TerraVest Capital Inc (TVK-T)

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

TVK’s growth was driven mainly through its acquisition strateg and it is now trading at 8.3x times' EV/EBITDA. In the 3Q, TVK’s revenue grew 4% to $150.4M, compared to last year of $145M and cash available for distribution also grew slightly by 9% to $13.2M compared to last year of $ 12.2 M. Growth was slower compared to previous quarters of more than 20%, but  the deceleration in growth was expected after two booming years of explosive demand for oil and gas processing equipment and services. Overall, an okay quarter. It has no analysts and thus no estimates, but we are comfortable with the outlook. 

The balance sheet is strong, with net debt of $250M and net debt/EBITDA is around 2.3x. TVK generated healthy cash flow which was mostly reinvested back into the business through acquisitions (TVK pays dividends but the payout ratio was only 17%). We like TVK, the company is trading at a reasonable valuation with a track record of growing EBITDA consistently while opportunistically buying back shares too, we expect TVK continues to demonstrate execution going forward, would be comfortable to average into the position over time.
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A conglomerate and he isn’t a big fan of this model. A well-known catalyst investor has just purchased about 19%. May sell of some weaker units.

Half of their business is in oilfield services, which has not quite bottomed yet. The other half is in several derivative forms attached to the housing market. Really cheap at 5 X pro forma EBITDA. OK with a basket of risks.

A mini holding company. Bought a variety of businesses related to housing, and oil field businesses. Thinks q2 will look pretty ugly. Yield is currently 17%, which he doesn't think is sustainable.

A diversified trust that has a number of different businesses. You can run into a problem of buying too many businesses and going too wide. 16% yield.

Prefers companies that are in one line of business. This company is in several lines ranging from upholstered furniture to metal bending for the oil patch. Difficult to have all business lines firing at the same time.

The company is paying out more than they are getting. Current distributions could not be attainable.

Stock is trading at about $8.50 and the NAV is $11. While you're waiting, it pays a 16% income yield.

Like a holding company. They make different investments in various business sections. Likes the model. Had a few stumbles in the past. Prefers others. 15.8% yield is a red flag.

Pretty good little story. Not very well followed. Sold their holdings, but it's still a decent story. Had a pretty good quarter.

Looks for and acquires undervalued Canadian companies. Uses public market valuation and private market valuation, which has a big spread between them, and arbitrages them.