I'd appreciate a reply if you have the time, Simon. You're one of the few people who's knowledgable about PNP. I have a small stake in the company myself, but am puzzled by the current, and unrelenting, decline of the stock. I'd like to think it'll do well, since it's run by the son of the Constellation founder, but also because the holdings of PNP seem fundamentally sound. Any observations or thoughts you can share?
it seems that insiders opportunistically sell some shares (small relative to their holdings) at elevated prices compared to current book value. i believe investors got over-excited at prices above 20$ (more than 2x book value). its now trading something like 1.3-1.4 x book which to me is getting pretty reasonable if you think they can grow book per share anywhere near last few years for more than a few years into the future. speaking beyond that about why the stock moves where it does is purely speculative as there isn’t a true real answer. i haven’t sold any and have purchased more today, in fact. it could continue to fall, there’s no way of knowing but the margin of safety gets better the lower you go. its very illiquid so any change in sentiment can be violent on the stock price.
Thanks for the quick and detailed response, Simon! Yes, it seems that Shezad Okhai has recently sold about 150,000 CAD of stock. I'm concerned, since he's the Chief Investment Officer, so I would assume he's in a good position to understand the overall financial health of the company. Then again, maybe this is a small amount of his ownership, and maybe it's just a way for him to get paid.
Good points about the margin of safety improving as the stock falls, and about the illiquidity of a micro-cap stock like this.
So, if you don't think the stock is undervalued, why are you so interested in it? Why not buy QQQ or UNH instead? Are you expecting the future performance to be superior to such alternatives?
Personally, I'm intrigued by the idea of getting a 'mini-Constellation' in it's earlier growth stages. I know that it's naive to think Damien Leonard would be able to replicate his father's success, but sometimes 'the apple doesn't fall far from the tree.' Also, the companies they hold - Bravura, Quorum, Topicus, etc. seem to have a lot of potential, although I'm not an expert in vertical software businesses so I can't be sure.
i have no insight on what qqq or unh is worth. i will say that at around these valuations, I have written about this (check out my latest on pinetree), I think the returns are decently attractive with a solid management team at the helm. i wouldn’t say pinetree has the same model as csi, in fact its definitely less good of a model but as you mentioned much smaller so can take advantage of better opportunities relative to their size. so there’s tradeoffs here.
Thanks Simon! Those are good points. You think the PNP model is less good than CSU because PNP doesn't actually acquire companies, but eventually sells them? Or some other reason?
indeed, dax. personally i’m probably more exposed to real estate than anything else with my primary residence plus brookfield and atlas are directly/indirectly connected to various aspects of real estate.
Curious to know why you’re so bullish on PNP, what do you like best about this company?
I'd appreciate a reply if you have the time, Simon. You're one of the few people who's knowledgable about PNP. I have a small stake in the company myself, but am puzzled by the current, and unrelenting, decline of the stock. I'd like to think it'll do well, since it's run by the son of the Constellation founder, but also because the holdings of PNP seem fundamentally sound. Any observations or thoughts you can share?
it seems that insiders opportunistically sell some shares (small relative to their holdings) at elevated prices compared to current book value. i believe investors got over-excited at prices above 20$ (more than 2x book value). its now trading something like 1.3-1.4 x book which to me is getting pretty reasonable if you think they can grow book per share anywhere near last few years for more than a few years into the future. speaking beyond that about why the stock moves where it does is purely speculative as there isn’t a true real answer. i haven’t sold any and have purchased more today, in fact. it could continue to fall, there’s no way of knowing but the margin of safety gets better the lower you go. its very illiquid so any change in sentiment can be violent on the stock price.
Thanks for the quick and detailed response, Simon! Yes, it seems that Shezad Okhai has recently sold about 150,000 CAD of stock. I'm concerned, since he's the Chief Investment Officer, so I would assume he's in a good position to understand the overall financial health of the company. Then again, maybe this is a small amount of his ownership, and maybe it's just a way for him to get paid.
Good points about the margin of safety improving as the stock falls, and about the illiquidity of a micro-cap stock like this.
So, if you don't think the stock is undervalued, why are you so interested in it? Why not buy QQQ or UNH instead? Are you expecting the future performance to be superior to such alternatives?
Personally, I'm intrigued by the idea of getting a 'mini-Constellation' in it's earlier growth stages. I know that it's naive to think Damien Leonard would be able to replicate his father's success, but sometimes 'the apple doesn't fall far from the tree.' Also, the companies they hold - Bravura, Quorum, Topicus, etc. seem to have a lot of potential, although I'm not an expert in vertical software businesses so I can't be sure.
i have no insight on what qqq or unh is worth. i will say that at around these valuations, I have written about this (check out my latest on pinetree), I think the returns are decently attractive with a solid management team at the helm. i wouldn’t say pinetree has the same model as csi, in fact its definitely less good of a model but as you mentioned much smaller so can take advantage of better opportunities relative to their size. so there’s tradeoffs here.
sygnity is more akin to a mini-constellation. check them out if that’s what you are after.
Thanks Simon! Those are good points. You think the PNP model is less good than CSU because PNP doesn't actually acquire companies, but eventually sells them? Or some other reason?
I will definitely look into Sygnity further!
Love the portfolio! And positively surprised to see some railroads in there, especially CPKC!
thanks ozeco. rails are good long term businesses in my opinion. probably should own more but will get there if they go on sale
Several Canadian companies, but no REITs!
indeed, dax. personally i’m probably more exposed to real estate than anything else with my primary residence plus brookfield and atlas are directly/indirectly connected to various aspects of real estate.
Jesus, Dude. Its been a while since I dont see a trash portfolio like yours. The stocks, how many, the size postion , all a big crap. " Well done"