Bob Robotti's Presentation on Enterflex: Value Investing Congress ~ market folly

Tuesday, May 8, 2012

Bob Robotti's Presentation on Enterflex: Value Investing Congress

Continuing our coverage, today we're posting up more notes from the Value Investing Congress.  Below are notes and the slideshow presentation from Bob Robotti of Robotti & Company.  He presented the bull case for Enterflex (TSE: EFX).

He thinks natural gas will fill the hydrocarbon gap in the coming decades.  1mm ft cubic is energy of 1 barrel oil - historically interchangeable with 1 barrel of oil.  The following notes are courtesy of Kyle Mowery from GrizzlyRock Capital.

Investment Opportunity: Enterflex (TSE:EFX)

•    Installs compression and processing equipment.
•    $980MM EV
•    Decade long drilling activity 
•    Started trading in June 2011
•    Oil and gas firms are end customers
•    Service is 21% of revenues – key component to this firm.  Expected to grow to 40% of revenue in next 3 years.
•    Oil compressors – leverages due to fracking technology as fracked gas comes out of the well as low compressed volumes. 
•    Engines – Caterpillar and Waukesha was 50% (Cat been growing significantly). Waukesha bought by GE from private equity backing.  Enterflex distributor for Waukesha. 
•    2% dividend yield and share buyback.
•    Intrinsic value is $18 to $24 per share. 6.0x to 8.0x multiple on the business. 
•    Competitive advantage – engine part important (distribution system).  As Waukesha engines (Enterflex US distributor) get better from GE engineering this drives margins higher including

Embedded below is Robotti's presentation on oil versus natural gas:

Be sure to click here for other presentations from the Value Investing Congress.

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