My thesis on E-L Financial (ELF) is pretty simple. E-L is trading at 65% of its book value, that’s essentially the whole thesis. Since I might as well write a bit more, the major component of this book value is very high quality and could be worth significantly more than E-L carries it at. Continue reading “E-L Financial”
The news comes as bitter sweet. Ergoresearch is being taken private for just a 20% premium over my purchase price.
When I first bought ERG, I expected so much more. The company had discontinued an unprofitable line of business, which made revenue look bad but improved free cash flow. Ergoresearch was also starting up new clinics, moving into sleep apnea treatments, and had at least mentioned returning to its acquisitive ways. The bitter part of the deal is because my investment in Ergoresearch could have been so much more.
Then the company sort of went dark. One day I noticed that I hadn’t seen a news release about earnings, so I went looking and found that there wasn’t a press release, the financial statements were simply put on SEDAR. And the numbers were only put on SEDAR in French. I thought this was a little curious, it was a bit annoying but thought it may provide value investors more opportunity to buy while ERG was unfound.
Then this news of the privatization came out not long after. The sweet part is that Ergoresearch shares were unlikely to move higher anytime soon. By not announcing earnings, and by only releasing numbers in French, it effectively hides the company from a large percentage of the investment community. I’m fully aware that the business is improving, and this is an excellent deal for Sylvain Boucher and Walter Capital. They are acquiring a business with growing free cash flow and exciting initiatives that should grow the business in the future. For small shareholders like me, we’re provided an out for our shares that were probably still going to be in the $0.20-$0.25 range for year or more.
I’m mildly disappointed in this investment. I think the prospects of ERG deserve a higher premium, but I doubt anyone who has been holding their shares is patient enough to demand it or want to keep the company public. I sold my share at $0.295 and have moved on.
Nine months ago I wrote my thesis on Integrated Asset Management, which I thought should be trading at $1.49 on September 30th (end of fiscal 2017). I’m not usually anywhere close to this right, but IAM was $1.54 on September 29th.
Since then however, IAM has traded down to its current $1.38. I made a number of assumptions coming to my 2017 target, as well as my 2018 target of $1.76, with the share price lingering I decided I ought to take another look at these assumptions and make some new targets. Continue reading “Integrated Asset Management – Follow Up”