An unknown smallcap on 4 times cashflows

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Livewire Markets

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.

 

 


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