Yes, I have taken a tiny position. I have lost money in small caps in the past. I have learned it’s better to take a cautious approach and build a position over time.
Valuations: Honestly, I have no idea what’s metric used to value these companies. If you look at P/E, the market has never assigned it above 8 in the last 5 years. The median EV/EBITDA of the last 5 years is 4.7. I looked at Beekay Steel and the market has assigned it similar multiples. Maybe it’s fairly valued for now.
The hope is they will be able to get their margins back to 15-18% with MAR2023 quarterly sales intact. Rest is trust that they have been able to consistently increase sales, profit and ROE in the past. Maybe they will do it in the future as well. Let’s see how it unfolds.
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