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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I'm considering cutting a loser to invest in something new that has some growth. SIS, PBH, and TOY have been poor performers for me for a while now and have been dragging down my returns. If I thought the issues were temporary for all 3 of them I would hold and wait it out but I've found each of them has been less than impressive. SIS with the equity raises and mgmt that I'm losing faith in, PBH with a million excuses as to why each quarter has negative surprises (weather, swine flu, minimum wage,etc), and TOY with disappointing numbers that seem to be getting worse with no real catalyst to get back to growth (Toysrus overhang, diminishing sales in their top sellers that are getting stale, no replacement "home run" product to turn things around. These 3 seem to no longer be growth stocks, do you think I should cut any of the three or give them some more time?
Read Answer Asked by Adam on May 15, 2019
Q: I know that you like Chartwell, but I am not certain why your strong endorsement.. Looking at the share price performance the shares currently sell at the same price as 3 years ago; so other than the dividend there has been no growth over the past 3 years. Not looking for a lot but some small token growth would be nice to instill some confidence in the company's management team. I own the shares, have done so for some time, but am now thinking that there are better income opportunities out there. Can you provide me with some rationale for not parting with my shares in Chartwell?
Read Answer Asked by John on May 14, 2019
Q: Hello,
I just read your report on this company and have a few questions:
- Revenue from 2014 to 2016 went down substantially (from $500M to $160M), should we expect the same correlation to oil price going forward in case of an oil downturn or was there more to it at that time ?
- Are their customers mostly low cost producers ?
- Would you consider EDR as a long term competitive advantage ?
- You mentioned long term contracts in your report. Would you know if they are for a considerable portion of their revenue and how long and guaranteed are they ?
- Is the insider ownership related to the founders? Are they managing the business?
- Any idea why the stock did not recover with the oil price ?
I have had bad experience with oil servicing cmies in the past. I am tempted to take a position but worry about the downside if oil price is going lower. I will do more research but I always appreciate your comments ! Would a 4% position be too high ? Thank you
Read Answer Asked by Pierre on May 14, 2019
Q: I would like to know what the Management and employees have been doing other than collect salaries for the past 5 years, other than a few small acquisitions and filings with the authorities it seems to me that they do not deserve much compensation. I can't see them "working" 50+ hours a week looking at investments day in and day out year after year. What have they been doing? Goodman raised a ton of money at $10.50 or $11.00. I would like to see Goodman and his management team paid a salary of $1 per annum (just as Steve Jobs did) and be paid with stock options, not at the current value but at $10.50 or $11.00. I have put my faith in this guy but like a lot of shareholders I think its time to move on from Goodman and his underperforming company. Goodman's talk of an overnight success for my grandchildren does not give me much comfort. I was hoping for more of a shake up yesterday and was disappointed it did not occur. The fact that his Dad owns a company that competes with Knight was something new that I did not know when I purchased GUD shares.
Read Answer Asked by stephen on May 13, 2019
Q: Is it time to bail on NFI or are the worst of the operating issues behind them? I have owned it since 2015 and saw the shares rise from $17 to $60 a year ago, only to half the amount today.
The Q1 results are not encouraging. Operating cash flow is a deficit of $7 million, earnings were down 46% or 56% adjusted. Gross profit margins declined Q/Q by 240 bps to just 16%. There have been substantial investments in new products (with learning curve troubles), a new zero emission bus, facility upgrades, a new parts facility (with start up problems and cost overruns), IT harmonization project, oh and they lost the Setra distribution rights in the motor coach division.

Concerningly, on capital allocation, they have increased the dividend with lower earnings and have a substantial debt funded share buy back. Annual interest is now about $25 million. This looks like brave policy unless the business really is about to turn the corner and shares return towards their $60 level.

What do you think?




Read Answer Asked by Keith on May 13, 2019
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