RE:Dennis on BNNStudent Transportation is a Good Company that does a Good Job for their customers.
Good Companies aren’t always Good Investments!
STB has just paid its 128
th consecutive UNEARNED distribution/dividend.
Denis Gallagher has done a very good job growing the company and is a good promoter.
I would suggest paying a lot more attention to the Financial Reports and a bit less to what he says.
Historically Student Transportations growth has been financed NOT with earnings but by Diluting the shareholders. There has been 3 sources of dilution;
- Dilution by DRIP
- Dilution by Debenture Conversions
- Dilution by Equity Issues
There is no evidence that anything is going to change. The most recent Debenture that matured wasn’t in the money and did not convert. Student Transportation took care of it by issuing another $86m CAD of DILUTIVE Equity. Denis never mentions that when he brags that STB has reduced their debt.
It seems that whenever they get a new contract they need to provide New Busses. Then at some point they issue another Convertible Debenture to finance the growth. If all goes according to plan the Debentures get into the money and convert into Dilutive shares. If not at some point it will be taken care of with yet another Dilutive Equity issue. It’s a well-established pattern.
I fail to understand how Issuing DRIP shared at a discount and then buying some of them back with an NCIB at market price with bowered money makes sense.
When I sold the last of my STB shares in January for more than $7 I had no idea that the share price would collapse to the extent that it has. It was because that I felt at that time that STB was at best dead money with a yield that is probably not as safe as many think. I got lucky!
As Always; Do Your Own Due Diligence; It’s Your Money !!