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

In a difficult situation. Their plane is not selling. Have had some bad financial numbers. They have to turn all of these things around. He wouldn’t touch the stock.

Personally he would rather go to Casino Rama where he would have a better chance of making money. This is a terrible company. It is a nepotism company.

Short? There is probably more downside left, but he would be sceptical of shorting at this low valuation, given that he doesn’t think it is a bankruptcy. They have had huge missteps with dual class shares. The big issue with them is the C series and the lack of execution. Until they get planes in the air and orders in the order book, that is what it is going to take.

He tries to find areas of leadership and then the best business within that with the best balance sheet. He never tries to buy broken hoping it will get fixed. He likes the price to be behaving as if things are getting better. The price of BBD.B-T is just getting worse. He prefers others in the space, e.g. NOC-N.

He feels that they have a lot of problems. They have so many divisions and they never seem to do well at the same time. He would avoid it at this time.

This has unquestionably been a disappointment. The big question is, do they have enough cash to see their project to completion and what is going to fund them along the way? A high risk play, so it is not a name that he would own at present. If you have a little money that you want to allocate and not look at for 5 years, it might be interesting.

Buying this is really catching a falling knife. They have a lot of issues on the aircraft side of things. How do you attract new buyers for your products when your financial position is precarious?

There are a lot of issues that are sucking a lot of cash out of the business. They have $9 billion of debt on their balance sheet, and now they have to do something about it. Had to issue a bunch of equity at $2.25. A lot of selling pressure on the name.

This is a company with 2 sides. Railway equipment and aerospace. They have been spending a lot of energy in developing their new C series airplanes. Raised money earlier this year to improve their financial position, and there has been a lot of dissension. They now have new management and a new sales force. The critical thing for the next 12 months is to get more orders for the C series. If they can get that going, he thinks the company can turn around. It’s a critical junction for the next 12-18 months.

This has been a tough one. The one positive thing is that sentiment is so negative that if they were to announce some orders for the C series, there could be a real pop in the stock. Feels the balance sheet is okay, but if they come out and are burning more cash again, this will continue down. This stock is in desperate need of good news.

Preferred dividends? There was a downward movement in the stock today. They had a conference call with their treasurer to talk about liquidity concerns. Preferred shares would be one of the last places where they would want to cut the dividend. You are protected a little bit, but they could cut those dividends as some point.

He does not see this company turning around in the next couple of years. Once a big cap company falls $5 a share, it never comes back. It is in big, big trouble, and he doesn’t know how they are going to turn the ship around. Selling off assets is not a good sign.

It’s a hard business. We have watched the ‘C’ series really crush their balance sheet. Takeout would be impossible. It is labour intensive and involves unions. It has all the ingredients of bad. Everything is wrong with them for his firm.

A highly cyclical stock. Have lots and lots of operating leverage. It swings really hard both ways. Right now we are in a period of a vacuum where new management isn’t really talking about what they can do with operating margins. He suspects that the way the Cdn$ is working he can see this stock doubling from here over the next 3-4 years.

Hasn’t run its business adequately well. Something fundamentally needs to change in terms of how they manufacture, their processes, their costs, etc. An economic recovery in the US has the ability help. It is going to take some time and some fundamental change for value to be realized.