Q: Hi,
The last question asked in 5i about this company was by me nearly a year ago. Since then they have purchased a few companies some of which are loss making and that they seem to have overpaid for, They blew most of the $541 million they had and the companies they purchased are in India/Italy where they can't use their tax losses. Admin. expenses have skyroccketed. Now there's a proxy fight. I'm thinking I should vote my shares with the minority (26%) shareholder to replace the management of the company. It seems like they are a bloated, self serving group of directors/managers that should be booted. They still have around $100 million that they haven't blown yet. What do you think?
Dave
The last question asked in 5i about this company was by me nearly a year ago. Since then they have purchased a few companies some of which are loss making and that they seem to have overpaid for, They blew most of the $541 million they had and the companies they purchased are in India/Italy where they can't use their tax losses. Admin. expenses have skyroccketed. Now there's a proxy fight. I'm thinking I should vote my shares with the minority (26%) shareholder to replace the management of the company. It seems like they are a bloated, self serving group of directors/managers that should be booted. They still have around $100 million that they haven't blown yet. What do you think?
Dave
Q: It's been over 6 months since there's been a question about Aimia. How do you feel about it's prospects now (buy/sell/hold)?
Q: Wondering your thoughts? New acquisition, new focus for the company, utilizing tax loss carryforwards is one of the goals. Recently on BNN, this was stated by an analyst.
This one is a bit of a departure from traditional earnings metrics stories we usually look at and is more of a special situation.
Aimia formerly had the contract to run Aeroplan, but then Air Canada cancelled that and ultimately bought the business back from Aimia. Since then, it is essentially a holding company, run by managers with a track record of value investing. It is essentially a public asset manager/hedge fund.
It recently sold its interest in PLM to Aeromexico for $541 million and this is where the story gets interesting. Today, the have interests in a few other companies worth around three or four dollars per share. It has cash of more than six dollars per share from its asset sales. Net of preferred shares, this gives it an estimated “sum-of-the-parts” of about seven dollars per share. The stock currently trades at $3.90, at just over half of its “fair” value, which we think makes it too cheap to ignore.
Sum-of-the-parts only works if management can do something to close the discount. It has $785 million of tax losses that can be utilized, and are in the enviable position of having a ton of cash to put to work at now very compelling valuations given the market sell-off. Since taking over the business, current management has been very active in crystallizing value. If it can’t find cash-flowing businesses to buy, it will continue to buy back stock, effectively returning cash to shareholders. In the past, it has done regular buybacks as well as substantial issuer bids.
Ultimately discounts like this don’t persist forever, and while we think you need to be patient, we also think it is aligned with shareholders as large personal holders of the stock, and that it will work to close the discount to fair value.
This one is a bit of a departure from traditional earnings metrics stories we usually look at and is more of a special situation.
Aimia formerly had the contract to run Aeroplan, but then Air Canada cancelled that and ultimately bought the business back from Aimia. Since then, it is essentially a holding company, run by managers with a track record of value investing. It is essentially a public asset manager/hedge fund.
It recently sold its interest in PLM to Aeromexico for $541 million and this is where the story gets interesting. Today, the have interests in a few other companies worth around three or four dollars per share. It has cash of more than six dollars per share from its asset sales. Net of preferred shares, this gives it an estimated “sum-of-the-parts” of about seven dollars per share. The stock currently trades at $3.90, at just over half of its “fair” value, which we think makes it too cheap to ignore.
Sum-of-the-parts only works if management can do something to close the discount. It has $785 million of tax losses that can be utilized, and are in the enviable position of having a ton of cash to put to work at now very compelling valuations given the market sell-off. Since taking over the business, current management has been very active in crystallizing value. If it can’t find cash-flowing businesses to buy, it will continue to buy back stock, effectively returning cash to shareholders. In the past, it has done regular buybacks as well as substantial issuer bids.
Ultimately discounts like this don’t persist forever, and while we think you need to be patient, we also think it is aligned with shareholders as large personal holders of the stock, and that it will work to close the discount to fair value.