As a whole, I own too many positions and am looking to concentrate my portfolio. I own positions in both TFII and CJT that are in the same industrial transportation sector. I have a larger position in TFII, which has done well while my smaller position in CJT has slumped.
If you had to sell one of these, which would you choose? Or are they different enough to keep both? What do you think of CJT, down about 30% in the past year?
Thanks,
Although we like both names and would be comfortable holding both. However, if we had to sell, we would let CJT go Both CJT and TFII operate in the same industry with quite different approaches to capital allocation. TFII is quite balanced between reinvestment for growth and capital return to shareholders (lots of buybacks over the years), the company is also more conservative in the way it finances its business with minimal debt (net debt/EBITDA is around 1.2x). CJT reinvested heavily all of its earnings and borrowed to fuel organic growth (net debt/EBITDA is around 2.3x). We prefer capital-intensive companies with a more balanced approach in terms of growth and shareholder return. CJT could recover well with an improving economy, but they are also subject to some of the same economic influences, of course. This is a case of pulling the weeds and selling CJT if reducing exposure. TFII is also much larger and thus safer (generally).