Guy Gottfried is the founder and manager of Rational Investment Group, a value-oriented investment fund. Rational employs a risk-averse, research-intensive value methodology to uncover securities exhibiting material upside potential along with minimal risk of capital impairment. Prior to launching Rational, Mr. Gottfried was an analyst at Fairholme Capital Management. Mr. Gottfried is a graduate of York University in Toronto, where he was a President’s Scholarship recipient. Guy Gottfried spoke today at the Capitalize For Kids Conference in Toronto and presented his favorite ideas. Below are some (very) informal notes from Gottfried who explained why he likes Tree Island Steel Ltd. (TSE:TSL) (OTCMKTS:TWIRF) and TerraVest Capital Inc (TSE:TVK) (OTCMKTS:TRRVF).

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Also see: Lee Ainslie Pitches Long Qihoo 360 At Capitalize For Kids

Guy Gottfried on Tree Island Steel Ltd. (TSE:TSL) (OTCMKTS:TWIRF)

Make steel wire products, largest in NA

Trades at 3.6x normalized FCF

Exceptionally well run

Considerable insider ownership

Why is it cheap

Small

Illiquid

No conference calls until this year

They have been under earning for 5 years

 

Insiders have bought 7% of the company in the past 15 months

CEO buying almost every qtr

CEO and CFO have paid 2.30/share

 

EBITDA was $25m in 2006

Thinks they can get back to $25m and views it trading at 3.5x earnings

Catalysts

Continued sales traction

Tuck in acquisitions

Dividend resumption

Guy Gottfried on TerraVest Capital Inc (TSE:TVK) (OTCMKTS:TRRVF)

Former conglomerate with six divisions

 

Divested 4 of the dividends, used cash for special dividend and share buyback

Trades at 6.7x fcf based on current run rate

Dramatic growth potential

Record of excellent capital allocation

Considerable insider ownership and recent buying

 

9 insiders have bought 8% of stock on open market since February

Avg cost 6.21

Largest division Jerico has only been around for half the year

Ebitda run rat $30m

FCF 17.2m

Thinks 2 divisions will put to work $40m and $60m for acquisitions

Sohn Canada Presentation – Oct. 2014

Guy Gottfried Pitches Long Tree Island Steel At Capitalize For Kids