What are you buying today?

[Sharad]

Building a position in TSX: SXP (Supremex Inc.).

 

From Google Finance (I need to find an alternative website once the portfolio feature goes away):

 

Supremex Inc. is a manufacturer and marketer of a range of stock and custom envelopes, and a provider of packaging and specialty products. The Company operates through manufacturing and sale of envelopes and packaging and specialty products segment. It offers translucent envelopes, digital window envelopes, EnviroSafe and self seal envelopes. Its packaging products include Conformer Corrugate Mailers, Auto Boxes, Tear Resistant PaperTyger Mailers, Board Mailers, Conformer Presentation Folders, Poly Mailers and Enviro-logiX Bubble Mailers. Its labels include custom labels, repositionable labels and affixing. Its specialist products include repositionable notes, membership cards, photo packaging, file folders, radio-frequency identification (RFID) ProteXion envelopes, Extended Envelope and integrated envelopes. It manufactures and distributes products to corporations, national resellers, government entities, as well as paper merchants, statement processors and solutions providers.

 

The company is a bit of a proxy on the growth of e-commerce, at a very compelling valuation. The company has seen growth to its top line revenues and bottom line over the last several years, is providing a dividend yield of about 6% at this level, has a P/E of 8, $30m of debt but averages about $20m of operating cash flows over the last 3 years. I feel that there is some margin of safety at its current low valuation.

 

My analysis is fairly simple, so if anyone has been following this company, please provide any insight for or against this investment.

[KJP]

Building a position in TSX: SXP (Supremex Inc.).

 

From Google Finance (I need to find an alternative website once the portfolio feature goes away):

 

Supremex Inc. is a manufacturer and marketer of a range of stock and custom envelopes, and a provider of packaging and specialty products. The Company operates through manufacturing and sale of envelopes and packaging and specialty products segment. It offers translucent envelopes, digital window envelopes, EnviroSafe and self seal envelopes. Its packaging products include Conformer Corrugate Mailers, Auto Boxes, Tear Resistant PaperTyger Mailers, Board Mailers, Conformer Presentation Folders, Poly Mailers and Enviro-logiX Bubble Mailers. Its labels include custom labels, repositionable labels and affixing. Its specialist products include repositionable notes, membership cards, photo packaging, file folders, radio-frequency identification (RFID) ProteXion envelopes, Extended Envelope and integrated envelopes. It manufactures and distributes products to corporations, national resellers, government entities, as well as paper merchants, statement processors and solutions providers.

 

The company is a bit of a proxy on the growth of e-commerce, at a very compelling valuation. The company has seen growth to its top line revenues and bottom line over the last several years, is providing a dividend yield of about 6% at this level, has a P/E of 8, $30m of debt but averages about $20m of operating cash flows over the last 3 years. I feel that there is some margin of safety at its current low valuation.

 

My analysis is fairly simple, so if anyone has been following this company, please provide any insight for or against this investment.

 

What is organic growth (or decline) after you account for all of the acquisitions?  Is this really a proxy for e-commerce or, instead, a proxy for direct mail and the types of mailings that need letter-sized envelopes with little plastic windows?  There is a two-year old short thesis on VIC that may interest you.

[Cigarbutt]

I held Supremex a few years ago and it was a mistake.

 

The main business was (and I think this is still the case even if they are trying to catch the new wave related to e-commerce) envelope manufacturing in a consolidating and declining industry.

 

During the time I held it, it behaved like a value trap. Ended up with +/- zero return (small capital loss more than compensated by dividends) but the opportunity cost was very significant.

 

Went to annual meetings and visited their installation. I liked the CEO who was at the helm then.

 

This is a company in transformation in a commoditized environment. Will keep watching. Good luck.

 

 

 

[Sharad]

Building a position in TSX: SXP (Supremex Inc.).

 

From Google Finance (I need to find an alternative website once the portfolio feature goes away):

 

Supremex Inc. is a manufacturer and marketer of a range of stock and custom envelopes, and a provider of packaging and specialty products. The Company operates through manufacturing and sale of envelopes and packaging and specialty products segment. It offers translucent envelopes, digital window envelopes, EnviroSafe and self seal envelopes. Its packaging products include Conformer Corrugate Mailers, Auto Boxes, Tear Resistant PaperTyger Mailers, Board Mailers, Conformer Presentation Folders, Poly Mailers and Enviro-logiX Bubble Mailers. Its labels include custom labels, repositionable labels and affixing. Its specialist products include repositionable notes, membership cards, photo packaging, file folders, radio-frequency identification (RFID) ProteXion envelopes, Extended Envelope and integrated envelopes. It manufactures and distributes products to corporations, national resellers, government entities, as well as paper merchants, statement processors and solutions providers.

 

The company is a bit of a proxy on the growth of e-commerce, at a very compelling valuation. The company has seen growth to its top line revenues and bottom line over the last several years, is providing a dividend yield of about 6% at this level, has a P/E of 8, $30m of debt but averages about $20m of operating cash flows over the last 3 years. I feel that there is some margin of safety at its current low valuation.

 

My analysis is fairly simple, so if anyone has been following this company, please provide any insight for or against this investment.

 

What is organic growth (or decline) after you account for all of the acquisitions?  Is this really a proxy for e-commerce or, instead, a proxy for direct mail and the types of mailings that need letter-sized envelopes with little plastic windows?  There is a two-year old short thesis on VIC that may interest you.

 

I'm finishing up quarter-end reporting for my client and then my small business' taxes. Once done, I'll revisit this discussion, and do a little more digging into the organic space (I don't think they have organic growth in the envelopes business, but are seeing some in the corrugated cardboard space (which is a spall portion of the business right now). At 8 P/E, I think the terminal value is greater than Mr. Market's valuation.

[Cigarbutt]

Versus Supremex:

 

Followed closely when they were consolidating the envelope manufacturing industry in Canada.

    -did not result in a very profitable result either because timing was too early and/or paid too much.

 

Now seem to be involved in a similar environment in the US.

    -your analysis may help you decide if this will be worthwhile or not.

    -maybe better positioned for gradual geographic expansion, as manufacturing operations have a geographic radius of potential profitability.

    -maybe worthwhile to look into Cenveo which is a large relevant US competitor in relative distress.

    -Cenveo and Supremex have a common history (many years ago).

 

A key aspect is that the main business will get to be a gradually smaller pie overall.

 

Also, they are trying to diversify into related fields which has its own risk-reward profile.

 

Will follow too.

May get involved if I become convinced that they can profitably grow market share in the US.

Not convinced at this point.

 

[John Hjorth]

Started out with a small position in BAM today.

 

The post by Uccmal in the BAM topic today, in the Investment Ideas forum, did trigger this.

[frommi]

WPP PLC

CVS

[Liberty]

I've been buying back the CHTR that I sold at 390 last July...

[_JJ_]

GSUM

NULM

[DooDiligence]

BRK.B

 

also, last week I pushed CVS up to a 3.6% pos (includes the 30.3% in cash that I'm holding)

and I feel much better about enduring the upcoming ugliness at CVS than I did with ESRX (expect to add when it gets REAL ugly.)

(unless CVS gets hit with a big termination fee & expenses on the proposed AET thing, in which case I'll be PO'd at myself.)

[frommi]

More puts on HCSG. I still think they fake earnings and that it is unreasonable to assume that they don`t have the same problems with healthcare operators like OHI or other REITs have with them.

[blainehodder]

TSLA puts. Yup Im crazy.

[frommi]

TSLA puts. Yup Im crazy.

 

That sounds rational to me. Could get interesting tonight.

[Voodooking]

Haha, I'm waiting until the price drops after Earnings (Losses) are announced tonight, then I'm going to load up and increase my position while it is nice and cheap (relatively).

[writser]

Small stake in BRCD. Down significantly over the past few days as the market seems to be worried about Trump / CFIUS blocking the LSCC deal. However, in this case the buyer is a US / Singapore company. All other regulators have vetted the deal. I see no problems but what do I know. FIG also down quite a bit, might be interesting.

 

Sold again.

[longlake95]

GIL.TO

[hillfronter83]

Small stake in BRCD. Down significantly over the past few days as the market seems to be worried about Trump / CFIUS blocking the LSCC deal. However, in this case the buyer is a US / Singapore company. All other regulators have vetted the deal. I see no problems but what do I know. FIG also down quite a bit, might be interesting.

 

Sold again.

 

Nice call!

[no_free_lunch]

Recently purchased MIDD and GUD.TO.

 

MIDD is a compounder going for 19-20x earnings.  Not exactly a steal but a reasonable price if past growth can hold.

 

GUD.TO you can buy at a fairly nice discount to the $10/share equity offering that happened last year.

[bennycx]

OMC

[Cardboard]

T.CONA, T.BRY, T.PPR

 

Some of the most undervalued stocks on the Planet.

 

Cardboard

[Liberty]

Recently purchased MIDD and GUD.TO.

 

MIDD is a compounder going for 19-20x earnings.  Not exactly a steal but a reasonable price if past growth can hold.

 

GUD.TO you can buy at a fairly nice discount to the $10/share equity offering that happened last year.

 

MIDD is one of my sins of omission. I looked at it pretty closely after seeing it mentioned in a report about high CRI/ROIC companies... Probably around 2012..? Not sure. Saw promising numbers, but had a few reservations about the CEO and too many things I didn't understand about the industry, so I passed.

[SafetyinNumbers]

T.CONA, T.BRY, T.PPR

 

Some of the most undervalued stocks on the Planet.

 

Cardboard

 

I bought some T.PPR as well. But also T.IPO and V.ATU.

[no_free_lunch]

 

MIDD is one of my sins of omission. I looked at it pretty closely after seeing it mentioned in a report about high CRI/ROIC companies... Probably around 2012..? Not sure. Saw promising numbers, but had a few reservations about the CEO and too many things I didn't understand about the industry, so I passed.

 

I could certainly stand to do more work on it myself.  I'm mostly relying on others research and just looking for issues.  CEO seems okay to me, while a serial acquirer the debt levels are very reasonable.  Usually they get into trouble when they are taking on too much debt to fund the acquisitions.

[Hielko]

T.CONA, T.BRY, T.PPR

 

Some of the most undervalued stocks on the Planet.

 

Cardboard

Some of the most undervalued stocks on the planet, and they are all trading in Toronto. What a coincidence ;)

[Sullivcd]

OMC

 

Bennycx, would you mind sharing your thesis in a new thread? I think this one looks interesting also.