Aecon Group Inc T.ARE

Recession means increased public works spending

[Gabriel]

There is material documentation evidence that 1$ spent by governments on infrastructure generates over 1.5$ in economic activity, more so when infrastructure projects are cost-effective (for instance the more users, the higher the benefits; also lesser construction, operations and maintenance costs improve the project rates of return) and the literature indicates that this is more so during a recession.

During the great depression of the 30s (Roosevelt's New Deal investment program) and the great recession of 2008-2009 and COVID, governments spent heavily on public works in accordance with Keynesian economics to support employment and accelerate economic recovery. It has always helped.

The effectiveness of government spending on anything (like a grant to a battery manufacturer) depends on the size of fiscal multipliers or how much economic activity is generated from every dollar spent.  

Substantial documentation estimates such multipliers. Overall, the largest multipliers are found to be associated with public investments, as opposed to other types of spending. The size of multipliers is sensitive to economic conditions. During recessions, public works spending offers higher multipliers.
This is based on a literature review of over 100 academic papers summarized in the link below. The full synthesis is also below. Good reading.

All this to say that should we hit a recession, more projects will come along to stir economic activity. All economic advisors read the same papers...

https://blogs.worldbank.org/en/ppps/effectiveness-infrastructure-investment-fiscal-stimulus-what-weve-learned

https://documents1.worldbank.org/curated/en/178841633526651703/pdf/What-Have-We-Learned-about-the-Effectiveness-of-Infrastructure-Investment-as-a-Fiscal-Stimulus-A-Literature-Review.pdf

[Kupotea]

Hi Gabriel, Do you know of any detailed revenue breakdowns for Aecon? It would be great to get a sense of their revenue mix in terms of industry vs public spending contracts. One of the reasons i've been so comfortable allocating heavily to Aecon is knowing that they can perform accretive buybacks or M&A during a downturn thanks to their low net debt.   The large upcoming

[Gabriel]

Aecon's revenue mix between public and private sectors is predominantly skewed towards public sector projects. This includes significant government contracts in transportation and infrastructure, such as the Eglinton Crosstown West Extension project. Private sector revenue, while substantial, tends to be smaller in proportion compared to public sector projects. Aecon engages in private sector

[Dibah420]

Thank you for that.  All timely & excellent Keynesian economics which would be applauded by the late JK Galbraith et al.  However, let's also  look at some possible pitfalls that might be around the corner.  I'm sure there will be more but I'll mention only three. 1) Careful selection of sectors to invest in.     e.g. Is a battery plant the best

[Gabriel]

Great points I totally agree with all your points. 1 and 2. We need crown publicly owned corporations to manage our infrastructure investments with board/s of directors predominantly from the private sector and stakeholders representatives (chamber of commerce and industry, media, unions, truckers association, employers council, academic,.. and a minority of government's representatives but

[Henrye]

Not a happy day in the USA market today! And others. 

[Alexcanada]

Nikkei up 9.40% at the moment..

[wkrpradio]

Only if you are silly enough to be selling into a panicked  market. I like to buy when things are on sale, like ARE was on 07/02. I picked up more share at $14.02 because some nervous nelly couldn't handle the heat. 

[Henrye]

Did not blink as usual! Did not sell a single share, not entertaining to sell any shares in the near future, bought this time only 18,000 shares at scattered prices .  Why would anyone sell when NEW CFO is buying!  Insiders are buying based on solid inside information!  I am thrilled that you picked up on such great bargain and some poor nervous sole parted with his shares for

[Ronbromleygross]

Been buying myself too.   With a nice dividend yield (4.59 percent) and a buyback plan coming, you have the twin engines working for you.  I like the fact Aecon only has 62m shares o/s and coming down to 59m soon.  Means the earnings per share will look that much better.   Will continue to buy on dips.  Pissed off st myself for not buying at the $8.40 low about 1 year

[Henrye]

Ron , thumbs up to your insights and positivity! 

[Alexcanada]

Hi Ron hehehehe... the lowest I paid for my shares was 8.49, 8.60, 8.65, 8.70, 8.93, 8.95, 9.00 (50000+ shares), all bought on the 26 of october 2023 in a few minutes after open, using multiple successive orders. In hindsight, I should have bought all shares available that day :) Don't kick yourself now, we just have to be patient because this is like SNC at 23$. cheers

[ol_griz]

I was a nervous Nelly, having bought before the drop, but fortunately girded my loins and bought near the low.  I'm only up 6% now but it's been a satisfying whipsaw.  Like lots of others, wish I'd filled my boots to make my first tranche incidental.  Oh, well.  Looking forward to improved sp as share count drops and LSTK fades into the mists of time.  Hoping

[Henrye]

Ron , today's 17$ is in the very near future going to be your 8$ +++ huge score as you describe. You also mentioned that you should have bought all traded shares for that bargain day. Look at it this way with my logic analogy! "Once you squeeze the toothpaste out of the tube, you can't put it back into the the tube." So at this point forget about it and enjoy your win as many

[Gabriel]

Ron, and close to zero net debt, a key metric. SNC/ATRL was again -1.7B barely 4 years after cashing the 3B installement in Q3 2019 for their 10% stake in the 407 (minus taxes of course). Excuse me but may I say monstrous..Finally, the man and the team. The ongoing chairman founded this firm and picked a very impressive and totally relevant team of directors to care for it, a CEO that gives me a

[Henrye]

Gabriel, great Birds Eye added overview and greatly appreciated! Aecon today is showing strength to support all our teams comments and demonstrate that we all are on the right path to achieving greatness sooner than later.