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

(Market Call Minute.)

A name he hasn’t liked for many years, but “speculatively” he now likes it here. They are free cash flow negative for 2017 and 2018. A good management team. Have made some tough decisions that is already starting to bear fruit. They have liquidity out to 2018. If they get their “blue sky” guidance, this is a stock that could triple over the next 3 years if they execute. The real risk is the aerospace cycle.

This stock went all the way from $6 in 2011 to lows that we have seen earlier this year. New orders are good and attractive, but you are running into a lot of oversupply of shareholders going back through the years. He would caution on getting involved with stocks that has a heavy government component in it. There are better sandboxes to play in.

This has had a good lift recently. He doesn’t tend to Buy turnarounds. Thinks it will continue to have challenges going forward. There are better places where you could focus.

(Market Call Minute.) If you want to go to the casino, this is the one you would Buy. If you want to sleep at night, don’t buy it.

It does well until the air show. They announced today the clearance for their larger new aircraft. They may announce sales shortly and that will help. After the air show investors take profits, however.

Watching this closely. This is a stock that you buy on speculation. If you want to put 5% of your portfolio in this, it has lots of upside potential. In the C series, they have got their money from Québec. The risk has declined significantly over the last 6 months.

(Market Call Minute.) Has had a nice recovery from a horrible bottom. Too volatile and too government dependent.

They have this enormous downtrend. There is some potential in the near term. It is doing a rounded bottom. There is a possibility that they are turning themselves around. People wanting to just get their money out could hold the stock back.

Has a few shares, but by clients’ direction. Considers this as a high risk situation. It is very tempting, because they are making progress. He wants to see planes actually taking off, which could convince the industry as a whole that it is a good plane. However, that may be 6-12 months down the road. The basic balance sheet situation is still troubling.

After the Delta deal he shorted it in his hedge fund. It might go higher for emotional sentiment reasons. It is a ridiculously high valuation. It will take a long time to pay their debt down.

It has moved too far and too fast. There are still lots of questions, particularly on the transportation side, where they are trying to put together a cohesive transportation/production platform. The Delta orders were a great plus and can be used as positive leverage. 3 questions. What price are planes going to be sold at, when will the cash flow come through, and who is going to finance the working capital until the planes are finally sold and cash starts coming in?

He does not understand the fixation. It has a poor balance sheet. They made a lot of bad news over the past while. They used to own the business jet market and now put all their resources into the ‘C’ series. On the transportation division they have had a miss. He does not like the corporate governance.

He thought it would be higher today, but the DAL-T contract is not quite as juicy as he thought it would be. Apparently it was that there were less planes than expected. He thinks it will get significant cultural and financial support in Canada. He thinks it might have turned.

They had a very positive announcement. Had heard that they needed 300 planes on the C series to be taken seriously, so this plus another order gets into 295. This means they are survivable, but the business is way too lumpy. Now they have an order, but they have to show that they can do it profitably.