The Bedford Park Opportunities Fund returned 13.5% net of all fees and expenses in the second quarter of 2021, bringing its year-to-date return to 27.6%. Q2 2021 hedge fund letters, conferences and more In the fund's second-quarter investor letter, which ValueWalk has been able to review, Jordan Zinberg, the President and CEO of Bedford Read More
BGR Energy operates in the power and capital goods segments and is in the business of constructing boilers, turbines and generators for coal-based thermal power plants.
It currently has about 7 or 8 major power projects running including overseas projects. It executes major contracts for companies, PSUs and government agencies.
The company reported rapid growth in revenues and profits over the last five years – reporting about 540cr of operating profits on revenues of about 4,800cr. It operated with a slightly uncomfortable net debt ratio, with net debt exceeding book equity (as at 30th September, 2011) – presumably as a result of the current distress in the power sector (discussed below).
The business suffers from issues relating to coal availability, environmental concerns impeding construction activities and State Electricity Board (SEB) insolvencies. It is dependent on government-set power tariffs.
Since it is project-based, revenues are lumpy and inconsistent (using percent-of-completion accounting) dependent on project-specific progress and customer payments; and subject to revenue downturns when orders dry up during lean periods when capital investment is curtailed.
It executes a significant portion of revenues for overseas customers exposing to risks of INR appreciation. Needless to say, it is capital intensive and requires additional financing, usually loan financing, exposing to the pain of high interest rates.
Bedford Park Opportunities Fund Q2 Letter: Long Converge Technology Solutions