25% range. In exchange you get very slightly more visibility and regularity.

    I'd rather they raise debt than equity but If they raise equity and invest the proceeds at historical returns on capital (2.5x turns, 14% after-tax margins) then every $1 raised becomes $2 in value.

    If the CEO is a 30% owner it's reasonably likely that that's what he's thinking of.

    Would makes sense to wait until Q4 or a little later to see if share price recovers and then raise equity.

    But this idea doesn't need a genius at the helm for it to turn out just fine.

  24. Red, what do you think about this:

    It seems Emeco is pretty dependant on Canadian oil sands. And this method would lower demand for their large dump trucks.

  25. I think that's something to think about at a share price above 50. The Canadian assets are under long term maintenance contracts and the number of these seem to be expanding and broadening rather than shrinking.

    Emeco is a special situation partial liquidation (rather than a GARP) story: if it makes it through the next year I'll see a return I can live with and I'll have a choice between moving on or sticking with it.

    Thanks for the link

  26. Barry,

    I liked it enough to buy some today

  27. Red,
    thank you for posting about your watchlist.

    Do you have some code for google spreadsheets, which can automatically trigger an alarm (E-mail, SMS, whatever), if a certain threshold is reached?

  28. Hmm I don't, no, for a couple of reasons:
    1) I didn't(don't) know that I had that option as a technical matter; and
    2) I look at the watch list several times a week as I work on (and therefore add/subtract) new ideas.

    If I were super organized (and if it were possible) I suppose I'd add a function to remind me about upcoming results releases so that I could refresh my memory and thinking on a stock ahead of the event.

    I worry, though, about becoming a slave to the process. This is supposed to be fun and whimsical.

  29. Whether or not it'd take all the fun out of this investing process, I'd be very keen on hearing how to get RELIABLE notifications on company earnings dates. When you have for example +100 companies on your watchlist, it happens more often than not that you notice months later that some company had announced earnings.

    If someone has an idea of how to implement this (tried Google Finance: unreliable and doesn't work for smaller companies, Google Alerts: couldn't get it to work, etc.) I'd be super-happy to hear!

  30. Sorry red, it's my first time here - is it just me or nothing appears in the Methodology tab?


  31. Hi. It's empty, I'm afraid. I should get rid of the tab until I actually write something.

  32. Welcome aboard with Hargreaves! Curious about your 60-90sec thesis, now that you took a look & purchased some shares?

  33. It's not a bad business -- it has been accident prone, obviously, and has therefore exhausted the patience of most. That accounts for the valuation.

    I see 2 steps to value creation:

    a) Management and the major shareholders are grown ups so we should see significant working capital release from disinvestment in low return mining. Then cash returns to investors via special dividend/buyback from that could be very significant - maybe 1/4 to a 1/3 of the market cap. (One would think this would happen at/before the next interims report)

    b)Beyond that, what remains would be a profitable growing, cash-generative business with ROICs potentially in the 30s. One wouldn't be mad to put a 12x multiple on earnings. (I suspect it well be less focused on the UK and more focused on continental Europe over time)

    So, maybe 40 million in WC release and 300 million in multiple expansion --> shares could go to 1600p or so as trauma fades.

    The principal attraction of these shares is that it's hard to see a downside from the current valuation so I'm willing to see how this plays out.

    That's the quick and dirty. Do you see it differently?

  34. Thoughts on enterprise management? CEO has a somewhat shady past. CEO at 3 companies at the same time as well.

  35. I've not seen anything that suggests that either of the two principals are shady.

    They have both failed in the past. Whether one thinks that the inevitable risk of entrepreneurship or an irredeemable character trait is going to come down to judgment.

    Leonard seems to me to have behaved well in the case -- I can't remember the name of the company; I can look it up if you want -- where he and the bad actor held cross-directorships in each others' companies.

    What I feel -- and have always felt uncomfortable about -- is that the IR function is far too promotional for my taste and targeted too much in the direction of the gold bug & junior resource newsletter crowd.

    I suspect the above is a consequence of O'Kell's past career as the IR rep for junior resource companies.

    Having said all that, I'd be interested in hearing specifics on the how and why they'd cheat the OPMI when the path of least resistance is to build the company, sell it, share in the proceeds, and live to fight another day.

    Thanks for the question.

  36. Hello Red,
    Macro realy have catched my interest from NAV growth perspektive, i currently wouldnt bet a ranch on high profitability over long term and valuing them from the earning power perspektive.
    It seems to me, that the probability is high, that their profitability will go down rapidly, after the market get saturated, which i think can come as fast and unexpected as a lightning from blue sky.

    1. Do you think, the market dynamics will warrant profitability near current elevated levels for at least few years?

    2. Do you think, that they have demonstrated better operational effectiveness, then their competitors?

    Thank you for one of the best investing blogs on internet.


  37. Hi Mira,

    My sense is that companies that add value to their clients get paid for it.

    If you look at the experience of the Australian mining boom over the past ten years, for example, mining services companies' ROIC has been reasonably high and stable if they have some service component (implying relationships, trust, stickiness, learning curve efficiency, etc) and low and stable if they don't. Examples of the former would be Emeco and MacMahon and an example of the latter would be Boom Logistics.

    There is a reasonably material service component to Macro's offering and some of it (e.g. pipeline integrity) requires trust/relationships. If you own a pipeline, you're not going to go with the lowest bid because it's the lowest bid.

    I can see Macro doing 14% to 15% ROIC at maturity and IC is very likely going to grow, too. If we put invested capital at 150 in 2016 and value the enterprise at 1.4x invested capital, the shares are worth ~$5.50 --> 25% IRR.

    And one would have a couple of years to assess whether there is upside beyond that.

    Obviously, this is premised on Macro exhibiting a degree of competence in executing its current contract pipeline.

    Thanks for visiting the blog.

  38. do you download the latest stock prices into your spreadsheet? how does that work? tnx

  39. well, I use google drive so the code for stock price is

    =googlefinance("TICKER", "PRICE")

    Alpha Vulture has provided us with alternatives here

  40. red,

    Thanks for another great article. I had one quick question about the multiples you were using. I see no reason why 12.5x eps wouldn't be fair, but then looking back at past multiples it seems that even in a successful 2013 it only traded at 6 times, and in 2011 from what I can work out it was trading at about 2 times. Do you have any idea why the multiples were so low, and why they might be more generous in the future?



  41. Thanks for reading, Toby

    I can give you my sense of it:
    pre-2012 Macro was a thinly traded nano cap with negative retained earnings and an EBITDA margin so low that you couldn't be confident that earnings would be positive in the down slope of the cycle.

    Post-2011, it was larger and more frequently traded and therefore both suitable for at least some institutional interest and more likely to attract M&A interest.

    Bigger companies with positive retained earnings, higher liquidity and fatter EBITDA margins attract better multiples. Bigger companies also take the investor relations function more seriously.

    Will it earn a 12x multiple? I don't know (and I don't see why not as it grows) but 6x at least seems a safe bet.

    I note, too, that Enterprise Group's roll up strategy is premised on this size/multiple idea.

  42. Thanks for the clarification on that. Admittedly, at current prices, it hardly matters what multiple you put on normalised earnings.

    On another note, have you had a look at XPEL Technologies, written up on Moatology and the VIC? Definitely not trading at 3xish earnings, but equally isn't absurdly expensive, when arguably it should be considering past performance and the opportunities ahead.

  43. Thanks, Toby - I'm a big fan of Moatology and, all things considered, I like OPRX better than Xpel.

  44. when would you buy OPRX? I guess it is a bit too speculative for you with no earnings?

  45. Sub $0.80/share seems an attractive price if you think it can do $0.16 EPS in 2015 earnings and go on from there. Never know, it might get there.

  46. Thoughts on XCO? a few smart investors got large stakes in it. And it is free falling now.

    I find it hard to judge intrinsic value of these exploration stocks though.

  47. Looks like it would take many hours of intricate work to sort out whether it survives as a going concern. The effort/risk/reward is not to my taste.

  48. Hey red, no love for outr? It seems cheaper then super 800?

  49. It's not cheaper than Super 800.

    Still, OUTR is more interesting now that the streaming JV is dead. I'll wait to see how ecoATM progresses before I jump in.

    The concept makes no sense to me but, on the other hand, the company reports high ROICs in the small number of installed locations. So, we'll see whether this translates into the heartland and survives the challenge from alternatives.

    The dollar sample idea seems a lot more plausible and, if it works in practice -- price point, distribution, supplier backing etc - the investment decision would be easier. I don't mind playing the time arbitrage game but I don't want to guess.

  50. I take it your quite pessimistic on their redbox business, and that is where we differ in opinion on it's cheapness. As for super 800, it seems to trade at 10x earnings? I guess that new contract plus operating leverage makes it cheap then?

  51. Actually, I'm not pessimistic about Redbox. There's a rump business that will survive for a long time - parents, latinos, students, working poor, specialty audiences, etc. Management is heavily data-driven and I don't doubt that they'll squeeze a lot of FCF out of that segment.

    The issue is this: a lot of the FCF is going to be pumped into ecoATM. Will that generate a return beyond San Francisco, Manhattan and Westwood? I honestly don't know. If it doesn't work will management shut it down quickly? I don't know.

    Managements don't generally like to preside over a shrink of the business so, unless the sample business works, this situation could end up being a war of attrition between declining FCF, dept paydown, and share buybacks.

    At the current market cap, there's value there -- probably. But it's not easier, safer or cheaper than anything I already own in my core investments portfolio.

    800 Super is trading at 5x forward earnings, non-cyclical, healthy payout, etc. Not correlated with my other holdings and not a battleground so I don't have to think about it which is a plus.

  52. Hmm if your interested in my opinion. Core business generates about 300m$, possibly more if they up prices for redbox.

    Installing all planned ecoatm's will cost about 270m$. So unless they let it bleed badly it should probably not cut too much in their FCF?

    And it seems economically coinstar does not make much sense either. Free at the bank with some more effort vs like 8% in those Coinstar kiosks. But people use it because it's easy. As for Ecoatm, I think 80% of old devices are not traded in. I think the advantage of these kiosks is that they function as free billboards in busy area's at the same time. They draw in the non price sensitive customers that see trading in a device as free money because they were not planning to do this anyway otherwhise. Most of it's users will probably not be people like you and me who would look for the highest bidder online.

    Same thing for redbox, I download my movies for free. Why rent?

    If it is a hit, OUTR could generate 4-500m$ in FCF within a few years. Add in buybacks to the mix and you got a multibagger.

    Anyway, thanks for your input :) .

  53. Hi Red,

    Missing new writte up....

  54. Red,

    Saudi Arabia is trying to keep oil prices down for avoiding the competetition of fracking.

    If Saudi Arabia success and can keep the oil prices in the actual levels how do you think it will affect to companies such Enterprise Group or Macro Enterprise.



    You can look through their annual and interim reports and see how much of their income is attributable to O&G expenditure and how much is attributable to infrastructure and maintenance work.

  56. Any thoughts on the Enterprise sell-off? Seems pretty harsh and I can't identify a good reason for it. I notice you've added to your position...

  57. Well, the reason is obviously the recent fall in oil prices. Oil goes down, oil production follows suit, etc.

    E's utilities & infrastructure segment is running at 14.9m in EBIT
    less 4.5 in corporate overhead
    = 10.4 in earnings = 8.5x P/E

    This assumes that the equipment rental segment is at breakeven. For that to happen utilization rates would have to drop by 80%. And that doesn't strike me as very likely.

  58. Now about 6.9 P/E based simply on Utilities and Infrastructure segment.

    Sell-off in Enterprise was overdone. When they report upcoming earnings, I think there will be a step-change in share price when folks finally realize their earning power.

    Should be interesting to hear some details about their new drilling/tunneling equipment.

  59. lost some faith on Emeco? Or just diversifying from whole commodity sector.

  60. Too much exposure to the oil sands. Will come back to it after E & MCR play out

  61. Red, what kind of filter tools do you use to find these stocks? Just the google stock screener?

  62. I don't screen but I do try to read a little on what companies do and take it from there. Pretty clear that certain industries are better than others so i tend to read based on themes of various kinds: rental companies, Macau, interest rate elasticity, etc. Look at one and one'll find comparable companies and that leads one to best in class. Value it and wait for price to come to an attractive level. Rinse and repeat.


    Makes some interesting points on Canada and China. And also Japan. Thought you might want to see it, in case you didn't.

  64. Hi Red,

    You are selling Lombard Risk but I haven't seen bad news about the company.

    Are you just increasing your cash, or loosing confidence un LRM.


  65. As BC gas pipeline gets delayed, your time horizon will be postponed, right? Price action suggests that way. Not too bad for the long, but not fun in the deep red now.

  66. Red.

    I think you made a mistake in your tracking portfolio. You've written that you sold macro enterprise at 3.30. Maybe yo want to write 2.30.

    And you finally sold all your position in LRM, any particular reason?


  67. Bought at 2.30. I'm not selling Macro. Thx fo rpointing it out.

    I sold LRM because I think the released funds will work harder if allocated to Future Bright or Macro or Enterprise over the next few months. LRM becomes materially FCF positive this time next year so I hope to be able to get back into it by then.

  68. I wanted to say "buy"instead of sold.

  69. Thanks and good luck with Barça, but this year i think will be for Real Madrid : )

  70. Hey red, any thoughts on intralot. Market cap of 160m euro's, could do 40-80m in FCF. I have trouble understanding their financials though.

  71. Hey Red, thanks for sharing always a pleasure reading your blog. My question is regarding their new contracts going forward, from what I am deducting from their financials the margins are eroding and looking back to past operating income might be misleading. How are they going to keep the margins stable in a commoditized industry? I might be wrong, fairly young at this.


  72. Anon - I don't know Intralot, sorry.

  73. Well, I think they talked about forward gross margins in the low 20s in the last quarterly conference call, so there's that.

    It's also possible to look at comparable companies in North/Western Canada and see what margins they manage to achieve.

    I'd also say that the pipeline integrity work which is a significant share of the overall business is probably not very price/cost sensitive. You can imagine that the client would rather pay a little extra to make sure that the job is done right rather than be at the wrong end of the publicity and financial costs associated with a leak.

    If there's a prolonged period of low oil prices we might find that there's an oversupply of equipment in the region that will cause marginsto be pressured on the non-integrity work.

    But, you know, some of that equipment will eventually find its way elsewhere and new equipment won't arrive and so 20% to 25% gross margins seem quite reasonable to me.

  74. Im starting to appreciate good management more now. Looking at enterprise, extendicare and LRM. It seems that is not to be underestimated and can add a lot. And helps you sleep at night as well.

    It seems there are all kinds of hidden ways management can throw a wrench in the whole thing? Or maybe im overly negative about that now.

  75. Well, mgmt is important in roll-ups, land grabs, levered equity, and a few other situations, and important also when dealing with time-sensitive securities like warrants or options.

    But if one is invested in the stock and the time horizon is long enough, it's not so easy for mgmt to turn a fundamentally good business into a bad one. Though it certainly can be done with enough determination as in the case of Tootsie Roll, for example.

    I'd be more than a little surprised if the equities of MCR, E or LRM were impaired at 3.35, 0.73 and 12 respectively. I just don't see that happening.

  76. Hi Red,

    Have you an oppinion of Poundland Group?

    They´ve presented great numbers, growing 18%. And in the new stores in Spain they are pulverizing sales.

    Maybe a good oportunity with big future growth.

  77. "You can look through their annual and interim reports and see how much of their income is attributable to O&G expenditure and how much is attributable to infrastructure and maintenance work."

    Is there really information about the percentage of income from infrastructure and maintenance work in the reports?

    In case the oil prices are going down, I'd like to check this more reliably if possible.

    The closest statement I've found is "If drilling activity decreases markedly, as a result of oil and gas prices declining for an extended period or otherwise, maintenance operations could moderate the adverse effect on the Company of the decrease in drilling" from annual information.

    Thanks in advance.

  78. Hi Igor,

    I was suggesting that one could infer rather than find a statement about it.

    So in 2009/10 oil and gas prices were low, forecast was bleak and MCR did 8.5m in gross profit.

    in Nov 2015 it acquired $16m in pipeline integrity assets from North American Energy Partners. Pipeline integrity work is, by its nature, maintenance work. 3.5 x $16m in assets $56m in revenue and, at 25%, $14m in gross profit. One can look at NAEP's financials before the divestiture to guage whether that's an okay asset turn and margin estimate for that segment.

    So 8.5 + 14 = 22.5 in gross profit from maintenance work, which is approximately half.

    Another way to get at it is to ask the company. A correspondent of mine did just that and received the answer "roughly half". If he reads this he may chime in and add some color.

    I hope that makes some sense.

    And, btw, nice blog, I have subscribed :)

  79. I've spoken with the managers and they won't come right out and say it (for competitive reasons I imagine). So I won't quote them... I am using 50% in my analysis and feel confidently doing so...


  80. Red,

    Have you ever look at Norwegian airlines. It seems interesting.

  81. Hi David,

    It's a nice arline but it's priced accordingly

    I believe the buy-back provides kind of a floor and haveestablished a position at current prices.

  83. I think you've paid a good price.

    In the long term, the Site C Dam approval yesterday will probably end up being just as useful as this buyback

  84. HI there,

    Macro has been operating in North Eastern BC since 2006 (perhaps even before that, not sure). Just wondering why it has become interesting now. Any thoughts ?

  85. Hi Red, what were the reasons for selling Macro from the tracking portfolio?

    1. One could make a reasonable argument that it is dead money in the immediate period and there's quite a lot of competition for the slot that it had occupied. Plus I need to reduce my total exposure. But then again, I had thought that DWSN was dead money and got rid of it for the same reasons.


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