Tony Hansen, the CIO of EGP Capital illustrates more of his original stock-picking strategies with a small cap his fund has built a large position in. The stock has an upcoming key catalyst, and is currently trading on a little over 4 times its potential cash flows.
“You’re buying free cash flow of $15-20mil per annum, into perpetuity, for $83mil … I like that.”
- Has accumulated bankrupt Managed Investment Schemes over the last few years to construct a timber plantation company.
- Trading at market cap around $83 mil at present. Confident of wharf approval: If approved, company will turn out $15mil free cash flow per annum.
- However it is less attractive if wharf denied, as barging costs will take it from a lower quartile, to a third quartile, producer.