mikazo Posted August 3, 2016 Share Posted August 3, 2016 "Canam Group Inc. is engaged in designing integrated solutions and fabricating products for the North American construction industry. The Company operates through the construction products segment, which includes many complementary goods and services. The Company's service offer extends from the preconstruction phase to project management, including the erection of structural steel components. It also offers customers an array of complementary services ranging from virtual design and construction to Building Information Modeling (BIM), and the outsourcing of technical drawings. The Company operates approximately 20 plants across North America. The Company takes part in over 10,000 building, heavy steel and bridge projects. The Company is involved in the construction projects for commercial, light industrial, institutional or multi-residential buildings with an area of 10,765 to 1,399,355 square feet." Summary: Consistent revenue growth (>= 14% every year since 2011) Shrinking SG&A costs every year Retained earnings growth every year (>= 10%) Largest bridge manufacturer in Canada Growing project backlog P/E of ~9 The stock took a -20% hit last month on higher project costs, and is trading at new 52-week lows. Canam Drops Most in Almost Two Years on Unexpected Project Cost http://www.bloomberg.com/news/articles/2016-07-14/canam-drops-most-in-almost-two-years-on-unexpected-project-cost (Extra $32M in costs, market cap dropped by ~$40M) I can see their project growth in Canada growing in the coming years, especially with a Liberal federal government: http://www.budget.gc.ca/2016/docs/plan/ch2-en.html (Ctrl+F for "Revitalizing Federal Public Infrastructure Across Canada") Canam Bridges is already supplying all 35 steel spans for the New Champlain Bridge: http://www.infrastructure.gc.ca/nbsl-npsl/nbsl-npsl-eng.html http://www.canambridges.com/projects/new-champlain-bridge-corridor-project/ Canam Group reports Q2 earnings tomorrow. I'm interested to see how it turns out. Link to comment Share on other sites More sharing options...
Guest notorious546 Posted August 3, 2016 Share Posted August 3, 2016 Shares ~13.3% owned by insiders with CEO/President/Chairman owning 11.1%. Taking a quick look at there track record... - gross margins have varied from 4.19-20.6% over past ten years - 2011 looks like it was awful, negative roe's roic, margins etc. not sure why. - ROE's outside of 2011-2010 have been consistent low single digit - sales growth looks quite consistent with per share numbers up consistently. - book value doubled roughly over past 10 years - share count jumped last year as convertible bonds were settled in shares - dividend hasn't really grown, was eliminated in 2011-2010 period. looks like some good buybacks were done as shares performed poorly last year. What's the moat here? limited other people can supply this expertise? the plants/patents? Link to comment Share on other sites More sharing options...
obtuse_investor Posted August 4, 2016 Share Posted August 4, 2016 I owned Canam through 2011 trough and was able to average down as low as half of tangible book value. Couple years ago market offered 1.5xTBV for this same business. The management's interest is quite aligned with the rest of the owners and this is really a family firm. As for moat, there is nothing substantial there. As mentioned, long term ROE is sub par. This is not a high quality business that Buffett would buy now. But it certainly gets dirt cheap from time to time and he would have bought something like this during his partnership days. Link to comment Share on other sites More sharing options...
mikazo Posted August 4, 2016 Author Share Posted August 4, 2016 Q2 -$0.61 loss per share http://www.reuters.com/article/idUSASC090OF Stock dropped another -9% Link to comment Share on other sites More sharing options...
mikazo Posted August 4, 2016 Author Share Posted August 4, 2016 From their latest Q2 balance sheet: In thousands: Total assets = $1,232,337 minus Intangible assets = $9,850 minus Goodwill = $56,918 equals Tangible assets = $1,165,569 Shares outstanding: 46.98 million TBV per share = 1165.569 / 46.98 = $24.81 Seems high because the stock is trading at $9.55 = 0.38x TBV Is this right? Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted August 4, 2016 Share Posted August 4, 2016 You call it tangible book value but I don't see you subtracting any liabilities. Link to comment Share on other sites More sharing options...
mikazo Posted August 4, 2016 Author Share Posted August 4, 2016 I was going by this definition: http://www.investopedia.com/terms/t/tbvps.asp Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted August 4, 2016 Share Posted August 4, 2016 There is an error in the formula. The text says you divide tangible equity by shares outstanding but the formula says divide tangible assets by shares outstanding. The former is correct. Link to comment Share on other sites More sharing options...
longlake95 Posted August 4, 2016 Share Posted August 4, 2016 BV is currently $11.75 or so, TBV is $10.50 ish. I owned this back in 2009 and just dusted off my file as it's recently sold off. At the time I was thinking it was worth $12ish, while it did get there, with the benefit of hindsight my estimate of IV at the time was probably aggressive. Since then, while sales and net income have moved higher, so has the share count. By around 4M share from 43M to 47M. It's probably now worth $13 or $14, so I'd like to see it around $8 before I'd step in. I'd suspect there are a lot of frustrated holders dumping recently - it will wash out eventually. Link to comment Share on other sites More sharing options...
longlake95 Posted April 13, 2017 Share Posted April 13, 2017 started a position in CAM, as it's finally washed-out. It trades at 0.6X TBV. The market is acutely focused on their lousy 2016. Backlog stands at $1,139M. Once they posted a couple of quarters of profitability - the market should focus on the future and not the past. Don't kid yourself - this a still a cigar butt with a couple of puffs left - but worth the wait. LL Link to comment Share on other sites More sharing options...
longlake95 Posted April 20, 2017 Share Posted April 20, 2017 added to CAM today Link to comment Share on other sites More sharing options...
obtuse_investor Posted April 20, 2017 Share Posted April 20, 2017 At the risk of sounding really cheap... I'd wait for the dividend cut before buying. Link to comment Share on other sites More sharing options...
longlake95 Posted April 20, 2017 Share Posted April 20, 2017 I'd be quite surprised if they cut the divvy. It's only $7.5m per year, for a company that cash flows 40$-$50'ish M ( of course notwithstanding the lousy 2016). I'd think the Dutil's like their tax-advantaged dividend stream. Link to comment Share on other sites More sharing options...
awindenberger Posted April 21, 2017 Share Posted April 21, 2017 Thanks for highlighting this stock. I like that they bought back close to 5% of shares over the last year, and only seem to buy them back when the stock is trading under book value. Its also interesting to note that BVPS has increased over the past couple quarters, from about $11.85 to $12.40. Link to comment Share on other sites More sharing options...
handycap5 Posted April 27, 2017 Share Posted April 27, 2017 Going private. https://www.groupecanam.com/en/press-releases/canam-group-announces-going-private-transaction-by-a-group-of-investors-led-by-the-dutil-family/ Link to comment Share on other sites More sharing options...
obtuse_investor Posted April 27, 2017 Share Posted April 27, 2017 Congratulations everyone! I certainly missed the boat :-) Link to comment Share on other sites More sharing options...
longlake95 Posted April 27, 2017 Share Posted April 27, 2017 Nice news to wake up to! I think the Dutil's are very smart to take this private now. They are smart to offer $12ish as it will be enough to appease most holders, and enough of a forward IRR for them to do very well going forward. Non-residential construction appears promising in North America. I hope many of you are holders of the stock. Link to comment Share on other sites More sharing options...
mikazo Posted April 27, 2017 Author Share Posted April 27, 2017 I was still only holding my initial position from last August when I bought in around $9. I wish I had bought more in the $6 range! Oh well, I'll take it :) Link to comment Share on other sites More sharing options...
Mackenzie48 Posted April 28, 2017 Share Posted April 28, 2017 Had been looking at this recently in the $6 range but never pulled the trigger. :P The company certainly had some warts (which made it so cheap) but some positive points were: - my (very rough) tangible book value calculation at ~$10.90 vs market price ~$6.50 - company bought back ~1.3M shares Oct 31/16 at prices between $8.68-$8.75 with ~47.5M shares outstanding - insiders bought ~$68K worth of stock in past 6 months, no sales by insiders. - as longlake95 said, a few puffs left!! Link to comment Share on other sites More sharing options...
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