Performance Sports Group (PSG-T)

Trading has been halted in order to avoid bankruptcy. At this point it is not an investment; it is a speculation. Fairfax has been sniffing around this. It is a model they tend to like; a fallen angel that used to earn a reasonable return on equity. Be very careful.

There is an investigation going on. There is a lot of debt. They are not cheap. A lot of costs are in US dollars. There are a lot of negatives going for this company. It is not for the faint of heart. He is staying away from it for now.

He wouldn’t own this, but had been Short. They have run into some problems with debt. Lowered earnings a number of times and just have too much debt. Terrible price momentum.

(Market Call Minute.) This has been a really sad story because it is a great brand. It is hard to believe it is down at this level. There is just too much hair on this name, and he wouldn’t touch it.

Hasn’t owned this for a while. The debt is pretty high, and the operating cash flows have been coming down. The biggest issue is that they broke some debt covenants. They’ll probably need some new equity flow in. You will probably do better to have the money elsewhere.

This company has been beset by a number of issues, including the Cdn$, decreasing demand for some of their products, and losing a bit of market share in their areas. The biggest issue they’ve had to face is their balance sheet. They levered up to do a lot of deals, and now they are paying the piper for that. However, they do have some iconic brands, and brands do hold value, and there will be a solution here.

(Market Call Minute.) This company has just blown it and it doesn’t look good. Be careful.

This just took a major haircut. Has never seen a stock fall so precipitously in one day, and yet still not be concerned about bankruptcy. Had announced the currency exchange was going to hurt them in the quarter, but that has gotten better. Also, announced they were going to take a write off on a receivable to Sports Authority which had declared Chapter 11. They are far from any breach of their debt covenants, and are still generating a ton of cash. A very well-managed company.

(Market Call Minute.) Wouldn’t buy right now. They are having difficulties. Bat sales have gone way down. There are new regulations in the US on bats that take effect in 2018. Expects sales will go up hugely in 2017-2018. They have had difficulty with sports authority.

First of all, this needs a new balance sheet. In his work, if the stock goes below his last line, that tells him that the balance sheet is impaired. They basically need to do some write offs. He thinks the stock could go back up to $5.80 from here, which would be a pretty good gain. He would need more information before he could give a recommendation.

Have diversified into many other businesses besides hockey, including apparel. About 8-9 months ago, they bought the baseball and softball division of Easton Sports. Has been hurt by the falling Cdn$ because of hockey being their biggest market and Canada being the biggest market for hockey. Just pre-released May results with a cautionary note that 2016 earnings are going to be pretty flat because of the currency impact.

(A Top Pick April 10/14. Up 50.05%.) Great company. Predominantly on the hockey side for many, many years. Several years ago they diversified into lacrosse and then a couple of years ago bought a private apparel company. Their most recent acquisition was when they bought the baseball division of Easton. Rather than being a one season player, they have now diversified their seasonality. Management team has executed very well.

Has a lot of admiration for the sports group. This is a good, solid company that has executed extremely well. Had a pretty good run over the last year. He would categorize this as a momentum stock. A number of American funds have jumped on this. A good consumer story. However, they have a fair bit of debt and it is fairly expensive now. If they miss a quarter, you are probably going to see a significant correction in the stock.

(A Top Pick April 10/14. Up 60.85%.) Made a very nice acquisition of a baseball bat business about 6 months ago. This is a category that he thinks they can dominate as they do in hockey. Something that has grown significantly for them in the last year is their apparel business. Very well-managed. Still trading at only about 15-16 times earnings.

18% increase in bookings for next quarter. 12 times earnings and could easily be at 14-15 times.