Post by
jimmyvee on Nov 12, 2014 12:23pm
Is management working for themselves or shareholders
I have been nibbling at several drilling companies lately including CDI and akt.a/b. Buying out of favour industries is always a bloody business but over the long hall it has worked out for me. I tend to look for low debt companies, long term lease type income, some growth protential, invest in their opperations and steady management and some financial industry coverage (AKT.a/b has no industry coverage). As I buy more, I do more research and lately I think CDI is working for themselves and not shareholders. With virtually no debt management prefers to dilute shareholders at every opportunity as apposed to making use of the low interest envirorment. Think of it this way as long as debt to Equity is less than 25% CDI could get an investment grade credit rating getting debt at Cda + 2%, thats 60m more leverage possible or about 11% fewer shares, the only way share issue is cheaper than debt is if mangagement felt that 10 years from now the shares will be worth less than $7.65