Element Fleet Management (EFN.TO)

This is going to split at the end of September. Feels it has been going down because people are worried about the interest rate environment and the environment the company is operating in. The company has basically carved out a niche in the finance business that a lot of the banks didn’t want to be in any longer. If this were 15%-20% lower, he would be seriously looking at it. This is one that you could certainly take a good hard look at.

(A Top Pick July 30/15. Down 29.55%.) Sold his holdings recently on the news that they were going to be splitting the company, and how they were going to be allocating costs, etc.

When a company’s business decides to break off, the idea is to unlock value in a part that is being weighed down by the overall picture. It is the fleet management business that is being undervalued. A stock split is different. This is not a splitting of the stock.

They are splitting the company up. He thinks it is undervalued. They are separating their fleet management and equipment financing businesses. They think their fleet management business is not being fairly valued.

This is a company where management pays itself very well. That has been a big red flag for him. This is going to be splitting into 2 parts. There is going to be the fleet business and the non-fleet business. The street seems to be undecided as to how to act with this.

It is a love it or hate it stock. He thinks it is cheap and has huge upside potential. You would be a fool to be scared out of this stock at this time, when you should be buying. It is already down so it should not be down twice on the same news.

(A Top Pick Aug 20/15. Down 26.51%.) Being split into 2 different businesses. He likes the fleet business part which is a good business over the long-term. Still a Buy at these prices.

This has been positioned in a unique line of financing that makes it stand out. The only problem he has is the valuation. As a value investor, he finds it very difficult to pay for future growth without using a fairly severe discount rate on it. You have to take a longer-term view of the stock. This contains a great component of companies in a rather unique area.

An excellent company. It is higher beta, meaning it will move more than the market. The consensus is overwhelmingly positive for it. If you are willing to have some portfolio volatility and look out a year, then he thinks you would be well-suited by buying it. However, if you are looking more for income or want to sleep at night, then you are probably better paying up for things such as grocers, and just staying flat.

They bought back in February and they sold it. It is going to split into two companies. There is concern that the growth may be over. The fleet management is doing well.

We still don’t have a date when the 2 companies are going to be separated. A year ago they earned $1, and this year they are going to earn $1.60. Now it is trading under 10X earnings, so he would like them to hurry up and get it over with. Thinks there is $25 of value that will trade at $20 once they unlock it.

Element Financial (EFN-T) or Aecon (ARE-T)? Two different things. One is a financial player and the other is involved in industrials being a construction company. This one is mostly a financial that is in the leasing business, either equipment, railcars or fleet, and they are separating into 2 companies from the fleet and equipment leasing. The issue by and large is where the economic growth is going to come from and the financial leverage the companies will have. They need to be able to lever up the company and to grow the business, and that is a challenge after having acquired a few things from GE Capital.

Has a particular issue with the fleet space, and specifically railcar space. This was a very tough one to analyse. It is sort of financial engineering at its best. There is a lot of support from the street. You would have to have a strong view in an economic pick up in North America to get behind this name.

(Market Call Minute) Wait and see how the break up plays out.

(Market Call Minute.) The stock has come down too much and there is some good value creation that is going to be happening in the next year.