Michael Simpson, CFAE. D. Smith Income FundJAM.UN.TODON'T BUYMar 20, 2007
Has disappointed from its IPO. CEO resigned in the last several months. Have been hit by rising input costs. Payout ratio is too high and too much debt.
Doesn't fit his criteria for picking small cap trusts. There is not the year over year growth that he would expect. However, it has a strong brand name and there is stability. A conservative approach.
Stock has had a rocky ride with concerns on its payout sustainability. Not out of the woods yet. Made a significant acquisition recently. Payout is over 100% for 2006 and this is not sustainable. Over the longer term, they do have a lot of sales growth.
Has dropped with other trusts and is around its issue price. Has exposure to US$ currency. Some growth to the story, but because of the US exposure and being near 100% payout ratio, It's probably fairly valued.