Sunday, April 23, 2017

Input Capital a long term wealth creation machine

I have owned shares in Input Capital for a couple of years. The company does streaming contracts on canola in Canada. You can go to the company website to learn more. I also wrote an article about the company when I first purchased the stock. 

I was reading the company's latest investor presentation and thought I would update readers on why this is a great company that is still trading at reasonable valuations. This slide in the presentation pretty much tells the story of why I like this company.

The company continues to take revenue from in place streaming contracts and invest the funds into new streaming contracts. The company has already proven the streaming concept over the last couple of years and now the business is a rinse and repeat exercise. 

More streaming contracts is leading to higher revenue and cashflow. In fact the company initiated a dividend last year and I would expect that to increase over time as cashflow increases. 

I was listening to the Frank Curzio podcast and he was interviewing Chris Mayer who runs the Bonner Family office. Mr. Mayer was talking about his book about 100 baggers and how he researched how companies that went up over 100 times in value did it. 

Basically it amounts to consistent returns on invested capital being reinvested back into the business year after year and then letting compounding have its effect. That is basically what Input Capital is doing. 

They also talk about India and how it is Mayer's favorite emerging market. He also mentions Fairfax India as his favorite way to play India. 

I am long Input Capital and Fairfax India.

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