The Quandry of MFC Industrial (MIL)
I just read (and reread) the transcript of MFC’s 1st Quarter conference call, and, besides the usual typographical errors that show up in all seeking alpha transcripts, I find it simply baffling. I know I should listen to the actual call but I simply can’t bring myself to do it. Am I the only one or does everyone find the MFC calls totally sophomoric? Despite now having a new deputy CEO, new CFO and new Treasurer (all, apparently, roles that Michael Smith previously filled) they don’t seem to be able to provide any information. It’s as if they hired a bunch of actors to play the parts of deputy CEO and CFO but then forgot to give them a script so that everyone just has to ad lib without any knowledge whatsoever of the business. OK, OK so maybe its just me. My expectations about what a quarterly call should be might be a bit too high, but really…. Why not just eliminate the calls?
That gets me to my real point. The only interesting moment of the call was when a question was asked about whether management shouldn’t be doing something like buying back shares given the continuing chasm between book value ($11) and market price ($7-8). The answer is hilarious, if somewhat telling. Michael Smith’s says that investors need to give them time now that they have a new management team in place. Um, Michael, why did we have to wait years to get a new management team if they were the key ingredient to earning a decent return on book (or buying back shares if that couldn’t be done)?
Yes, I’m still holding my position in MFC Industrial… for the moment. And, yes, I will be giving the new management team some time to show that they can produce a decent return on equity. But I’m getting near the tipping point. MFC under Michael Smith made what now appears to be one good investment (Compton) in the past 3 years and that’s it! And that was just fortuitous as no one could have predicted the rebound in natural gas prices. Peter Kellogg take note! I want to see some positive cash flow here (and I bet you do too).