RE:Case study #1 - MTY Food Group Inc.Great stuff LongView.
I appreciate your detailed business analysis.
After reading about MTY, and pondering your thoughts on excessive dividends being harmful, I was reminded about one of my current investments, Peyto Exploration. Sorry if this seems a bit off topic, I will be brief.
Peyto, while being a proficient low cost operator, could be considered a poster child of bad financial decisions. Excessive debt to fuel dividends (in the past), bad basis deals attempting to diversify markets (mostly in the past), and more recently horrible hedging compounded by increasing royalty rates. Thank god a rising tide of nat gas pricing can cure some of these ailments. (Eventually)
I purchased the bulk of my Peyto in the Covid doldrums, after Peyto's creditors extended lines of credit at moderately higher rates, stamping fees etc.
Peyto was a Billion + in debt, intelligent analysts were certain bankruptcy was imminent, the world was quite literally ending for many investors. Long story short, I took some risk, figured I could skim a double in a year or two if nat gas recovered to historical pricing (3 ish AECO), two years later, voila.... me and the banks made a few bucks on paper :-)
Sadly, Peyto's trading desk is still run by the same crew, the debt has barely budged, management seems content to stay the course, what could be a ten-bagger is once again hampered by managements use of debt and financial instruments.
The point of my (apparantly not brief) commentary is to extoll the virtues of conservative business management. I tend to see Gamehost as a basic, boring business. Relatively low debt (although needs to improve, but I digress), conservatively run, with prospects for moderate growth (in line with Alberta GDP).
I somehow doubt Gamehost management will change course and embrace an added demographic. I hope they do, I love growth as much as the next guy, but that is not why I own GH shares. I own shares in a simple, old fashioned business that typically pays a decent dividend. Growth is nice, and I agree a business can grow larger with smaller dividends, but sometimes I just want plain vanilla dividends as opposed to pie in the sky.
Maybe I am just getting old and lazy?
I am thankful people like you are attempting to grow the pie, as of late I am just enjoying a small slice without looking too far ahead.
My thoughts for this morning,
Nukester