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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Sorry another comment that Members owning CRH may find comforting and certainly shows the clear difference between it and Valeant/Concordia:

"At March 31, 2017 , the Company had $9,232,240 in cash and cash equivalents compared to $9,507,004 at the end of 2016. The decrease in cash and equivalents is primarily a reflection of cash generated from operations, less cash used to finance acquisitions during the first quarter of 2017"


Looking at the Cash Flow Statement: they generated CF-Op of $8M and acquisition cost was $7.5M. Net Debt did go up ~$3M to fund some distribution to non-controlling interest (need to dig more into note 4 for details).


The main point through is CRH earns real cash and finances its acquisitions mainly from its cash flow and not from out of control debt - as the Motley Fool article was suggesting.
Read Answer Asked by Jennifer on April 27, 2017
Q: So last night Motley Fool Canada took down their article from yesterday that was bashing CRH and comparing it to Valeant. Then the author releases a new version of the article that is actually promoting CRH for the most part. I did notice in the original article that they listed Motley Fool (US) as owning the stock which struck me as odd. I wondered why Motley Fool would bash a company, contributing to its decline while its parent company is long the stock. Feels like maybe the author got a big slap on the wrist and was forced to instantly retract the article? Very weird.Would there be any legal implications there, seems like manipulation. They are bashing a stock one day, and pumping it the next.Not that I had any respect for Motley Fool but I've defintitely lost the little I did have for their stock reports.
Read Answer Asked by Adam on April 25, 2017
Q: Being only a few days from earnings release. Wouldn't CRH management be in the blackout period? Releasing a short report when management potentially cannot respond (not sure about this), would that not technically be a violation of the CFA ethics code of conduct under market manipulation? Would this not trigger some kind of review by the CSC or another regulator for taking advantage of the inopportune timing?
Read Answer Asked by Liam on April 24, 2017
Q: Hi Peter and Team,

Could you please comment below The Motley Fool's analysis about CRH.
"CRH made three acquisitions in 2016 for controlling interests of anesthesia companies with two of the acquisitions for 51% of the targets, and the third acquisition for approximately two-thirds of the business.
Because CRH now owns more than 50% of these companies, it is able to include 100% of the revenues and earnings from these firms on its balance sheet, boosting total earnings substantially while distributing only approximately half of the acquired value to shareholders.
On the bottom of the financial statements, we can see that net income “attributable to shareholders” was $10.6 million in 2016 and net income “attributable to non-controlling interests” was $5.5 million, meaning more than a third of the net income produced by CRH in 2016 is not attributable to shareholders of the company.
It is important to differentiate the two; looking at the financial statements from a high-level perspective, the numbers may seem impressive, and the growth rates often stated on press releases or in the media may make investors wonder why they didn’t pick this “growth gem;” however, the numbers used are clearly artificially inflated by more than one-third, and the overall indebtedness attributable to shareholders is more than one-third higher.
Shareholders who are not careful to take note of the adjustments may be disappointed when they understand that their overall equity as a percentage of the total company is actually shrinking.
The percentage of net income attributable to shareholders has been decreasing at an alarming rate due to the manner in which CRH is completing its acquisitions. As of Q4 2016, over 45% of the company’s quarterly net income was not attributable to shareholders, meaning in 2017 investors can expect to cut most of the numbers shown on the financial statements in half for the sake of accuracy."

Thanks
Read Answer Asked by Victor on April 24, 2017
Q: How to catch a falling knife and when do you know it's hit the floor?

In your opinion, considering all the media, short attack pirates, and the massive volatility that have come to life so quickly. How would you play picking up CRH medical? I see technical levels at 7.99 for different measures as a resistance level. Or perhaps it would be prudent to spend time on the sidelines and watch this one. Or would it be best to watch the moves of institution buying as a sign of confidence for those who have done their homework vs. stop losses begetting further selling? I see this company as having a lot cleaner financials, so I don't feel too worried taking a small position at $8.00.
Read Answer Asked by Liam on April 24, 2017