Guy Gottfried's Presentation on Tree Island Steel & TerraVest: Capitalize For Kids Sohn Canada ~ market folly

Tuesday, October 28, 2014

Guy Gottfried's Presentation on Tree Island Steel & TerraVest: Capitalize For Kids Sohn Canada

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Guy Gottfried of Rational Investment Group who pitched longs of Tree Island Steel and TeraVest Capital.

Guy Gottfried's Sohn Canada Presentation

Pitched LONG Tree Island Steel. They are the largest steel wire product manufacturer (think nails). Small company and a recent sell off has made it even cheaper. Currently trades at 3.5x normalized FCF (using 2006 EBITDA and adjusting for capex, interest & tax). Believes the company is well run and has considerable insider ownership, however is still cheap and unrecognized by the general market due to being a microcap, illiquid and no conference calls until second quarter this year.  Believes they have been “under earning” for last few years. However, insiders remain confident and have bought 7% of shares in the open market within the last year and higher prices than today.  In 2006, EBITDA was $25m and he believes they can get back to these levels.

Next, he pitched TerraVest Capital. It is a former conglomerate with six divisions. It has divested 4 of the divisions, simplifying their capital structure and using cash for special dividends and share buybacks. Currently trades ~6.5x FCF based on current run rate. This exists because the market is not understanding the recent acquisition of Jerico (only been in financials for 2 quarters). It has dramatic growth potential (especially with lots of dry powder waiting to be allocated). Considerable insider ownership and recent buying. Insiders have bought 8% of openly traded stock since February and at much higher prices than today. 

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

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