Guy Gottfried is the founder and manager of Rational Investment Group, a value-oriented investment fund. Rational employs a risk-averse, research-intensive value methodology to uncover securities exhibiting material upside potential along with minimal risk of capital impairment. Prior to launching Rational, Mr. Gottfried was an analyst at Fairholme Capital Management. Mr. Gottfried is a graduate of York University in Toronto, where he was a President’s Scholarship recipient. Guy Gottfried spoke today at the Capitalize For Kids Conference in Toronto and presented his favorite ideas. Below are some (very) informal notes from Gottfried who explained why he likes Tree Island Steel Ltd. (TSE:TSL) (OTCMKTS:TWIRF) and TerraVest Capital Inc (TSE:TVK) (OTCMKTS:TRRVF).
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Also see: Lee Ainslie Pitches Long Qihoo 360 At Capitalize For Kids
Guy Gottfried on Tree Island Steel Ltd. (TSE:TSL) (OTCMKTS:TWIRF)
Make steel wire products, largest in NA
Trades at 3.6x normalized FCF
Exceptionally well run
Considerable insider ownership
Why is it cheap
Small
Illiquid
No conference calls until this year
They have been under earning for 5 years
Insiders have bought 7% of the company in the past 15 months
CEO buying almost every qtr
CEO and CFO have paid 2.30/share
EBITDA was $25m in 2006
Thinks they can get back to $25m and views it trading at 3.5x earnings
Catalysts
Continued sales traction
Tuck in acquisitions
Dividend resumption
Guy Gottfried on TerraVest Capital Inc (TSE:TVK) (OTCMKTS:TRRVF)
Former conglomerate with six divisions
Divested 4 of the dividends, used cash for special dividend and share buyback
Trades at 6.7x fcf based on current run rate
Dramatic growth potential
Record of excellent capital allocation
Considerable insider ownership and recent buying
9 insiders have bought 8% of stock on open market since February
Avg cost 6.21
Largest division Jerico has only been around for half the year
Ebitda run rat $30m
FCF 17.2m
Thinks 2 divisions will put to work $40m and $60m for acquisitions
Sohn Canada Presentation – Oct. 2014
