Element Fleet Management (EFN.TO)

(A Top Pick April 15/15. Down 16%.) Last year, when investors were worried about higher interest rates in the US, the stock took a hit. Earlier this year they decided they were going to split in 2 to bring out value. That will probably take all year to complete, but the stock is worth holding onto.

This is a well run, but economically sensitive company, sensitive also to rail cars. Transportation is weak in the summer months. It has a very long support level. It is at the top of its trading range. Exit and come back in in the fall.

(A Top Pick May 28/15. Down 21.55%.) This is splitting into 2 businesses. He continues to like it. There is a real opportunity on the leasing side as well as the fleet business. You are really buying more of a US company, because that is where the business is growing.

He is currently studying this. They have proposed to separate the company into 2 parts, a fleet management business and a commercial side. He would be more interested in the fleet management business which would give more predictable revenue and cash flow. He wants to see the balance sheets of the 2 new companies before doing anything. There may be a tendency to layer on more debt on the more mature business.

He owns this. Frustrated because they had a good thing going and the management team got pushed, for one reason or another, to break the company up into 2. It is pretty quiet about how they are going to go about doing that.

Has been watching this for some time. It has 4 segments, and they are going to split the company in half. Fleet management and rail makes sense for them to be bundled together. Equipment financing and aviation financing, etc. are going to be in a 2^nd segment. Trades at about 9X this year’s PE and about 7.5 for next year. Reasonably inexpensive and has a decent management team. He would stick with this for the next 12 months.

This is a really good company. It is unique and has an innovative model. Thinks the split, when it happens, will be successful from an investor standpoint. Financials have struggled in general and the backdrop isn’t great with the low interest rate environment.

It has been a very well performing stock over time. The market has turned against anything that is growth by acquisition. They have stayed up over time. They build up their earnings power. They are splitting the company into two parts. He thinks the market will like this. He thinks you will get a higher price to book over the next year. This is more of an opportunity than not.

(A Top Pick April 7/15. Down 11.19%.) A commercial leasing company, and are just in the throes of splitting up into 2 companies over the coming year. Really well run by a seasoned management team. Cheap, trading at 7X 2017 earnings.

(Market Call Minute.) Has a lot of legs, and the street is really punishing them for no good reason.

This has taken over GE’s fleet business and is going to split into 2 companies. It is going to be very interesting, but that is all in the market right now. You would not have done well in the past betting against Steve Hudson. Technically it seems to be trading in a downtrend. It needs something of a turnaround. Thinks it will be under pressure for the next little while.

Announced they are splitting into 2. He is more positive on the leasing side, which will be the lion share of the split. Leasing is a very well-run business with a lot of opportunities in terms of acquiring and adding on services. They now pay a dividend. He is doing work on how the split will take place, so it is a bit of a wait and see.

(Market Call Minute.) Staying on the sidelines right now. There is too much dependence on the financial markets for funding. Splitting the company into 2 pieces could be interesting. Thinks this is a high risk.

(A Top Pick April 16/15. Down 22.92%.) One reason he really likes this is that the leasing business is almost all in the US. Banks and other organizations are getting out of this business, so there is a great opportunity for them to grow. Made the purchase of General Electric’s (GE-N) leasing businesses. They are being split into 2 companies, which will give you the choice of owning the fleet business or the leasing side, and he would own the fleet part. Good management. They will grow through acquisitions along with organic growth. Still a Buy.

Had dipped inexplicably to $12 a while ago. A leasing business, 90% non-Canadian. They were big buyers from General Electric (GE-N). They have railcars, helicopters and leasing. Have split into commercial and industrial sides. Valuation now is under 10X earnings, which he doesn’t quite understand. If you were to get a 15 multiple on the number they say they can reach, you could see $25. He would be happy if it could get halfway there. Thinks it gets back to $20 by the end of the year. Dividend yield of 0.68%.