Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.E

The Good Bad and the Ugly

[Experienced]

By way of background, I bought CHE in the depths of the Great Recession back in 2008 in the 4s.  I rode it it up to the low 20s and down into the mid teens.  I sold back then since the company's communication strategy was IMO very bad and after conversations with management, I was not satisfied with their answers.

At the time they bought General Chemical, I was surprised at the cheap price they got.  Previously their acquisitions were very good (with the exception of Canexsus). So originally I thought I would let it ride.

Soon it became clear that the bargain price they got for General Chemical was frought with problems...the lawsuit, the writeoffs etc.

Since then I have kept an eye on the company, looking for a time to buy back in.

I am close to pulling the trigger, but am concerned that as of 4Q 2021, they are still writing off parts of their investment in General Chemical.  By my math, they have for all intents and purposes, pretty much written off the whole investment and that is why the price is about half of what it was when they bought it.  In the same vein they have pretty much written off most of their investment in Canexsus.

With all that as background, their balance sheet is starting to look pretty good and their forecast for next year looks OK..not stellar.  So the only question for me before I start a new position is to see what happens in the 1Q report this year.  If it looks OK then I will start a small position pending the 4Q report to see if they are still writing off stuff from past acquisitions or they are in the clear.

[Kherson]

Right after Chemtrade bought Canexus, whose book value was actually less than zero, the CEO got the $5 million retention bonus! That in itself speaks volumes. By the way, that is when I began posting on this SH board as it was obvious that the deal was only completed to pad the pay of the CEO at the time! Kherson

[bttmfischer]

I just received the "Management circular"  of CHE in the snail mail yesterday. Reading thtough it , I found that I(unfortunately) I own many more shares than some of the board of directors, who had plenty of time to purchase CHE shares. That is a causew for concern. Does that mean that they think it is too risky to spend their own money on the company they are the directors of

[Joe455]

Chemtrade is a very risky investment.  Don't invest more than you can afford to lose.

[Brad329]

please breakdown all risks you feel are possible. Or is this just a general statement that can be applied to any investment?

[pjn0987654321]

Yes, two bad acquisitions in a row.  However, a new CEO now. 

[raybay_98]

And that's why the 'book value'  is now just $3.64! Since value investors like to buy at one times book, a purchase at $4.00 appears to be the place to make a purchase, not $7.85!

[raybay_98]

Check this out https://www.fool.ca/2022/04/14/2-top-tsx-income-funds-with-yields-above-7-to-buy-for-very-high-passive-income/ One is defintely good and one is ugly . Price needs to come down a lot to justify the risk. Imagine in the last 5 years down  58%! JMHO