New Capital
Contrarian, deep value, long/short equity, special situations

Emeco: Negative Developments Not Yet Reflected In The Price

I have expressed my pessimism over Emeco Holdings (OTCPK:EOHDF) in a previous article. The latest developments during the quarter seem to indicate that the bearish thesis is actually working out, but is not yet reflected in the market price, which remained relatively flat during the recent months.

As a recap, Emeco is an Australian company that owns and rents out earth moving equipment to the mining sector. The bullish argument for investing in Emeco is mainly based on the company currently trading significantly below its liquidation value and selling down assets to reduce debt. I have argued that the liquidation value (or book value) is likely to be overstated as industry is in a prolonged downturn cycle...

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