Badger Daylighting (BDGI.TO)

They had a run-in with a short-seller who he thinks is odious. He is a fan of Badger and thinks it is proving the short-seller wrong. There were some possibly valid issues about their free cash flow and about how their accounting presents their results. However, the company appears to be doing well, they raised their dividend, he thinks they bought back some stock, the insiders bought stock when the accusations cratered the stock price. The oil patch is improving; he thinks this company will do well.

A hydro-vac company for excavation. It trades at 14.2 times earnings and there was very good earnings recently. Their dividend was increased by 18% recently. They have diversified into infrastructure and away from oil and gas. Yield 1.9%. (Analysts’ price target is $32.38 )

This is a great company that has been targeted by short sellers. He think they got their attacks completely wrong. Badger’s business is easy to understand and has refuted their comments.

(A Top Pick March 23/17 - Down 27%). A controversial stock in the last years. A company the is in the hydro vac – high pressure water to move earth rather than digging. Largest in North America. Last year it had a bad quarter and the shorts were clobbered the stock. In the meantime, the company has done better. Sales are up. Margins have come in. Still own it.

He has owned it for a while, buying it when it was an income trust. Operationally the company has done well. In the hydro-vac business and has expanded operations more into the US and into the utilities space. Municipalities use these services to avoid digging around existing infrastructure.

This has become a little more commoditized than it was when they first started, so he decided to stand back and watch to see how things go down. There have been rumblings about accounting, and when that happens, he prefers to step back and watch, and make sure they have a couple of quarters that work.

It had an attack from the shorts but they failed to convince the market. 2/3ds of their business is in the US where they are just discovering hydrovacing. They generate great free cash flow and are very well managed. Buy it and sock it away. (Analysts’ target: $37.00).

The company has most of its earnings outside of the oil patch now, and most of its revenues outside of Canada. It is by far the largest hydro-vac company in North America. It has attracted the attention of a major short-seller, who has damaged the stock. The Short is zeroing in on what their 0-30 day receivables are, which is an irrelevant number. A good company and is showing excellent growth. He is still buying for new clients.

(A Past Top Pick Dec 2/16, Down 11%) There had been a bearish article on them. He thought the hedge fund did not have a good case on them. He should have bought it when it fell because a lot of insiders bought then. He thinks it will be okay.

Recently came under selling pressure after its 1^st quarter earnings were announced, because of a bad month of January. Their operations have been doing well since then. A Short Seller jumped all over it, saying bad things, which scared people away, creating a buying opportunity. They are in earthmoving using high-pressure water, and are the biggest in North America. They are now bigger in the US and non-energy than they had been before. Dividend yield of 1.8%. (Analysts’ price target is $36.)

Management is very conservative in what they do. It has an ROE of 15%, good free cash flow, and asset turnover is extremely efficient. The earnings are expected to be up 11% in November. They want to double their business in the US over the next 3-5 years. The dividend was increased. (Analysts’ target: $36.00).

(Top Pick Sept. 9/16, Up 0.65%) He bought it when it was about $5 as an income stock. They’re not as big in oil now, but in municipalities. This year it had a slow January. The next two months were so good that they started to build more trucks. Last week it reported excellent results. But a short seller went very vocal. He feels this is a great long term hold.

He is short this. They are in a particularly tough spot at the moment in that they operate in what he believes is a commoditized business, mobile hydro-vac vehicles. With almost 70% of the business being in the US, this is one of the companies that would be harmed by a stronger Cdn$. However, it really comes down to an overcapacity issue. There are more trucks than are required. Two of their competition are in the process of merging.

(Top Pick Jun 29/16, Up 14.70%) He thinks manipulation is going on. You should load up the truck on it. This is a great business. They are growing profitably in the US.

He doesn’t like the huge amount of management turn over. There are some questions around accounting and some of their franchisees. Has a very tiny Short position on this. There is more downside than upside on this.