Andrew Bell and Rob Tétrault
Andrew: Back with our guest-host Rob Tétrault Portfolio Manager and Investment Advisor and National Bank Financial. You have a couple of stocks for us. Boyd Group Income Fund and they are the crash-repair outfit.
Rob: Yeah. You’d think it’s not a very sexy business, but you know, people are always crashing vehicles. Insurance companies are their biggest asset, and a very, very, very strong balance sheet. So it’s a stock that I have been personally owning, and telling clients about it for a while. I was on here in December and I was asked for a target and I said something along the lines of, “This is going to be an $80.00 stick in 2016” which was, I think, a 25% gain or so. I think yesterday it was trading at 80 bucks. So it’s done that. I think it’s poised for more growth yet, for a couple of reasons; they don’t do equity raises. So to raise capital they don’t dilute the shares. They do forgivable loans with their suppliers. I really like that.
Andrew: Forgivable loans…sorry, how does that fit in?
Rob: So, if they buy enough products it’s a loan that’s forgiven, right? So it’s really fantastic for balance sheet bottom line. Now it’s forgivable at a specific rate, but its issuing debt basically. So they’re issuing debt on none equity, so. That and New Flyer. New Flyer is another Manitoba companies. I guess you could tell I’m a Manitoba boy, and Artis Reit’s one has been beat up lately, Artis Real Estate Investment Trust. I really like the management, the Martens family. They know what they’re doing, and specifically New Flyer’s CEO Paul Soubry there, they keep, keep getting orders and growing.
Andrew: The bus maker.
Rob: The bus maker and they’ve acquired Motor Coach Industries, tons and tons of synergies there in my mind. The market is underestimating what those synergies are going to be, and Soubry is a great CEO and they’re doing it the right way for sure.
Andrew: Just one thing on Boyd; I mean it’s still an income fund technically but the yield is only .6%.
Rob: Here’s the thing; the dividend yield used to be 4 or 5%. Stock was in the penalty box for so many years because they almost didn’t make it through ’08, ’09, and now the stock has rallied significantly at say, 80 bucks. They were doing new issues raises 4 – 5 years ago in the 5 – 6 dollar range, so the yield is not the play here.
Rob: The yield is not the play. The idea is that they will pay less, use it to acquire mom and pops so you know, Joe and Jim’s Auto Collision Repair in Memphis, Tennessee, that’s what they’re buying. They buying up that and they’re paying for assets and not client revenue so they’re busying stuff for 50 – 60 cents on the dollar and they’re applying their own model it. They have a strong relationship with the insurance companies so insurance companies want to deal with them because it’s simple, it’s clean, there’s a process, it always works, so really, really impressed with their company. I think there’s poise for a lot of growth there, even though it’s trading at a fairly significant multiple.
Andrew: Yeah, car repairs. That’s an industry that’s ripe for reinvention sometime, but anyway.
Rob: Self-driving cars or something perhaps?
Andrew: Well, yeah. But the information is symmetry. I go in, they say I need a new component, I’m like okay.
Rob: You need a new Johnson Rod, right?
Andrew: [Laughs] Right. Rob thanks very much.
Rob: Thank you.