I bought EHL over a year ago on the basis that hire companies should do well in the resources boom, which includes building infrastructure, and because I suspected there would be takeovers in that field. I bought BOL and Coates too. I made a profit when Coates was taken over, but the share price retreat of BOL and EHL wiped out that gain (on paper).
I do not believe that EHL will soon get back to the $1.52 that I paid for it, but I feel it will gradually improve, so I hold on. I did not buy many EHL shares, so the dollar loss is petty (I wish I could write the same about BOL – boohoo).
On the positive factors for EHL are: a) firms in the equipment business would have to be crassly mismanaged not to be doing well in 2008 - read how well Tutt Bryant is faring, and how short supplied the world is for the equipment type that EHL owns; b); in past months institutional investors and directors have bought EHL shares (albeit when the price was lower than today); and c) the large holdings of some EHL managers should incentify them to improve the share price.
On the negative side: a) I do not like the geographical spread of EHL’s business - I would be happier if EHL stuck to making profits in its backyard, but I could be wrong in the longer term; and b) EHL carries more debt than companies in which I now choose to invest. The debt is well secured by assets that are in demand – the problem is that serving the debt should add to EHL’s expenses, and dampen profit.
Other than the debt metrics, the other metrics (PE ratio et cetera) are a neutral factor – neither being compellingly attractive, nor egregiously offputting.
Anyhow, let us see what happens to the share price over the rest of 2008. It should go up.
Pioupiou
EHL Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
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