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Compiling comments that experts make about stocks while on public TV.

2017-03-14

Opinion for Exchange Income (EIF-T)

Signal Price Bias Subject Owned
TOP PICK $38.640 UNKNOWN CANADIAN Yes

*Short* This is sort of a mini conglomerate. They have a bunch of small regional airlines in Canada, as well as an aviation leasing business in the US, along with some small manufacturing businesses in Canada. This is what he would call “an access to Canada short” in that the underlying businesses do not generate enough cash to sustain the company as a whole. Subsequently they need to continue coming back to the market doing equity issue after equity issue. All the industries that they operate in are high capital intensive businesses. Just in CapX alone they have outspent their cash flow way, way back. Yet they pay a dividend yield of 5.34% and have a debt they have to service. If there was any market downturn and equity markets were actually shut off to this sort of constant equity issuance, the dividend would be in very, very serious trouble. (Analysts’ price target is $47.)

Daniel Lloyd
Founder & Portfolio Manager, Sui Generis Investment Partners

3 Comments

Ken

March 15th 2017 at 9:56pm

Either this guy is a liar or the financial statements are false. According to the last financial statements available on the website, (3rd quarter, 2016), free cash flow was $4.41/share for the 3 quarters, and free cash flow minus capex and maintenance was $2.46. For the last quarter cash flow (fully diluted) was $1.37 while cash flow (fully diluted) MINUS capex was $0.84.
Not sure where this guy is getting his information from but it is highly suspect. And if he is reading from a different line in the financial statements he does not make that clear.
This kind of commentary is both annoying and highly misleading.
If you don't believe me check out the financial statements yourself here:
http://www.exchangeincomecorp.ca/quarterly_reports.php

N1K

March 24th 2017 at 10:11am

Ken, I concur with your comment. Where did this analyst get his information from? BNN should be contacted to supply viewers with the facts. The financial statements of EIF is a rebuttal to Daniel Lloyd's statement and comment on BNN.

lamgau

April 14th 2017 at 4:59pm

Ken & N1K, read the SEDAR filings that adhere to GAAP or IFRS, not something the company puts together.

By the normal calculation of those items, and not with the custom method used by management, what was said on BNN is correct. EIF doesn't generate enough cash to keep doing what it does.

If you believe the company over the market, then what is your explanation for why the company issues a large amount of shares every year. They've gone from 8 million shares out to 34 million shares in about 6 years. If they had enough internal cash flow, that wouldn't be the case


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