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Stuart Isherwood, CFA

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  • Torstar Even Cheaper After Sale Of Harlequin [View article]
    I agree with your conclusion that Torstar is cheap. Since writing, Torstar has reported Q1 which showed very strong results in the newspaper division (EBITDA up 18% on cost cutting) but weak results in Harlequin, which of course is being sold. Most analysts covering the company just lazily reported the overall results were in-line. I would also like to point out that the sale of Harlequin is the second time that the company has sold off a division, at a substantial premium to the value assumed by the street, resulting in a big jump in the stock (it sold its CTVGlobemedia stake similarly in 2011). At some point investors should better appreciate the strategic value of Torstar's assets, and the excellent job mgmt has done surfacing that value.
    May 9 03:39 PM | 1 Like Like |Link to Comment
  • Crescent Point: Shedding Light On The Dividend [View article]
    Yes, Twin Butte excluded their large acquisitions costs in 2013. I was not suggesting they are superior to Crescent, or that I agree with all their calculations. I was just pointing out an example of a company that calculates coverage after capex, something you stated you had never heard of before.
    Apr 7 09:52 AM | 1 Like Like |Link to Comment
  • Torstar's Ongoing Value Trap, Part 2 [View article]
    I agree you should question the value of intangibles, if you are relying upon book value. But book value is still limited by being a historical metric, and possibly a poor indicator of future cash flow. And volatile! the tangible book of $186 million at the end of 2013 (I just take minority interest off of your $188.9 figure) compares to $36.6 million at the end of 2012. That's up 400%, so maybe a higher multiple is warranted? I don't actually invest like that, but I think it shows a pitfall of using book value. Of course all that really matters for valuing a stock is future cash flows, and if you think predicting the next 12 months is too difficult, then you should probably avoid the stock period.
    Apr 7 09:30 AM | Likes Like |Link to Comment
  • Crescent Point: Shedding Light On The Dividend [View article]
    I am not arguing whether capex is good, or necessary, but simply that it needs to be funded, which can become more challenging when a company tries to pay a big dividend at the same time. For a comparison, you may look at Twin Butte Energy, another high yielding Canadian energy company. From Twin Butte's year end results press release they "Reinforced the sustainability of the dividend model by holding total payout to 94%". Similarly in their corporate presentations, they deduct capex from FFO to get an "all in payout ratio", which they plan to keep under 100%, as their strategy is to "focus on dividend sustainability". I think various broker analysts calculate all in payout ratios also.
    Apr 7 07:36 AM | 1 Like Like |Link to Comment
  • Torstar's Ongoing Value Trap [View article]
    If you look at the latest results, you see cash flow improvement, lower debt, including a major improvement in the pension liability, cost cutting initiatives, etc which make a strong case that Torstar is good value. The fact that the stock was higher in the past, or some large shareholder previously paid more for it and might be averaging down (do you really think that was Prem Watsa's motivation?) seems irrelevant. It strikes me that any stock, not currently trading at an all-time high, is a candidate for someone to average down. I guess it makes for good headlines, but not much value in terms of fundamental analysis.
    Apr 3 02:40 PM | 2 Likes Like |Link to Comment
  • Just Energy Group: This Growing Utility Yields Over 10%, Paid Monthly [View article]
    Couple of additional points - there are actually two Canadian billionaires accumulating this stock, the other is Jim Pattison (who has added over 300k shares in the past week). Also note there are several debentures that trade on the TSX, high yield and much safer than owning the equity. I own the JE.DB (June/17 maturity, YTM ~9.7%).
    Jan 17 11:42 AM | 4 Likes Like |Link to Comment
  • Data Group Inc.: Deconstructing A Failed Idea [View article]
    I also did not expect such a bad quarter. But a couple of things you should note: the company has had big swings quarter to quarter in the past (Q1 of this year was surprisingly poor relative to the prior reported healthy Q4, prompting me to sell most of my stock); the bank line became current (due Aug/14) this quarter, forcing mgmt to renegotiate. The extended bank line has mandatory payments which will eat up most of the FCF, and was likely the key factor which prompted the complete cut in the div.
    Nov 11 07:58 AM | Likes Like |Link to Comment
  • Data Group Debentures Trade At Massive Discount [View article]
    Its interesting that the CFO was doubtful about getting the bank's permission to buy back debentures. Currently the banks are allowing the company to pay out $7 million a year in dividends. It would be in the best interest of the banks to have DGI use its cash to pay down debt (especially debt that could be taken out below par), rather than pay dividends. The current bank facility comes due in Aug 2014, so this will probably be renegotiated in the next few months, possibly with some new terms???
    Oct 16 09:48 AM | Likes Like |Link to Comment
  • Data Group, Inc.: Time To Grab This 19% Dividend Yield [View article]
    The convertible debentures are listed on the TSX (DGI.DB.A), and, although quite illiquid, are trading at 57, which implies a 10.5% cash on cash yield, and approx. 26% YTM. So if you believe in the company maintaining its FCF, but would prefer less risk, this may be a better investment. Also it suggests to me that the company should try to buy back some of this debt, which it could probably do well below par, and thereby reduce its overall debt faster.
    Oct 3 09:48 AM | Likes Like |Link to Comment
  • Richards Packaging: The Safest Company In North America Gives You A 9% Dividend [View article]
    I also like this company, and own the stock. Management is pretty conservative, and are forecasting the dividend to represent 80% payout of free cash flow for 2013. They have also being steadily reducing debt and buying back shares. I think the dividend is very safe. I do not expect huge capital appreciation though, unless the company gets acquired.
    Jan 31 11:17 AM | Likes Like |Link to Comment
  • Student Transportation: Here's Why We Don't Use EBITDA To Evaluate This Company [View article]
    I don't think you really understand EBITDA. It has been used for decades to analyze companies with high capex (such as cable and wireless operators), this is not something that has evolved recently. It is useful and regularly relied upon by both equity and debt analysts for many reasons beyond what you have included here. And the use of EBITDA has nothing to do with the success of the company's growth strategy, which you deride as a "mad dash of acquisitions."

    Saibus, your research is not accurate or objective. This is the last of your articles I will read.
    Oct 18 01:01 PM | Likes Like |Link to Comment
  • Student Transportation's 8% Dividend Yield Doesn't Divert From Poor Financial Management [View article]
    I am not sure which figure you are referring to. If you mean cash flow from operating activities, it peaked in F'2010 at $44 million, but was boosted that year by a $9 million jump in current liabilities, basically a timing difference (which is why I prefer to look at EBITDA, as do all the analysts that cover the stock). If you really like to use this cash flow figure, you should at least note that cash flow was up 9% in this latest year on this basis.

    On the competitive front, I maintain STB has similarities to a REIT (tax level is irrelevant) and a utility (school buses are an economically insensitive, gov't supported service).
    Sep 30 09:01 AM | Likes Like |Link to Comment
  • Student Transportation's 8% Dividend Yield Doesn't Divert From Poor Financial Management [View article]
    The fact that they sold shares to finance acquisitions is not necessarily bad. School busing is a very stable business, but with limited growth, so similar to many REITs and utilities they pay out current cash flow and then raise money to make acquisitions. I like the discipline it imposes on management, and shareholders have enjoyed a high dividend yield for many years.
    Sep 28 09:27 PM | 1 Like Like |Link to Comment
  • Student Transportation: Dividend Cut Could Mean 70% Drop In Stock Price [View article]
    You make an interesting point about overly generous mgmt comp, but the rest is bashing we have heard many times before. School buses are more stable than other transportation businesses, and STB should therefore be at a higher multiple. Your lengthy valuation comparison is not relevant. You omit the support of the banks, at reduced borrowing costs, despite "high leverage". You omit the support of Canada's largest pension fund. You fault a small cap company for having a large retail investor base? etc
    Jul 26 10:37 AM | 4 Likes Like |Link to Comment
  • Student Transportation: A Rare Combination Of Stability, Growth, And High Yield [View article]
    STB has often raised money to do acquisitions. On the Feb 14 conference call they talked about initiatives in SC and Florida which may provide significant opportunities to acquire state/local government run school buses, so a capital raise at this time should not be surprising. $75 million is a lot for this company, however, relative to the size of past issues, and the market may need a bit of time to digest it.
    Feb 28 09:53 AM | Likes Like |Link to Comment
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