Element Fleet Management (EFN.TO)

This is one of 2 parts that was spun out from the old Element Financial. North America’s leading fleet manager and growing organically as well as rolling up other fleet managers over time. They also have some fleet management in other parts of the world. Also, have a lot of peripheral services that they can provide to customers. Trading at 11X next year’s earnings. Dividend yield of 0.71%, which will probably be increased every year. He can see 40% upside from here. (Analysts’ price target is $14.66.)

Had owned this before the split and did okay on it. CEO couldn’t consolidate the fleet business more aggressively and there wasn’t a lot of growth, so he split the companies and then proposed the structure. Thinks it was completely full of conflicts of interest. The investment community is supporting this because the CEO is a wonderful guy in promoting things. Sold his holdings, because he won’t invest in companies where he doesn’t have confidence in the management team. This has been a massive destruction of shareholder value.

(A Top Pick Dec 31/15. Down 5.49%.) Sold his holdings well before the split happened. Felt management was not executing as well as they had promised.

(Top Pick Sep 8/16, Up 9.07%) There is still upside on their multiple. They are still growing on the fee side of the business – fuel cards and so on. The dividend is sending a signal about the stability of this business. He thinks they will increase the dividend by at least 10% in the first few weeks of 2017.

(A Top Pick Dec 7/15. Down 9.54%.) Broke into 2 pieces. One is Element Financial and the other is Element Fleet Management (EFN-T), North America’s biggest fleet management. The other is ECN Capital (ECN-T) with railcar and equipment leasing. They missed in the last quarter which is why the stock seemed a little weak, but the long-term growth story in both companies is excellent, and he has been adding both to his portfolio.

(A Top Pick Dec 14/15. Down 10.22%.) This split into 2 separate companies. The air lease side is up about 17.5%. He held onto the shares of both companies. Hopes to see this one’s dividends go up, which will cause the stock to go up.

(Top Pick Nov 2/15, down 11.54%) It was recommended before the split. He felt he was investing more on the fleet side and then they split up the company. He liked the fleet assets more. He sold after the split. He would get back into fleet except recent results were not great.

Down about 5% today on the back of earnings. The guidance was a bit weaker. Not a space she is particularly attracted to. Going forward, they really have to figure out a way to grow organically. She is not interested in getting into this space.

(Top Pick Nov 23/15, Down 5.24%) It includes the value of ECN. ECN is at $3.05 and that is why you get a marginal decline. He would probably sell and keep the Element Fleet.

(Top Pick Oct 1/15, Down 7.51%) He sold it. The fleet business is the best part of the business. Management did not do all the things they said they would do and he lost confidence in them to execute. The fleet business has some very good dynamics to it.

He was very disappointed that Steve Hudson broke the company up needlessly. The fleet business doesn’t have a lot of growth in it. It is a very convoluted structure, and thinks it was designed to make Steve and a bunch of other people a lot of money in the spinoff.

He is more interested in the fleet management business. The capital division is much smaller and was looking for an inflow of cash in a deal that did not work out. He does not see interest rate increase being a big issue, especially in Canada.

Recently bought this. This is the 1^st day the Element Financial shares are formally split into 2 companies. You now have ECN Capital (ECN-T) and Element Fleet Management (EFN-T). Thinks both are undervalued. This one is trading at about 10X next year’s earnings. Its group trades at about 20X. Both companies are looking to do some acquisitions which could transform things in the next couple of quarters, but both assets are attractive right now.

This is being split at the end of this week into 2 separate companies. He would stay away for now, and would wait to see what this looks like when the dust settles in 3, 6 or 9 months.

He has a small position. He thought they would be growing the one company. Time will tell if it is the right position.