TRU.V - Trius Investments Inc.

[cheerlee]

How about this company traded on TSX venture TRU.V?

Market Capital $3.83 at current price $0.37

 

up to 2014Q3:

cash  $3M

short-term investments  $0.125M

loans receivable  $0.65M

investment in associates  $0.9M

long-term investments  $0.39M

 

substract long-term debt - $0.36M

net cash and investment (not include main business solid waste collection)=$4.7M (actually the investment in US real estate worth much more than number on book)

 

solid waste collection business revenue $4M, earning or free cash flow about $0.6-0.9M fluctuated by truck depreciation.

the main business is a stable business with local competitive advantage, equity growth >10% in last 10 year average.

High insider own, 3 directors owns >60% ownership.

share repurchase and insider buy last year.

The company is just too small for people to look. I valuate TRU.V more than $1 per share.

 

 

[cheerlee]

Sorry, the market capital is $3.83 million CAD dollars.

[cheerlee]

Its competitor GFL (Green for Life) valuated at $950 million with revenue $500 million from an article on Globe and Mail one week ago. Trius has $4 million revenue from solid waste collection, so worth >$7M just for its garbage collection business.

 

[mcliu]

Took a quick look.

What are the related-party transactions in regards to? Is management/majority owner friendly toward minority shareholders?

What are the possibilities of the company ever returning capital?

Company seems to be investing excess cash flows in large hedge funds?  ???

Why is this company even public?

Why are you comping a $4 million company against a $1 billion company?

[Guest Schwab711]

Cool business, maybe worth $8m-$10m CAD but there's a lot of hair. 50% of quarterly expenses are spent at businesses owned by the major shareholder that share the same name "Trius Group" but are not related to this equity. There's a huge inefficiency in the disposal business as they own 4 garbage trucks when only 2 are ever in use. They recently rented these trucks at very favorable rates to this same shareholder. Why would he need garbage trucks? Is he competing against TRU.V? I won't even mention the ridiculous investments well outside expertise. The disposal business is awesome but given the complex web of ownership, I doubt it will ever be run efficiently nor could it ever fully split away. This is made to buyout Trius Group at a ridiculous valuation at the expense of shareholders like me. It's definitely undervalued but the equity returns won't  come anywhere close to the returns of the disposal company.

[yadayada]

They got almost a million in that building project. the 650k loan is already non performing. So im not too sure what the CEO is doing here. And those million options dont help either. Plus their trucks are old, and probably need to be replaced soon.

[cheerlee]

really good question and discussion here.

What are the related-party transactions in regards to? Is management/majority owner friendly toward minority shareholders?

TRU.V need to pay fee to Trius group a Private company owned by CEO Gordon for its vehicle repair, gasoline, and office. That is most cost efficient way to provide services for TRU.V waste disposal business. The office is just no different from your garage. From proxy and a couple of time personal meets, feel good with Gordon.

What are the possibilities of the company ever returning capital?

Share repurchase last year, but not much trading volume in market. That will be great if dividend can be paid in near future. CEO is a least worry about stock price, and that's one reason the stock price keep low; he said he don't look his own stock price in half year, but he can be office at 6AM most of days.

Company seems to be investing excess cash flows in large hedge funds?  ???

Mainly invested in real estate built for health care and health care in  Salt Lake US in last few years because a director John a New Brunswick native has connection and do business there. The health care investment is more than tripled from last year's selling. last October, invested additional $1 million USD in similar business. In mean time, also invested $0.75M CAD with ScotiaMcLeod in a portfolio with significant in GIC and saving for liquidity. The Colt Builders in Calgary is losing money now due to high cost of labour, John had sent engineer to Calgary to help Colt Builders on management, and probably low oil price can relieve labour shortage, most of contract of Colt Builders are buildings for health care, don' see high impact by oil price. CEO is very conservative, and he only invest in something understanding well. They don't invest any public company yet unless suitable person on board.

Why is this company even public?

like many public company go public just for wrong reason. TRU.V went public initial for green energy.

Why are you comping a $4 million company against a $1 billion company?

When big waste collection company bid a small city/town contract, there are no different to a small local company. TRU.V has better profit margin and ROE than other waste collection companies due to supporting from Trius Group. probably better safety record than GFL.

[cheerlee]

http://www.oddballstocks.com/2014/06/calling-all-growth-investors-24-roe-at.html

[Guest Schwab711]

Did you read the article? It's not well liked for all the reasons brought up.

 

I think this is pretty obviously a type of scam (an extremely lucrative one). Owners operating in the grey area of fiduciary duty is extremely disgusting and it hurts tens of thousands of families throughout this country who invest along with these owners, expecting one thing and getting another. It should be a reasonable expectation to rely on fiduciary duty in the US and Canada and it makes business much more efficient. I do hope the case is you missed these details yourself since not mentioning them when bringing up the company is somewhat dishonest in presentation to me. I hate companies like these!

 

Good luck cheerlee, if Gordon decides to act correctly you can make an excellent return.

[cheerlee]

I just read the Oddball's article 10 days ago, and posted here just for your information. But I don't agree the article's conclusion.

I also had concerned on the relation between TRU.V and Trius Group when doing first time research, Gordon could use TRU.V to benefit his own interest because services (gasoline, truck repair, office) for TRU.V provide by Trius Group. I believe Trius Group benefits from these, but all of these services are cheaper than market price or services provided by third party. TRU.V initially has own mechanic but found out it is cheaper to do repairing by Trius Group's mechanic; and gasoline and office rental price are also reasonable or cost saving. You can just see these from TRU.V's financial report, ROE and profit margin are high in long term. management's compensation are reasonable or low. Bottom line, all of the waster collection business discussed above is free given to everyone that own TRU.V because the current stock price just part of cash and investment(mostly in real estate in US) value.

Also has concern on privatization, but more likely TRU.V will sell to a big firm due to CEO Gordon close to retirement and he also indicated that on last year's annual meeting.

[Guest Schwab711]

It makes me concerned that you are embellishing to support your thesis. TRU.V is definitely extremely cheap, no argument there. My point is that you will never see more than a fraction of that equity you deserve. Nothing personal to you, I just don't want to see folks invest in this without fully appreciating the risks! I definitely didn't mean to write this much but it seems worth posting.

 

I believe Trius Group benefits from these, but all of these services are cheaper than market price or services provided by third party.

 

How do you know this? Can you provide support? They specifically state the related-party contract is "at market prices".

 

 

management's compensation are reasonable or low.

 

On compensation, Gordon now makes $200k/yr (from $120k in 2012 and $160k in 2013) which represents 20% of NI. Next highest paid director makes just $50k/yr (this is the CFO; additional support for piggy bank theory). Gordon's $200k includes $42k for 300,000 shares issued at $0.11 a share (actual cost = $120k). There's also $55k/Q or $225k/yr in management fees where the majority ultimately end up in Gordon's pocket but are not counted as compensation. His real compensation from just TRU.V (not including expense costs paid to his affiliate companies) is likely between $400k - $600k a year (10% - 15% of revenue or 40% - 60% of income).

 

Their US investments are in companies owned by other BODs. John M Robertson is listed as an "Independent" BOD even though he runs Recovery Ways which they have a substantial investment in. They also state:

Risks associated with Compensation Policies and Practices

Given the nature of the Corporation's business and the size of the Corporation's management team, the Board

believes that there are no material risks associated with the Corporation's compensation policies and practices.

 

They pay $23k/yr to each of the 2 directors (who are not executives) on the board (another $50k/yr in expenses). I invest in similarly sized company called Eldorado (ELDO) with a similar board make up. They fully disclose that board members are not independent, only pay $2k/yr to board members, and have only given management 1 raise in 10+ years from $100k/yr to $120k/yr (after significant increases in revenue/profit among other accomplishments).

 

To me, this is nothing but an obvious and disgusting example of a corporate piggy bank! I actually wish someone would take on an activist role as what Gordon & Co are doing is wrong in so many ways! If nothing else, a lawsuit for breach of fiduciary duty should be brought against them! I hesitate to say things like this and I would have no problems with Gordon's actions if this wasn't a public company but this just doesn't seem right.

@cheerlee: What do you think this is worth and why? How did you become comfortable with Gordon's actions?

 

It is salivating to think of the margins/returns of the disposal business if run properly! We do need to remember that only 2 years remain on their disposal contracts and these margins for a public contract seem extremely excessive (US Govn't contracts generally provide 8% profit margins).