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Sandy McIntyre Sun Gro Horticultural Inc GRO-T(dead) HOLD Aug 12, 2005

Their payout ratio is very tight. Cash flowing around $0.90 a unit. Dominant in the growing medium area and as climate becomes more extreme you are looking for more controlled growing medium for quality of product. Would like to see their balance sheet a bit better and can see that correcting over time.

Sandy McIntyre

Unknown

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$8.110

Stock price when the opinion was issued

agriculture

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PAST TOP PICK

(A Top Pick March 21/05. Down 9%.) Might have been a couple years early on this. Will probably be growing over the next 5 years.

PAST TOP PICK

(A Top Pick July 28/05. Down 17%.) A quasi-monopoly. It takes the bogs and uses the peat moss to create mixes for home growers. It had about 45% gross margins and pricing power. Because it sells mostly in the US, the stronger Canadian dollar as well as transportation costs hurt them. Sold his holdings.

DON'T BUY

Peat moss. Growing market share but his concern is too much financial leverage and too high a payout ratio. This has created volatility. High risk.

PAST TOP PICK

(A Top Pick July 28/05. Down 14%.) Has now sold his holdings. Too much headwinds going into the story.

DON'T BUY

Not a fan of the management team.

DON'T BUY

Peat moss. Heavily dependent on weather. Have been hurt by transportation issues in the past. They do very well keeping their costs under control. High payout ratio and high input costs.

HOLD

Reserve life of 50 years. Controls 70% of the market. Very cheap at 6.5 EBITDA.

COMMENT

Payout ratio of about 82%. Reported an excellent Q4. Excellent reserve life of peat bog. Reducing their debt.

SELL

Get peat moss out of Canada and ship to the US. Double whammy is 1. Foreign exchange exposure. 2. Peat moss is used for landscaping and US housing is going down. Thinks is should be $4 -$4.5 per unit.

HOLD

Undergoing some strategic reviews because of a creeping competitor Premier Tech (?) and wouldn’t be surprised if an acquisition didn’t occur in the next month or 2.

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Sandy McIntyre Sun Gro Horticultural Inc GRO-T(dead) HOLD Aug 12, 2005

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