Bombardier Inc (B) (BBD.B.TO)

It was a favourite short by hedge funds over the last couple of years. It has all changed now. It has broken out of the $2 cap. To him the valuation is just not there yet and is moving ahead on optimism. There is a risk of an equity issue to shore up the balance sheet.

(Market Call Minute.) As a trend follower, he would say buy this here and see what happens.

He was short and is now out. He is waiting for the time to re-enter it. He is waiting for an announcement on government aid. It has done well but is a very difficult, low margin, capital intensive business. He would not suggest this stock as a US$ play, either.

A foreign company could not take this company over due to regulatory intervening. They have negative net worth of about $6 billion. He has no idea where it will go going forward.

Hopes the company succeeds and that it survives. Its balance sheet is a smoldering crater. They have a huge amount of debt. He has no idea if this company is going to make any money on its airplane orders. He worries that they are filling up the order book because they need to show some activity and they aren’t going to make any money on these planes. They’ve never made much money in the train business. You have negative shareholder equity in this company. There is a huge amount of debt that has to be refinanced. He doesn’t see how this company digs itself out of the hole.

This broke its downtrend, and now appears to be basing. There are a series of higher lows, but he needs to see a break of around $2.40. If we get a break past $2.30-$2.40, it could be quite positive, because it did break that downtrend.

There is a huge amount of debt at the company. The ‘B’ preferreds were trading at 8% but there is a lot of risk. He would be very wary of anything they say. He was glad he got out because he was afraid of what was going on with the ‘C’ series. They have constant bailouts. The preferreds are reasonably secured.

From a seasonal perspective, we are in a period where industrials tend to do well. This company moves on big news. The chart shows a little bit of consolidation. If it breaks above $2, that would be quite positive.

Definitely not a buy. He does not like that they continually burn cash. They have high debt.

Nothing would persuade him to buy this company. This is a family run company which has got more benefits from various government levels than you can shake a stick at, and yet still manages to mess up. A lot of that mess has to do with the family. There have been huge execution issues on the transportation side.

It still has way too many risks. They are doing every possible financial engineering to save the company. There are too many moving parts to the company. They are in a tough, tough spot in aerospace.

Lumpy earnings. He stays away from it because it is unpredictable.

More for the high-risk investor as it is definitely a turnaround story. They have some financial concerns, and have gotten some help from the Québec government, and hopefully the federal government on their C series jets. The new management group has got costs under control and are getting orders on their aerospace and train divisions. He has a target of $2.75. If it got up to $2.40-$2.50, he would probably rebalance out some profit and keep a small portion.

The Canadian aerospace business has been hit. The Avro from years and years ago didn’t work. We are all cheering for the C series. He understands that Swiss Air likes them very much. However, we have to see other orders from Air Canada and Delta. Until we see that pick up, he wouldn’t buy this.

Tricky. He would hazard to say that they are not a viable company in terms of the amount of government support that they have had over the years. They spun out their recreational vehicle division, and that company is attractive to him.