# Chesswood Group (CHW.TO)



## liquidfinance

Thoughts on this one please? Any holders? I've been looking at it and can't seem to come to a conclusion. 

It's a minnow in terms of market cap but has a very appealing divi. 
Then they have actually increased the divi slightly just two months back so I would tend to think that the payout should be safe.


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## doctrine

I am a holder. They've increased the dividend by 10% this year but also 10% last year. It's a full payout but they seem to be able to grow their revenues/earnings by 10-20% a year and raise the dividend accordingly. I'm up 20% year over year - 10% capital gains and 10% dividend. Pretty thinly traded for some but not too hard to get a hold of a thousand shares.

Pretty good to get a 9% dividend with a good chance of a dividend increase, as opposed to some stocks at 4-5% and probably less of a chance. Hard to ignore two nice dividend increases since Feb 2011.


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## liquidfinance

Looks like quite a nice set of results out today. 



> Chesswood's earnings reflected continued growth in Pawnee Leasing's portfolio along with excellent portfolio performance. Chesswood's net income more than doubled for the second quarter, compared to the second quarter of last year, while net earnings for the first six months of this year were up by more than 50% over the prior year.


http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=8582575


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## doctrine

Very nice indeed. Still a 8.28% yield, but their payout ratio of net earnings is dropping and now down to 82.5%. I'm up 15% this year, plus still receiving dividends.


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## riseofamillionaire

Not a holder. But its one i watch and I would probably own if I had more $$. Have to be careful with auto stocks if the cycle goes against you. I would be comfortable holding this in the current environment tho.


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## liquidfinance

What a fantastic little company. 

An already fantastic yield at and now a 9% increase to the monthly payment. 

http://www.marketwire.com/press-rel...rease-in-monthly-dividend-tsx-chw-1754442.htm


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## doctrine

It's essentially the third ~10% dividend increase in a row now for the last 3 years. You could have picked this up last summer for $7.50, then a yield of 8.8%. That was the last time I added although my ACB is still below $7. Still holding - the current yield if you bought today is 7.7%.


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## liquidfinance

I did actually decide to buy a small holding the day after I started this thread. My purchase price was $7.51


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## GoldStone

The new dividend is $0.72/year. EPS is $0.72 according to TDW, $0.75 according to GlobeInvestor. Either way, payout ratio is close to 100%. How is this sustainable?


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## liquidfinance

GoldStone said:


> The new dividend is $0.72/year. EPS is $0.72 according to TDW, $0.75 according to GlobeInvestor. Either way, payout ratio is close to 100%. How is this sustainable?


Those figures are looking in the past. 

Yes the payout ratio is high though. The YTD according to the most recent 1/4 it was 96% of dilute EPS.

It will be interesting to see what the results are but when they payout is already yielding almost 8% would any management be stupid enough to increase the dividend?

Yes the ratio is high but that's all down to your risk tolerance. For me it's a risk i'm willing to take. If they grow earning then it's likely I am going to be rewarded by an increasing payout.

They were also previously an income fund and converted to a corporation.
http://www.marketwire.com/press-rel...verts-to-a-Corporation-TSX-CHW.UN-1375120.htm


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## GoldStone

liquidfinance said:


> would any management be stupid enough to increase the dividend?


Sure, if they have the "right" incentives. For example, big bonuses tied to the stock performance. I'm not saying that this is what happened in this case. This is just a general statement.



liquidfinance said:


> If they grow earning then it's likely I am going to be rewarded by an increasing payout.


Prudent management waits for the earnings to materialize, then raises the dividend. Not the other way around. Do you have good reasons to believe they will grow earnings next year?

Don't get me wrong... I'm not arguing that this is a bad investment. I don't know anything about the company. I just took a quick look at the numbers. Payout ratio raised eyebrows, that's all.


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## doctrine

Chesswood is a former income trust that normally returns all of its earnings to shareholders - thus the high payout ratio. There is some risk to that of course, and the stock had been trading near a P/E of 10. But their revenues are up and their earnings are up over the last several years. Their net income for 2012 was on track to be 50% higher than 2011. When a stock with a P/E of 10 raises earnings by 50%, there is good results for shareholders - my returns in the last year have been something like 50%. If they're raising the dividend again, then they have confidence they are on the right track. We'll see when the next report comes out. The stock is at a P/E of about 13 right now based on the last four quarters. I've been happy to hold them because the trailing 12 month payout ratio has remained below 100% - but it is net earnings, and not 'cash flow' or some other definition. The projections I have seen are for continuing higher revenues and earnings over the next 2 years.


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## BullAllTheWay

Their businesses are not capital intensive. Management doesn't believe that it needs the extra cash. Of course, if we have a recession, there is the risk that the dividend will be lowered. But I would that business is surely very good right now, otherwise we would not have seen a dividend increase.
If you look at the volume Friday, I think that the market got the same feeling. Best volume in a long time, the stock should go up nicely from here.


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## doctrine

2012 annual results are out: diluted EPS of $0.77. That's up from $0.56 in 2011. And thus the reason for the dividend increase which leaves their payout ratio below 100% even though it's been three ~10% dividend increases per year for 3 years. And the stock is up about 6% since the 9% dividend increase announcement.


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## doctrine

Q1 2013, net earnings of $0.25 a share, up from $0.16 in Q1 2012. Small increase in revenue and a larger increase in margins. The big success appears to be Case Funding (legal loans) which went from a $150k loss to a $200k profit year over year, providing almost half the growth in earnings. This means their payout ratio has dropped to 70%, despite 1.6% more shares outstanding on options. That's ok, given the stock is only up over 50% in a year. My ACB is at $6.93 and it's trading at $10.70. Pretty happy overall. My 3rd largest holding. Not selling as not a lot of stocks with a growth profile like this with a 6.7% yield and likely to increase the dividend by 10% next year again.


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## doctrine

Q2 results, again a record in terms of earnings, this time $0.28/share diluted. Closed up 8.8%, that's probably the biggest one day increase I've seen on this. P/E still in the range of 11-12, dividend payout ratio down to 65% in the last quarter. Still one of my favorite small caps. One year return is 73%.


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## liquidfinance

doctrine said:


> Q2 results, again a record in terms of earnings, this time $0.28/share diluted. Closed up 8.8%, that's probably the biggest one day increase I've seen on this. P/E still in the range of 11-12, dividend payout ratio down to 65% in the last quarter. Still one of my favorite small caps. One year return is 73%.



Ditto to that. It shure as hell helps off set the loss I had with POT today.


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## doctrine

Q3 earnings out and dividend increase!

http://online.wsj.com/article/PR-CO-20131104-911007.html?dsk=y

Diluted EPS of $0.23 are up from $0.13 last year; dividend increase is 8.3% from 6 cents to 6.5 cents monthly. Their legal funding business is really taking off; they had $200k profit in April and had $572k this quarter. And they started a new business providing loans to small businesses (Windset). Lots to like here. I officially have a double on my shares since my ACB is $6.95 and a close at $13.92 - not including dividends which have been substantial - I already have about 20% of my capital back.


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## liquidfinance

doctrine said:


> Q3 earnings out and dividend increase!
> 
> http://online.wsj.com/article/PR-CO-20131104-911007.html?dsk=y
> 
> Diluted EPS of $0.23 are up from $0.13 last year; dividend increase is 8.3% from 6 cents to 6.5 cents monthly. Their legal funding business is really taking off; they had $200k profit in April and had $572k this quarter. And they started a new business providing loans to small businesses (Windset). Lots to like here. I officially have a double on my shares since my ACB is $6.95 and a close at $13.92 - not including dividends which have been substantial - I already have about 20% of my capital back.


Really wish I had purchased more of these. Still considering it as they are currently doing so well. Fantastic company.


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## liquidfinance

Come on my little beauty up another $0.01 and I have my first 100% gain :encouragement:


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## doctrine

Quite a year for Chesswood. I have my 2013 return pegged at 113% on top of my 50% return in 2012. Two dividend increases this year totaling 18%. They have growth in all business lines and have started a new one (Windset) providing working capital loans to small businesses. They issued $20M of debentures which are convertible at $21.25 which may be a bit of a ceiling in the medium term but that's certainly okay given my ACB is $6.93. One thing I have been noticing is liquidity is increasing a lot - as much as 5-10 times in 2013 over 2012.


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## liquidfinance

Was there any news relating to the 6% gain on Monday? Either way I have no complaints. Only wish I had invested more. Up 135% on this one now


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## doctrine

Jason Donville mentioned it on BNN Market Call on 24 Dec and the next two trading days (27-28 Dec) both saw big gains. His fund isn't in it though, they sold in late 2011-early 2012, but someone still asks him about it every time he's on. From CHW's numbers, I know their legal funding is really taking off, and I also am betting they will get a lot of business from their new small business loans company which is probably why they raised the $20M in convertible debentures. They could also be looking at an acquisition which they've done in the past.


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## Dom

Jason says to hold on to it for the long run!


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## Dom

All the gains from the past week have been negated by Yesterday and Todays fall
A small pullback I suppose?


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## doctrine

There were definitely momentum players who jumped in a few week ago then drove it to $19. The last two days have been more volume than has been seen in a year. As is typical when short term players get involved, the stock returns to a more normal valuation. Doesn't take much away from the 100%+ return in 2013 nor the company fundamentals which are very good.


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## explorer416

I've been watching this. What are people's opinions on a good entry price?


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## Dom

explorer416 said:


> I've been watching this. What are people's opinions on a good entry price?


Now...

great company, strong management, nice dividend, lots of potential growth


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## explorer416

In today at $16.49. Happy to see it over $17.00 already today.


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## CPA Candidate

*nficurri wld*

I've been watching this stock take off for 6 months but never pulled the trigger, regretfully. Great diversified company. When it is mentioned on BNN it typically gets described as being in car leasing/sales, but there is much more to the company's operations, including legal fee and small business lending.


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## explorer416

... and now it's sub $16.00. (shakes head)


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## Dom

explorer416 said:


> ... and now it's sub $16.00. (shakes head)


If you're in it for the long, why worry about how its moving a week after you purchased shares? lol

Just sit back and collect the divvy


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## doctrine

I remember CHW dropped from over $7 to below $6 within a few months of my first purchase, had to average down a little. It was something like a 15-20% drop in total - about what it's dropped now from what is clearly a too-fast run-up. Price movements can be volatile in small caps but EPS have been increasing steadily for CHW - from $0.55 in 2011 to $1.02 in the last four quarters - thats a good 76% payout ratio despite the recent dividend increase. My 4th biggest holding.


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## doctrine

Chesswood just announced an acquisition of "Northstar Leasing", which is a Canadian version of their Pawnee leasing business (which is their biggest profit maker). So, they are expanding into Canada. The Canadian company's finance receivables are about 13% ($16M total) of the size of their US portfolio. If their margins are similar, it is a very good acquisition that could provide 8-10% growth in EPS. They issued $20M of convertible debentures in December and paid for the acquisition with $10M in cash - perhaps that is why they issued them if they were in negotiations at the time.


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## Dom

Looking to get out at 18.5-19 and initiate funds elsewhere


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## doctrine

From my perspective, this is what I see in the annual report:

-Fully diluted EPS up 16%, payout ratio after the 10% dividend increase is 87%
-Book value is up 14%
- Finance receiveables were up 28%
-Their legal finance receivables doubled to $11M, now making up 7% of their total finance portfolio, up from 4.5% a year ago
-And their Windset capital corporation already has $2.6M in loans after just one quarter. They've indicated they could be adding up to $10M more capital to Windset in the near future. They have lots of cash on hand and credit available so they have no issues funding loan growth
-None of these results include operations from the recently acquired Northstar leasing in Canada

On the negative side, they are experiencing lower originations at Pawnee, but are maintaining their margins.

Definitely holding. I fully expect they can fund another 10% dividend increase next year at their rates of growth. The growth in legal and small business loans is quite impressive.


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## Dom

doctrine said:


> From my perspective, this is what I see in the annual report:
> 
> -Fully diluted EPS up 16%, payout ratio after the 10% dividend increase is 87%
> -Book value is up 14%
> - Finance receiveables were up 28%
> -Their legal finance receivables doubled to $11M, now making up 7% of their total finance portfolio, up from 4.5% a year ago
> -And their Windset capital corporation already has $2.6M in loans after just one quarter. They've indicated they could be adding up to $10M more capital to Windset in the near future. They have lots of cash on hand and credit available so they have no issues funding loan growth
> -None of these results include operations from the recently acquired Northstar leasing in Canada
> 
> On the negative side, they are experiencing lower originations at Pawnee, but are maintaining their margins.
> 
> Definitely holding. I fully expect they can fund another 10% dividend increase next year at their rates of growth. The growth in legal and small business loans is quite impressive.



I thought the results they released were good but I guess the market didnt feel the same way?
Or maybe CHW is just making a small correction due to the fast run up its had in the past 2-3 months

Either way I still feel there is more value elsewhere but I will be patient and wait till the stock hits my exit mark of 18.5-19


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## liquidfinance

I would like to hope that there will be some support at the current level. I am surprised by the drop today.


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## Bear2Bull

Started a position @ $15.93. Results were decent and dividend is almost at 5%.


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## DividendLuvr

I am in for the long haul on this one - lots of growth opportunities and diversification of their revenue streams.


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## liquidfinance

This makes no sense at all now. Down another 7% :rolleyes2:


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## doctrine

If you notice the big volume yesterday, the CEO cashed in about 350,000 options. Some of their options go way, way back, as low as $2 a share granted in 2006. Most options on the books are from 2011, and they didn't issue any at all in 2013. They had a balance of about 1.5 million options on their last statement, so it's not like everyone is cashing out, but there's probably some short term negativity around it.


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## Dom

Yea, sort of sad to see the crazy drop CHW has been having the past few days after their results which weren't bad by any means

It seems especially recently, if a company doesn't release earning results that blow away expectations the stock get hammered


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## Butters

If I had free money I would buy this! I transferred some but waiting  ill miss this dip!


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## PatInTheHat

Almost got in on that dip but it has recovered quite a bit today


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## Dom

Jason Donville told listeners on BNN tonight that now is a great time to buy into CHW
He also didnt know why the dip considering the decent/good earnings report

Last time Jason Donville went on BNN and mentioned CHW
the stock jumped 10% the next day... hoping the rebound comes tomorrow!


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## doctrine

Jason Donville wasn't a big fan of them in 2011-2012, because he thought they'd be more of a growth story and they hadn't expanded yet. He has turned 180 degrees in the last 12-18 months and always recommends them - they are definitely a growth story now. Legal funding is a multi-billion dollar industry in the US and highly fragmented. Same with US small business loans. Next quarter we should see more on the margins they are getting on that side of the business, but they must like it with all of the capital they are allocating.


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## Homerhomer

I think Jason Donville is one of the very few people worth listening to on bnn, mind you most of his stock are too risky for me (same for Benj Gallenger sp - contra investing), but they have very good track record and it's interesting to listen to their opinions.

In majority of cases he sticks to what he recommends (not always as it was the case with one of his past picks last night).


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## Dom

Homerhomer said:


> I think Jason Donville is one of the very few people worth listening to on bnn, mind you most of his stock are too risky for me (same for Benj Gallenger sp - contra investing), but they have very good track record and it's interesting to listen to their opinions.
> 
> In majority of cases he sticks to what he recommends (not always as it was the case with one of his past picks last night).


I agree, he is definitely worth a listen, a lot of his past picks have performed very well
He also didnt stick with GRE, of which he stamped as having great fundamentals but then sold it because of the risk
associated with a "China Play".


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## PatInTheHat

Homerhomer said:


> I think Jason Donville is one of the very few people worth listening to on bnn, mind you most of his stock are too risky for me (same for Benj Gallenger sp - contra investing), but they have very good track record and it's interesting to listen to their opinions.
> 
> In majority of cases he sticks to what he recommends (not always as it was the case with one of his past picks last night).


I'd have to agree. Those two are definitely a few tiers above the rest of the talking heads.


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## Butters

hit hard again, down another 5%


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## Bear2Bull

Picked up more at $14.60


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## Butters

Bear2Bull said:


> Picked up more at $14.60


Same, got some at 14.48, it was 14.20 or so, starting to regain a bit more now

edit* yikes down more, i thought it was time to spike up! theres no reason for these drops, their report was very good, just people unloading and cashing profits


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## Killer Z

Started a position at $14.40.


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## liquidfinance

This is insane. 

One of my best performers is now my ytd worst performer by a long shot. 

It must be a good time to buy / add now.


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## Synergy

Getting close to the 200 day MA (14.06). Could be a good buying opportunity if it pops off the 200 day MA as I don't see any fundamental reasons for a continued sell off.


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## moose

Since the beginning of 2014 there's been a bit of selling. A lot of the selling occurred this month. I think doctrine got it nailed with the short term negativity. 

Concerning the CEO's options of last week, I naïvely assume he just wanted some cash to buy something...


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## PatInTheHat

Also started a small position at 14.38


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## doctrine

There's been more volume in the last week than in in the last couple of months: 910k shares, almost 10% of the company. I think it will settle down eventually. It's actually probably only about 5 more weeks until Q1 results are out; they were announced 30 April 2013 last year.


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## CPA Candidate

I emailed the CEO today and chewed him out for dumping a large block of shares of a thinly traded stock at once. He replied saying he only made one transaction was not responsible for today's price action.

Besides the effect of a large increase in supply on the share price, the optics of a CEO dropping 10 days of trading volume are terrible. Sure, the price didn't go down today because he traded shares, but his actions have rattled everyone's cage and raised suspicion. 

I can't believe he is ignorant of the how the market works and how his move would be perceived, so the only conclusion I can come to is that he not particularly concerned.


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## gibor365

CPA Candidate said:


> I emailed the CEO today and chewed him out for dumping a large block of shares of a thinly traded stock at once. He replied saying he only made one transaction was not responsible for today's price action.
> 
> .


Actually I just assumed on doctrine's blog if any insiders sold some shares....lokks like this is the reason, if CEO strats to sell (for small cap), 
"domino" reaction can happen ...
btw, aren't you concerned about CHW high debt?


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## the-royal-mail

$14.44

doctrin's comments have me concerned. I think I will watch this one from the sidelines.


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## Dom

CPA Candidate said:


> I emailed the CEO today and chewed him out for dumping a large block of shares of a thinly traded stock at once. He replied saying he only made one transaction was not responsible for today's price action.
> 
> Besides the effect of a large increase in supply on the share price, the optics of a CEO dropping 10 days of trading volume are terrible. Sure, the price didn't go down today because he traded shares, but his actions have rattled everyone's cage and raised suspicion.
> 
> I can't believe he is ignorant of the how the market works and how his move would be perceived, so the only conclusion I can come to is that he not particularly concerned.



Its embarrassing to think the CEO doesn't understand what repercussions dropping that many shares at one time would have 
on the price


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## CPA Candidate

gibor said:


> btw, aren't you concerned about CHW high debt?


No, I view their debt as moderate and manageable. They have been executing well and are a very diversified company. Lower business risk tends to allow for higher financial leverage. Also, I expect that the convertible debentures will be settled with shares. The conversion price is 21.25 and they go to 2019. CHW has been as high as $19.44 in the past year.





Dom said:


> Its embarrassing to think the CEO doesn't understand what repercussions dropping that many shares at one time would have
> on the price


I'm sure he does, but is just not that shareholder friendly.

I think the stock will recover to upper teens this year, but it's frustrating to open a position at $16.50 and nearly instantly be down 12%. I made a mistake by not easing into the position, which is generally a smart move.


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## MRT

Frustrating, yes...but it is only a 'mistake' in hindsight.

The stock could just as easily have risen 12%, in which case you would be celebrating the fact that you did not make a 'mistake' by only easing into a position


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## liquidfinance

I'm just looking at the latest insider activity. 

It states acquisition in the public market yet the prices are below current trading prices. 

http://canadianinsider.com/node/7?menu_tickersearch=CHW+|+Chesswood+Group

Can anyone explain this to me?

Thanks


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## gibor365

liquidfinance said:


> I'm just looking at the latest insider activity.
> 
> It states acquisition in the public market yet the prices are below current trading prices.
> 
> http://canadianinsider.com/node/7?menu_tickersearch=CHW+|+Chesswood+Group
> 
> Can anyone explain this to me?
> 
> Thanks


Looks like because buys are in US$, don't understand why...
also, why on this page yield indicated 1.7%?
P.S. Still did't initiate position ....thinking... looks very volatile...


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## Butters

He's been doing lots of trades! For a long time now too. Probably responsible for the massive swings in this low volume stock. 

Sad to see this roller coaster. Still think in 6 months this stock will be 18+ with 5% yield dividends along the way.


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## liquidfinance

gibor said:


> Looks like because buys are in US$, don't understand why...
> also, why on this page yield indicated 1.7%?
> P.S. Still did't initiate position ....thinking... looks very volatile...


No idea why the yield is 1.7% it 6.5c a month.

Wow I didn't even notice it said USD. That would make sense. Although not sure why the price would be shown as USD


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## Butters

Today is ex dividend date too so it's expected to drop to pay it out. 

In the past couple weeks it goes down 5% up 5% next day

It's just a low volume stock.
I'm going to hope volatility ends today. Green tomorrow for sure!


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## gibor365

jacofan said:


> but a $0.07 divy shouldn't impact the share price by over $0.60....starting to watch this one myself too now.


actually as per TDDI ex-div wasn't today , but on 3/27/14


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## CPA Candidate

The CEO has become a trader of his own stock, buying back shares he sold at higher prices just a couple weeks ago.

I the cynic in me is calling shenanigans. I can understand why people shy away from low volume stocks. I'm feeling like a pawn on this one.


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## Dom

CPA Candidate said:


> The CEO has become a trader of his own stock, buying back shares he sold at higher prices just a couple weeks ago.
> 
> I the cynic in me is calling shenanigans. I can understand why people shy away from low volume stocks. I'm feeling like a pawn on this one.


So am I...

When the Ceo becomes a trader of his own stock.... what type of message does that send to shareholders


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## Butters

I can't believe how poorly this stock is doing!


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## Killer Z

This company certainly suffers from some wild swings ......or at least it has as of late.


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## Homerhomer

I have added a bit more today, with those swings it can go up quickly, in the meantime the dividend is nice.


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## Jon_Snow

This recent tank job has put this company on my "buy at a discount" list. Will watch this closely now.


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## bds

Picked up some more at $13.60 today


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## Butters

I sold some today, tired of the hurting!


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## Killer Z

Seems like a good buying opportunity to me. I like this company.


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## rossco12

I picked up [email protected] today. Volatility can be your friend.


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## Butters

I bought in at a good price before and it just kept dropping. 

It's likely hit bottom now. But man each day losing 2% over and over hurts!

It's past the 6% yield. Has tons of growth. 

With big risk comes big reward. I have a problem of just starring my at losses I guess. Maybe if it goes lower again this week I'll double up again.


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## liquidfinance

I think I am in the same position as you with this one. It's been hurting me to see a good gain erode so much but I like the company and there wasn't anything which I didn't like in the previous report. 

My dilemma is that previously it had done so well I didn't want to add new money. Now it's done the complete opposite. I'm unsure if to take it as a buying opportunity or to just save the remaining profit and run. I'm still up around 80% at this level.


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## doctrine

Pretty big drop, 37% from the 52 week high. Then again, it's also only a 6 month low given how fast the price went up. I always thought the price run wasn't really justified but even if I sold at the exact high, I'd only be ahead less than 10% after taxes and missing four months of dividends. So, holding on.


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## Butters

Great results last report. 
But it went down. 

How can this stock go up?
Someone like the CEO needs to dump 4 million in it. 

Or possibly even better q1 reports?


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## Synergy

Was going to pick up a few more shares today but my limit order never got filled. Oh well, perhaps there will be another opportunity.


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## Bear2Bull

Down about 13% but will hold for the long haul. Is the earnings report tmrw?


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## Jon_Snow

In keeping with my preferred strategy of purchasing seemingly good companies that are getting hammered for debatable reasons, I'm now in for 500 shares of CHW.


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## PatInTheHat

Jon_Snow said:


> In keeping with my preferred strategy of purchasing seemingly good companies that are getting hammered for debatable reasons, I'm now in for 500 shares of CHW.


I think im just going to start following you Jon. You seem to get into the same companies as me but at much better prices


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## Jon_Snow

PatInTheHat said:


> I think im just going to start following you Jon. You seem to get into the same companies as me but at much better prices


Pat, don''t do that. I bought Iamgold at $11 and sat transfixed while it sank to where it is today at under $4. My badge of shame (Thank goodness its a small holding at least)

I repeat, don't do what I do.

Yes, I have hit on a few good things, but I'm still deeeeeeeeeep in learning mode.


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## Butters

i regret selling half my shares, even at a 6% yield, i would have eventually caught up to my losses, panicked!
good learning opportunity? I bought suncor with my remaining money, something more stable hopefully


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## Homerhomer

SheaButters said:


> good learning opportunity? I bought suncor with my remaining money, something more stable hopefully


And Suncor is at it's 52 week high, hopefully for you this isn't going to be the case of buy high sell low.

If chesswood goes down closer to 12 I will be buying more, some of it will be proceeds from Suncor.


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## Jon_Snow

I just finished reading through this whole thread. Pretty good insight into the minds and emotions of investors.


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## PatInTheHat

Homerhomer said:


> And Suncor is at it's 52 week high, hopefully for you this isn't going to be the case of buy high sell low.
> 
> If chesswood goes down closer to 12 I will be buying more, some of it will be proceeds from Suncor.


Very much this.


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## rossco12

Nice little rally today, hopefully we can sit back and enjoy the dividend for a little while.


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## Jon_Snow

Hope I nailed the entry point on this one.... it's early yet, but promising so far. :encouragement:


----------



## rossco12

Sure does, of course I wish I bought more under $13


----------



## Butters

Lucky dogs!


----------



## The ruined man

I bought a little of this with some of my gic monies. Glad i did, but i don´t think stock picking is for me. I will enjoy the dividend and the rise but continue with my potato and gics.


----------



## liquidfinance

Buy, Hold & propsper. :encouragement:

Fingers crossed :biggrin:


----------



## Killer Z

Do any of you have a target price for this position or are you simply holding indefinitely?


----------



## Jon_Snow

I will hold it until I don't want to anymore.

Pretty technical, I know. :tongue-new:


----------



## doctrine

They have debentures due in 2018 at $21.25 a share. Let's start with that for a target price - that would be a great return over 3.5 years: 50% capital gains plus 20% in dividends (assuming no increases or cuts), probably 18-19% annually.


----------



## Jon_Snow

I'd be more than happy with that outcome, Doc.


----------



## liquidfinance

Results out 

http://www.marketwired.com/press-release/chesswood-announces-results-for-q1-2014-tsx-chw-1906090.htm


----------



## Jon_Snow

I love it when a plan comes together. :biggrin:

Up 12% in just over a week. Keep it going, CHW. :encouragement:

Probably should have bought more.


----------



## doctrine

Nothing wrong in the results at all. Management's outlook is positive. Business has been increasing in each of the first three months of the quarter. Earnings were up 5%; revenue was way up because of their new businesses - in fact it was a near record for revenue (the highest in several years at least). Looks good to me and fairly valued in this $13-15 range. I do expect these results support a dividend increase in the next 12 months especially if the small business economy is picking up.


----------



## livingthedream

I bought some shares of Chesswood a few months ago in the $15 range. When it went down to $13 I tripled my position. I then dumped half at $14. I think the dividend is safe, and I'm happy to collect the dividend.


----------



## Bear2Bull

Solid gains today


----------



## CPA Candidate

The fundamentals of the company are solid however there are a lot of market participants that aren't really interested in that kind of thing. They watch charts instead.

When volumes exploded due to insider selling and the price dropped, the weak hands rolled over and sunk the price even lower. CHW is broken in the short term, but long term they are a good company to hold.

I've been irratated about it, but it's important to take the longview and just hold the shares.


----------



## Dom

Bear2Bull said:


> Solid gains today


Trust me, that can change real quick, its not even worth it to count the small
+/- 2-3%

Right now this company is pretty volatile, I should of listened to my gut and sold out around $19 when
the stock was getting way ahead of itself... instead I trusted someone else's word


----------



## Synergy

Dom said:


> Trust me, that can change real quick, its not even worth it to count the small
> +/- 2-3%


Good call, I was thinking the same. Down over 3% today!


----------



## DividendLuvr

Averaged down on the dip today in my TFSA - picked up an additional 175 shares.


----------



## CPA Candidate

The stock price is on the mend after solid Q2 results. I added to my position when it was in the 13s. I think $16-17 is definitely possible by year end as people realize the company is undervalued.


----------



## doctrine

Book value is up 6.4% in 6 months. Revenue and profits on the finance side up 25% year over year. Very strong growth.

With a dividend payout ratio of net income of 70%, well below the average of the last 5 years (has been as high as 100%), another dividend increase is, I think, very likely in the next 3-6 mo.


----------



## liquidfinance

doctrine said:


> Book value is up 6.4% in 6 months. Revenue and profits on the finance side up 25% year over year. Very strong growth.
> 
> With a dividend payout ratio of net income of 70%, well below the average of the last 5 years (has been as high as 100%), another dividend increase is, I think, very likely in the next 3-6 mo.


Fingers crossed for November. That was when we had the last increase.


----------



## livingthedream

I sold mine yesterday at $15.20 after buying in the 13 and 14's. If it goes down another 10% from current levels I will buy some more.


----------



## Butters

The growth has slowed down, but still earning. 

Close to a 52 week low. 
Yield over 6% with a history of increasing

Anyone's thoughts?


----------



## al42

SheaButters said:


> The growth has slowed down, but still earning.
> 
> Close to a 52 week low.
> Yield over 6% with a history of increasing
> 
> Anyone's thoughts?


Down over 5% today...somethings up?


----------



## Homerhomer

I bought a bit today, sold all of mine around 14.50, so buying back at 12.70 seems like good deal.


----------



## al42

Homerhomer said:


> I bought a bit today, sold all of mine around 14.50, so buying back at 12.70 seems like good deal.


Yup..added a bit at $12.40. The last qtr. looked alright. Strange why it would take a hit today a few weeks after the report.
Probably expecting a dividend increase?


----------



## moose

I figure this article might have spooked a few people:

http://www.theglobeandmail.com/repo...-auto-and-financing-industry/article21662398/


----------



## Killer Z

Added to my collection at $12.12/share. They had nice Q3 results which is good enough for me to buy more of this low P/E, high dividend paying stock:

http://www.marketwired.com/press-release/chesswood-announces-results-for-q3-2014-tsx-chw-1965142.htm


----------



## al42

moose said:


> I figure this article might have spooked a few people:
> 
> http://www.theglobeandmail.com/repo...-auto-and-financing-industry/article21662398/


don't have access to that report...must be bad as people are bailing fast.

Can you paste the article?


----------



## chantl01

I've had this one on my watchlist and got in today at $12.30. I'm happy with that.


----------



## moose

There is growing concern among senior executives in the auto and financing industry about long-term loans that some car companies are offering to entice buyers and boost sales.

Auto consumers have been increasingly attracted to long-term loans with low monthly payments. But industry executives are worried that customers will return to showrooms before the seven or eight-year terms of their loans have been completed and find that they owe more on the their vehicle than what it’s worth as a used car.

“Longer amortizations are not good for the industry or for the consumer,” said Raymond O’Kane, managing director and head of national dealer finance for Bank of Montreal.

“We make good loans at the time,” Mr. O’Kane said at the annual TalkAuto Canada conference in Toronto Wednesday, “but nobody can predict that far out. Peoples’ lives change.”

The auto industry’s increased use of long-term loans and low-cost financing has helped boost sales to record numbers. But at a time when Canadians are already carrying heavy mortgage debt and other liabilities, the growth of financing in the auto sector is adding to worries about overleveraged consumers.

Mr. O’Kane’s comments were echoed by Ford Motor Co. of Canada Ltd. president Dianne Craig, who said Ford does not offer eight-year loans as some other auto makers do.

Ford has also tried to stay away from offering seven-year loans, Ms. Craig said, in favour of four-year leases as a way of keeping monthly payments low for customers.

“The bigger concern is from a consumer point of view because obviously they’re going to have negative equity,” she said.

“We want them back and we want them happy,” she said.

The monthly payment on a four-year lease is about the same as the monthly payment on an eight-year loan, she noted.

Among the long-term financing offers in the market are Hyundai Auto Canada advertising eight-year, interest-free loans on some 2014 Accent and 2015 Sonata models. Seven-year, interest-free loans are common and have been offered by General Motors of Canada Ltd. on its full-sized pickups at various points this year.

One high-ranking industry source said he has seen data showing that eight-year loans have grown to 14 per cent of the market since they first became prominent after the recession. About two-thirds of purchasers finance their vehicles through loans.

Mr. O’Kane said he believes eight-year terms make up at least 10 per cent of the new vehicle loan market.

Bank of Montreal’s maximum term on a new car loan is eight years, he said, but he urged dealers and industry officials attending the conference to make it clear to consumers that the monthly payments on five-year loans won’t be significantly higher than those on six-year loans and it means consumers eliminate that debt a year earlier.

“It’s doing the right thing for customers,” he said.

Loans of six years or longer make up about 69 per cent of the Canadian auto loan market, said Jeff Schuster, senior vice-president of forecasting for consulting firm of LMC Automotive. That compares with 57 per cent in the spring of 2012.

Incentives such as interest-free loans for seven or eight years have helped propel vehicle sales in Canada to a record pace. As of the end of October, auto makers were on pace to sell more than 1.8 million new vehicles in Canada, which would be the first time the industry has topped that mark and the second straight annual sales record.

“We believe zero per cent ads are driving a lot of people into the showrooms,” said Josh Bailey, vice-president of research and editorial for Canadian Black Book, an industry data service company.

Ms. Craig of Ford said the strength of the market in 2014 has taken Ford by surprise, but she forecast another increase in sales next year to 1.93 million vehicles.

Mr. Schuster of LMC Automotive is less bullish, forecasting that sales will end at about 1.84 million vehicles in Canada this year and rise slightly in 2015.


----------



## doctrine

I looked at Q3 in a lot of detail when it came out. It looked good to me. Revenue and earnings are up. Their finance receivables, which drive revenue, are at record levels. Loan loss provisions are up as well, but that has a lot to do with higher receivables, and management said they are well within their expectations. 

When I got into the stock 3-4 years ago, the dividend payout out of net earnings was 100% and despite a 30% increase in dividends, the DPR has fallen from 100% to 70%. I have a decent sized position, but if CHW hit $10 for some strange reason, I would be adding shares, although this is definitely a good entry point for someone without a position. 

Perhaps people are exiting because it's been 12 months without a dividend increase? They did have two last year. I would expect something in the next 3-6 months, in the range of 8-10%.


----------



## al42

moose said:


> There is growing concern among senior executives in the auto and financing industry about long-term loans that some car companies are offering to entice buyers and boost sales.
> 
> Auto consumers have been increasingly attracted to long-term loans with low monthly payments. But industry executives are worried that customers will return to showrooms before the seven or eight-year terms of their loans have been completed and find that they owe more on the their vehicle than what it’s worth as a used car.
> 
> “Longer amortizations are not good for the industry or for the consumer,” said Raymond O’Kane, managing director and head of national dealer finance for Bank of Montreal.
> 
> “We make good loans at the time,” Mr. O’Kane said at the annual TalkAuto Canada conference in Toronto Wednesday, “but nobody can predict that far out. Peoples’ lives change.”
> 
> The auto industry’s increased use of long-term loans and low-cost financing has helped boost sales to record numbers. But at a time when Canadians are already carrying heavy mortgage debt and other liabilities, the growth of financing in the auto sector is adding to worries about overleveraged consumers.
> 
> Mr. O’Kane’s comments were echoed by Ford Motor Co. of Canada Ltd. president Dianne Craig, who said Ford does not offer eight-year loans as some other auto makers do.
> 
> Ford has also tried to stay away from offering seven-year loans, Ms. Craig said, in favour of four-year leases as a way of keeping monthly payments low for customers.
> 
> “The bigger concern is from a consumer point of view because obviously they’re going to have negative equity,” she said.
> 
> “We want them back and we want them happy,” she said.
> 
> The monthly payment on a four-year lease is about the same as the monthly payment on an eight-year loan, she noted.
> 
> Among the long-term financing offers in the market are Hyundai Auto Canada advertising eight-year, interest-free loans on some 2014 Accent and 2015 Sonata models. Seven-year, interest-free loans are common and have been offered by General Motors of Canada Ltd. on its full-sized pickups at various points this year.
> 
> One high-ranking industry source said he has seen data showing that eight-year loans have grown to 14 per cent of the market since they first became prominent after the recession. About two-thirds of purchasers finance their vehicles through loans.
> 
> Mr. O’Kane said he believes eight-year terms make up at least 10 per cent of the new vehicle loan market.
> 
> Bank of Montreal’s maximum term on a new car loan is eight years, he said, but he urged dealers and industry officials attending the conference to make it clear to consumers that the monthly payments on five-year loans won’t be significantly higher than those on six-year loans and it means consumers eliminate that debt a year earlier.
> 
> “It’s doing the right thing for customers,” he said.
> 
> Loans of six years or longer make up about 69 per cent of the Canadian auto loan market, said Jeff Schuster, senior vice-president of forecasting for consulting firm of LMC Automotive. That compares with 57 per cent in the spring of 2012.
> 
> Incentives such as interest-free loans for seven or eight years have helped propel vehicle sales in Canada to a record pace. As of the end of October, auto makers were on pace to sell more than 1.8 million new vehicles in Canada, which would be the first time the industry has topped that mark and the second straight annual sales record.
> 
> “We believe zero per cent ads are driving a lot of people into the showrooms,” said Josh Bailey, vice-president of research and editorial for Canadian Black Book, an industry data service company.
> 
> Ms. Craig of Ford said the strength of the market in 2014 has taken Ford by surprise, but she forecast another increase in sales next year to 1.93 million vehicles.
> 
> Mr. Schuster of LMC Automotive is less bullish, forecasting that sales will end at about 1.84 million vehicles in Canada this year and rise slightly in 2015.



Thanks Moose


----------



## moose

No problem! Just home G&M doesn't come a-knockin' for copyright :cower:


----------



## al42

Same thing happened to Carfinco a few months back. Went from mid $10's to mid $7's when a similar article came out and then CFN was bought out for $11 and change.


----------



## CPA Candidate

Auto sales and financing make up a small part of Chesswood's earnings. Their main business by far is Pawnee in the US, which is a small business equipment leasing company. When it comes up on TV, it gets the title of auto dealer because few know much about the company.

I think the main reason the stock took a nose dive was a downgrade from Canaccord from buy to hold on Nov.11, with a target of $15.50. I believe it lost 5-6% that day. Personally, I couldn't care less what Canaccord thinks, I've been pleased with their results. The company offers business risk diversification and a combination of growth, both in earnings and dividends and value. In any case, if the stock is below it's target, shouldn't be a buy? Especially when you can earn 5-6% while you wait. 

Of course some idiot retailers pound the sell button on a thin trader and force it down a couple bucks to get out.

I added to my position on the weakness.


----------



## Homerhomer

in for few more at 11.43


----------



## al42

Wow..down over 6% at one point again today.
Something not looking right here.


----------



## doctrine

People selling because people are selling. Fundamentals are solid. They also get leverage from the Cdn dollar falling and have direct exposure to the improving US economy.


----------



## liquidfinance

doctrine said:


> People selling because people are selling. Fundamentals are solid. They also get leverage from the Cdn dollar falling and have direct exposure to the improving US economy.


Markets are very irrational at the minute. Time to keep a level head and let the fundamentals do the talking. I would be adding at these levels. Sadly I don't have the cash to deploy at the minute.


----------



## Butters

Anyone follow graham prices?

At years end their graham price is $12.41	
2015 is $13.77	

Seems definitely cheap now, and can definitely see how it got ahead if itself at the start of year

I got no free cash, won't be able to transfer until next week


----------



## al42

Big turnaround last 2 days...glad I added more.


----------



## jwsclark19

Glad I bought this stock at 11.72 yesterday


----------



## CPA Candidate

Looks like the lemmings have all gone off the cliff for the time being.


----------



## doctrine

Upon further analysis, I suspect much of it was tax loss selling, given how much CHW ran up early in the year. That could have also prompted some nervous nellies to run. If there is more selling, I suspect a strong bounce back towards the end of next month.


----------



## jaybee

doctrine said:


> Upon further analysis, I suspect much of it was tax loss selling, given how much CHW ran up early in the year. That could have also prompted some nervous nellies to run. If there is more selling, I suspect a strong bounce back towards the end of next month.


I hope you're right! I started a new position last week. I got in at 11.71.


----------



## al42

New 52 week low...tax loss selling?


----------



## CPA Candidate

al42 said:


> New 52 week low...tax loss selling?


No, the price of polyethylene in Shanghai is driving this lower.

Seriously, everything is down, CHW is not immune.


----------



## Killer Z

A tough week for CHW including a large sudden drop today (nearly 6%). Any news on why? All I could find is their dividend announcement which presumably is good/neutral news:

http://www.marketwired.com/press-re...ces-january-2015-dividend-tsx-chw-1984728.htm


----------



## Butters

Yeah weird, you'd think it would be increasing considering 75% of their business is in the US

And their payout is historically lower.


----------



## 299889

I feel like this stock will soon be under $10, is anyone still buying to average down? The dividend defiantly seems safe with high yield, maybe people dont know much of the company is in the US?


----------



## CPA Candidate

There's no rhyme or reason to the price fluctuations. It trades thin enough that nearly anybody can move the stock down if they get antsy.

I added more today, now up to 475 shares. The decline of the CDN will have a material positive impact.

An interesting sidebar - on Oct 31, 2008, shares traded for 99 cents.


----------



## 299889

CPA Candidate said:


> There's no rhyme or reason to the price fluctuations. It trades thin enough that nearly anybody can move the stock down if they get antsy.
> 
> I added more today, now up to 475 shares. The decline of the CDN will have a material positive impact.
> 
> An interesting sidebar - on Oct 31, 2008, shares traded for 99 cents.


Where did you find this out? I use google finance for most of my general stock charts but it seems to only go back to 2011


----------



## Synergy

eeehitscody said:


> Where did you find this out? I use google finance for most of my general stock charts but it seems to only go back to 2011


Best place to look is on the companies website. Select ALL and it will provide you with information back to 2008.
http://www.chesswoodgroup.com/Investors/Reports-And-Filings/Financial-Reports.aspx

I got this dog in my TFSA


----------



## CPA Candidate

Synergy said:


> I got this dog in my TFSA


While it's been frustrating as of late, we will be happy in the long run that the market for this stock is so inefficient.


----------



## FrugalTrader

CHW is up 4.4% today almost reversing yesterday's fall.


----------



## Synergy

CPA Candidate said:


> While it's been frustrating as of late, we will be happy in the long run that the market for this stock is so inefficient.


Indeed, I'm not too concerned. I just like to complain a little! I have a tendency to make a boat load of cash and pay a ton of taxes in my non-registered accounts and do the direct opposite in my TFSA - flat! My TFSA is part of my retirement fund and that's a long ways away so I'm trying to be patient.


----------



## oob

I really don't get what's going on with this stock... could it really be that the stock sold off with all other Canadian small cap financials despite having the majority of its operations in the U.S.?

You would think that the stock would be rallying in C$ terms on FX alone! I keep thinking there's something I'm missing.


----------



## CPA Candidate

oob said:


> I really don't get what's going on with this stock... could it really be that the stock sold off with all other Canadian small cap financials despite having the majority of its operations in the U.S.?
> 
> You would think that the stock would be rallying in C$ terms on FX alone! I keep thinking there's something I'm missing.


The chart is holding it back in my opinion. Most people invest in stocks not businesses and the chart is not pretty. It's a momentum driven market and CHW has none.


----------



## oob

Alright I initiated a position. Let's see how this plays out.


----------



## Butters

Their annual report comes out in first couple of weeks of March...
shouldnt be much news until then... seems like we will have a quiet month
Also Jason Donville should appear on BNN in early March (my guess) so I'm sure a listener will ask him, he has rated it a BUY several times but not been excited....
If he listed DCI as a top pick, with 20% ROE and 8% divy.... CHW will be in the same boat...
March will be a good month I would think!


----------



## Jon_Snow

This one is tempting...held it briefly a while back a made a bit of profit. I will think more on this over the weekend.


----------



## al42

SheaButters said:


> Their annual report comes out in first couple of weeks of March...
> shouldnt be much news until then... seems like we will have a quiet month
> Also Jason Donville should appear on BNN in early March (my guess) so I'm sure a listener will ask him, he has rated it a BUY several times but not been excited....
> If he listed DCI as a top pick, with 20% ROE and 8% divy.... CHW will be in the same boat...
> March will be a good month I would think!



Guess Donvllle's comments has some impact on share price today.

2015-02-05 PARTIAL SELL Jason Donville 

This is an example of one that he would lighten up on. A very good company and very well-managed, but their US businesses are centred in Denver, which has been a beneficiary of a lot of the oil/gas activity. He thinks there is vulnerability for a slowdown. Also, their Denver leasing company is also involved tangentially in construction, housing, etc. and he expects there will be a slow down there.


----------



## Butters

Yup! Jason has sold anything related to finance expect HCG
Not to say CHW isn't bad though. 

I was very surprised last night watching him 
This type of stock should get a 20% return. 7% from divvies and at least 13% upside, it's been beaten up way too much, the yield should be closer to 5%

It's been hovering around $12.00 and 11.00 the last 2 months anyways. If it gets lower than $10.00 with no real bad news I think there will be some buyers

guess I'll see what their annual report says in march

I messaged both doctrine and CPA
They both still like this stock, hopefully they can express their thoughts here!


----------



## Homerhomer

Jason isn't always right (nor he isn't always wrong), not sure that much weight should be put to everything he says (and I like him).


----------



## Killer Z

Homerhomer said:


> Jason isn't always right (nor he isn't always wrong), not sure that much weight should be put to everything he says (and I like him).


It really is incredible how his advice moves the markets. He even acknowledged this during one of his appearances by recommending a stock but advising not to go out and buy it upon the markets re-opening, as there always seems to be an initial spike after he recommends anything.

I enjoy his commentary, however the idea of buying a stock immediately after hearing someone pump it is just ridiculous.


----------



## doctrine

With all due respect to his past successes, Jason Donville hasn't owned CHW shares in at least 3 years, although he always responds to questions on the stock on BNN. 3 years ago, he said sell at $6-7 a share, which is where he exited. He often gets details on the company wrong because he's not following it that closely. 

From CHW financial statements in November 2014 on Pawnee, which is by far most of their profits:

-No state represents more than 11% of loans, except California at 13.1%
-Major equipment categories include restaurants, auto repairs, titled trucks and trailers, medical, and fitness
-Leases and borrowers operate in over 85 different industry segments, with no industry at over 17% of active leases
-No single borrower or leaser accounts for more than 0.01% of total lease portfolio

Colorado cannot account for more than 11% of their businesses as of Nov 2014, nor can the entire oil industry (which I am pretty sure is not their #1) for more than 17% of business, nor any single company responsible for more than 1/10000th of their loan portfolio. CHW is a definite buy at $10.xx.

On the downside, they have been reporting for almost a year that other competitors have begun offering cheaper loans with less stringent criteria. Management have stated they would stick to their guns and not bend their qualifying criteria. So far, they have maintained or grown revenue and earnings from what I can see. This would be a much different risk than Donville talked about and it is what I am actually keeping my eye on. Meanwhile, profits are still coming back to Canada in US dollars.


----------



## CPA Candidate

Bottom line, Donville barely knows the company so I'm not sure why he accepts calls on it. Comments were vague and not really informed. They have a total of 5 businesses across Canada and the US, but Denver is going to do them in? Whatever.


----------



## steepera

Took a small position today @ 10.75


----------



## al42

Bought a bit more yesterday but it keeps dropping.
Don't know where it will bottom but it's gotta be close unless there's something
going on that we are not aware of.


----------



## Butters

Still 3 weeks until their annual report....

The stock has been tumbling ever since the CEO sold a large piece.... The stock was a little ahead of itself ... but now historically it is below valuations

I sent a message to the CEO, he said _"...you should know that my sale in 2014 was less than 25% of my stake in Chesswood. A very substantial portion of my personal worth remains in CHW. In addition, I have been with CHW and its predecessor organization since 1999, so I crystalized a minority of some of my value after 15 years of work."_

If he still owns that large of a position, I'm sure we will see some (hopefully) good news in the next annual reports!

I can make predictions on the stock, but like doctrine said... they are diversified... _"profits are still coming back to Canada in US dollars."_

Jason Donville loves this management team, but fears all leasing and bank related companies "at this time in the cycle" instead now he wants to hide out in the big names to preserve his clients wealth.


What it will take to get this stock moving is a large volume of buying... im hoping for a dividend increase, or an upgrade after their annual reports
Right now we have the Jason Donville DUMP happening... it's likely ending soon....

What will they do with the funds from their recent sale is another question....


----------



## al42

Yup, it's gotta be the Donville dump.
Short interest is very small.

T : CHW	2015-01-31	32,500	7,100	10,420,354	0.31
T : CHW	2015-01-15	25,400	200	10,420,354	0.24
T : CHW	2014-12-31	25,200	-100	10,420,354	0.24
T : CHW	2014-12-15	25,300	-200	10,420,354	0.24
T : CHW	2014-11-30	25,500	-91	10,420,354	0.24
T : CHW	2014-11-15	25,591	-609	10,409,854	0.25
T : CHW	2014-10-31	26,200	-1,000	10,409,854	0.25
T : CHW	2014-10-15	27,200	-100	10,398,654	0.26


----------



## al42

Starting to believe this is more than a Donville dump.
looks like someone is trying to push the share price down.
Every day before the market opens the bid/ask is about 5% lower
and it seems to open pretty close to the low bid.


----------



## Butters

Seems like everyone's jumping ship... Still a few weeks until annual report
not quite the quiet February

New 52 week low
Doctrine gonna double his shares under $10 ^_^


----------



## al42

Doctrine gonna double his shares under $10 ^_^ 

Don't know but I got filled for another 1500 shares @ 10 bucks.
Just hoping it doesn't go much lower.
This is starting to trade like an Oil stock!!


----------



## CPA Candidate

You guys got to stop worrying about every move this stock makes. 2014 will be the best year in Chesswood's history and 2015 will be better than 2014.


----------



## thepitchedlink

Thanks for bringing this one to my attention guys....Im just reading back through the posts but seems like some have been following this one for a while....Never heard of them until today....


----------



## al42

New 52 week low and looks like it wants to go lower...Not good!!


----------



## thepitchedlink

al42 said:


> New 52 week low and looks like it wants to go lower...Not good!!


why not? pick up a few more at a good price....


----------



## al42

why not?

Hmmm, when a stock drops close to 15% in a week some alarm bells start going off in my head.
I did pick up a few thousand more shares last week when it touched $10. but should have been more patient.


----------



## Jon_Snow

Got $5500 sittin' in cash in the ol' TFSA...how lucky do I feel? Not pulling the trigger yet...better do some digging as to why this stock is on it's slide...


----------



## thepitchedlink

You and me both....been digging.......


----------



## al42

From the Boss...not that I expected him to tell me anything but at least he responded.

Thank you for your inquiry 

We must confess that we too cannot explain the pattern you mention. We are not aware
of any reason for this trend. We would add that Chesswood is in its normal blackout period
at the moment, pending release of our year-end results. These results typically come out in 
mid-March, just as they always have.

I’m sorry that we can’t shed any light on the market’s behavior. Thank you for your interest
in Chesswood, Allan.

Barry


----------



## doctrine

I don't see any reason. It smells like opportunity to me. On the other hand, it may be prudent to wait a month for results. If they're positive, it might mean picking it up at $11 instead of $9. If it's negative, it might drop 10% in a day. Those are the risks. I'm eyeing a potential 705 share purchase which would give me an even 2000. I have $30k in expensive teleco stocks that could easily provide the capital.


----------



## thepitchedlink

YA, I can't see any reason either....then again I'm not that smart :biggrin:......Im in, let's see what happens....I feel opportunity as well


----------



## Barneystinson

Took position on this one today. After reading their annual results, I didnt see any reason for people to sell, but maybe Im mistaken.


----------



## ChillbroSwaggins

I looked over the annual balance sheet of the company and calculated their book value equity per share to be around $8.82 since they have a significant amount of liabilities. There revenue and net profits seem to be increasing but perhaps it's the market adjusting to meet the book value of the company? Correct me if I'm wrong here.


----------



## CPA Candidate

ChillbroSwaggins said:


> I looked over the annual balance sheet of the company and calculated their book value equity per share to be around $8.82 since they have a significant amount of liabilities. There revenue and net profits seem to be increasing but perhaps it's the market adjusting to meet the book value of the company? Correct me if I'm wrong here.


With an ROE of 16%, I'd expect the company to trade close to 2x book. An ROE of 8-9% will typically get a company trading around book value.


----------



## al42

News!!

http://www.theglobeandmail.com/glob...20150226&archive=ccnm&slug=201502260993991001


----------



## CPA Candidate

A major accretive acquisition cannot elicit more than a half-hearted response from the market.


----------



## al42

More News...strange how the market always knows about these deals before they are released.

http://www.theglobeandmail.com/glob...20150305&archive=ccnm&slug=201503050995420001


----------



## CPA Candidate

al42 said:


> More News...strange how the market always knows about these deals before they are released.
> 
> http://www.theglobeandmail.com/glob...20150305&archive=ccnm&slug=201503050995420001


The equity offering was mentioned in the first link you posted.

Nothing like tapping the market for equity at 52 week lows. Jesus.

This is going to keep the stock deeply tanked for awhile yet.


----------



## FrugalTrader

This is a strange one, CHW up 12.63% this morning.


----------



## OptsyEagle

Very strange indeed.


----------



## Homerhomer

FrugalTrader said:


> This is a strange one, CHW up 12.63% this morning.


IMO strictly manipulation by the deal brokers, they are pumping it and then will be dumping.

My cost is around 12, don't like to sell at the loss, if not I think I would be selling it, mind you dividends are very safe IMO, there is a potential for take out or higher price even without it, but I beginning the get a bit tired with how this company is handled.


----------



## oob

I don't understand the pop today at all... the acquisition was already known.


----------



## al42

CPA Candidate said:


> The equity offering was mentioned in the first link you posted.
> 
> Nothing like tapping the market for equity at 52 week lows. Jesus.
> 
> This is going to keep the stock deeply tanked for awhile yet.


Yes I realize it was mentioned but what they said was equity offering subject to market conditions.
I figured that meant when the share price got to a reasonable level not whenever they could get a deal done at whatever share price.

The purchase price for the acquisition will be paid through a combination of (i) $17 million of cash, (ii) approximately $28 million from a fully committed senior secured bridge facility, that is to be replaced with the proceeds from an equity public offering, subject to market conditions, (iii) approximately $6 million in equity through a private placement to certain senior management, directors and other insiders of Chesswood, and (iv) the issuance of Chesswood common shares to the vendor for the balance. Closing of the acquisition is subject to customary conditions and regulatory and third party consents, and is expected to occur as soon as practicable but no later than April 3, 2015.


----------



## Jon_Snow

Hope I nailed the bottom on this one...


----------



## al42

I'm thinking of selling half my shares if it touches$12.00.
Don't really like the looks of this. There were virtually until last month and then all of a sudden close to 60,000 shares short shows up!!
Something fishy here.

T : CHW	2015-02-28	59,500	56,300	10,420,354	0.57
T : CHW	2015-02-15	3,200	-29,300	10,420,354	0.03
T : CHW	2015-01-31	32,500	7,100	10,420,354	0.31
T : CHW	2015-01-15	25,400	200	10,420,354	0.24
T : CHW	2014-12-31	25,200	-100	10,420,354	0.24
T : CHW	2014-12-15	25,300	-200	10,420,354	0.24
T : CHW	2014-11-30	25,500	-91	10,420,354	0.24


----------



## Butters

It is fishy al42
I feel the same.... huge volume today but at least its buying volume!!!


we bought these shares knowing this is a well run company,
which has profits from US coming back to canada
historically low dividend payout
and a graham price above $14

we definitely road this down the past month+, to regain it all in 1 day

I'm glad I've held onto it my second attempt at this stock... I think I may stick around instead of assuming these new $9.75 shares won't dilute the overall price.... my portion isn't large, so i dont want to go in and out anymore wasting my money on transaction fees 

Side Question: Do we get any options on these new shares... as existing holders is there anything we get... or does it just dilute I'm not reading any options

The CEO still has an extremely large stake in this company, he had to do whatever he could to make the shares turn around, and hopefully we see that now....

next big date will be the annual report in another week or 2


----------



## FrugalTrader

Now up 20%...


----------



## CPA Candidate

oob said:


> I don't understand the pop today at all... the acquisition was already known.


The manipulators just released the choke hold, that's all. Preprogrammed tank. Look at the instant return for the buyers of the new issue, they're up 20% right off the bat.

And my opinion of the world of finance drops another notch.


----------



## doctrine

Still monitoring, but more than willing to add here at or below $10 if it drops over the next few months - it definitely looks to be a good acquisition, and there will be a lot more liquidity in the stock as it is essentially 25-30% more shares on the market.


----------



## Butters

Annual Report out
I'm still learning
One of the biggest things is EPS right?

Earnings Per Share $0.98 up from $0.96 in 2013

What was the street expectation, where would I find this info?

It was up a few percent now -1% on the day. Low volume (like usual)

What else should I be looking at?
Doctrine or CPA care to share what you guys look for?


----------



## doctrine

Pre-tax earnings up 6.6%. Supposedly the new acquisition is 7-8% accretive to shareholders, therefore EPS next year should be in the $1.1X range. Certainly was a very good buy for those who got in at $10 or so. I would still buy back at that level if it drops again.


----------



## CPA Candidate

Q4 earnings were hurt by larger provisions for credit losses, write down of the deferred financing expenses and loss on interest rate swaps. There was an uptick in over 31 delinquencies from 2.1% and 2.9% in their Pawnee division, although actual write offs in the period were lower than the previous year. Have to keep an eye on that in future reports. 

Cashflow was up 32% y/y and they recorded a 858k gain on the sale of Casefunding business that will help 2015 earnings.

The Acura dealership results were pretty flat, but it was a year of transition with the dealership being renovated.

ROE slipped a bit from 16% to 14.4%, again with earnings with the above noted non-cash provisions and fair value adjustments/writeoffs.


----------



## apatel

CHW_Q1 Results are out. Rev are down slightly from q4, but gross margins are up. Income is also up but EPS is at 27c due to higher number of shares. Doctrine and CPA, would appreciate your comments on the results. What do you think would be the EPS for the year 2015. What would be the CFPS for the next three quarters.
apatel


----------



## CPA Candidate

Watch for a breakout.


----------



## Synergy

CPA Candidate said:


> Watch for a breakout.


What will be driving this breakout?


----------



## CPA Candidate

Synergy said:


> What will be driving this breakout?


Golden cross. The technicals are finally healing which will finally bring in some buyers, or at least that is the hope.

The last time the stock did this it was in the middle of the October market meltdown and it died off quickly.

The previous golden cross to that was way back in early 2012.


----------



## Synergy

The chart is starting to look a little better. I guess I was hoping for some fundamental driving forces.


----------



## doctrine

The trend is definitely up in the last few months. Anyone who picked up in the $10 zone in Feb is sitting pretty.


----------



## Jon_Snow

doctrine said:


> The trend is definitely up in the last few months. Anyone who picked up in the $10 zone in Feb is sitting pretty.


That's me.


----------



## CPA Candidate

Synergy said:


> The chart is starting to look a little better. I guess I was hoping for some fundamental driving forces.


CHW did acquire some new businesses just a few months back, but the market really didn't react to the announcement is any sustained positive way. There was a pop and a quick fizzle.


----------



## thepitchedlink

Yes, this has been a nice little ride.....I was thinking of taking some profits......maybe I'll wait a little while longer


----------



## CPA Candidate

The people who sell this stock make me want to start a riot.

Today the opening trade at the bell, 200 shares for 12.49.

The next trade was 1600 shares for 12.13, or 2.9% less than the last trade. Who does this? 

Now it's down over 4% and has broken the 50 and 200 day moving averages which will start another cascade of selling.


----------



## Barneystinson

Bad investors?


----------



## doctrine

I think a good quarter and/or a dividend increase will be needed to get the stock moving, but still happy collecting steady dividends here.


----------



## al42

Qtr. looks pretty good. Lets see how Mr. Market sees it.

Press release from Marketwire
Chesswood Announces Results for Q2 2015
Strong Originations Growth and Acquisition Drive 58% Increase in Net Income Gross Finance Receivables Exceed $500 million

Thursday, July 30, 2015
Chesswood Announces Results for Q2 2015
07:15 EDT Thursday, July 30, 2015

TORONTO, ONTARIO--(Marketwired - July 30, 2015) - Chesswood Group Limited (the "Company" or "Chesswood") (TSX:CHW) announced today its results for the three and six-months ended June 30th.

The Company's Operating Income(1) was $9.8 million for the quarter, compared to $6.8 million in the second quarter of 2014, a 44% year-over-year increase. Recently acquired Blue Chip Leasing and EcoHome Financial generated $1.3 million of the increase, while Pawnee Leasing and Windset Capital posted very strong growth in originations and Operating Income in the quarter, generating most of the other $1.7 million of the increase.

Net Income increased by $1.9 million or 58% year-over-year to $5.1 million for the quarter, while Net Income for the six-month period was $8.6 million, an increase of 34% over the same period of last year.

"We had another quarter of very strong application flow and originations growth at Pawnee Leasing and Windset Capital as their U.S. markets continue to expand, while Blue Chip Leasing, our Canadian equipment finance business, posted double digit growth in originations compared to the prior year" said Barry Shafran, the Company's President and CEO.
Financial Highlights For the Three Months For the Six Months
(in CDN $000's, except EPS ) Ended June 30 Ended June 30
2015 2014 2015 2014

Operating Income(1) $9,776 $6,766 $16,456 $12,556

Net Income $5,114 $3,241 $8,612 $6,370

Adjusted EBITDA(1) $9,990 $6,820 $16,862 $12,580

Earnings Per Share - basic $0.29 $0.28 $0.56 $0.55

(1) - See "Non GAAP Measures" below. 

Non GAAP Measures

References to Adjusted EBITDA and Operating Income are not recognized measures under International Financial Reporting Standards and do not have standard meanings. Accordingly, these measures may not be comparable to similar measures presented by other issuers.

Please refer to the Company's Management Discussion and Analysis for the three and six -months ended June 30, 2015, for additional information concerning these measures and a reconciliation of these measures to the Company's consolidated net income for the period.

Report of Annual Meeting Voting Results

The Company also announces the results of voting at its annual shareholders meeting (the "Meeting") held on May 12, 2015. These results were previously set out in the Company's report filed on SEDAR immediately following the Meeting.
Item Voted Upon Voting Result
The following nominees were elected as directors until the next annual meeting of shareholders:
1. Election of Directors Proxies Tabulated:

Clare R. Copeland
Robert Day
Sam Leeper
David Obront
Barry W. Shafran
Frederick W. Steiner
Daniel Wittlin
Jeffrey Wortsman For

10,514,679
8,321,632
8,269,423
10,514,679
8,269,523
9,430,742
8,269,523
10,136,800
Withheld

295,610
2,488,657
2,540,766
295,610
2,540,766
1,379,547
2,540,866
673,489
Total number of shares represented at the Meeting: 10,810,289
2. Appointment of BDO Canada LLP as auditors BDO Canada LLP, Chartered Accountants, were reappointed as the Company's auditors for a term expiring at the close of the next annual meeting of shareholders and the directors were authorized to fix their remuneration:
Proxies Tabulated: For Withheld
10,809,479 810

About Chesswood Group Limited

The Company operates primarily in the financial services industry with operating businesses in both Canada and the U.S. To learn more about Chesswood, visit www.ChesswoodGroup.com.

The separate websites of Chesswood Group Limited's operating businesses are at www.PawneeLeasing.com, www.WindsetCapital.comwww.BlueChipLeasing.com, www.EcoHomeFinancial.comwww.NStarleasing.com, and www.AcuraSherway.com


----------



## jaybee

Looks like a solid quarter. I've been adding on the dips here and there.


----------



## doctrine

Very solid. Payout of around 67% in the last quarter. These results show that the big share issue to acquire the new businesses was worthwhile and didn't dilute previous holders.


----------



## jaybee

doctrine said:


> Very solid. Payout of around 67% in the last quarter. These results show that the big share issue to acquire the new businesses was worthwhile and didn't dilute previous holders.


Agreed. That's the kind of growth we want! Solid management.


----------



## CPA Candidate

Although the operating results showed nice increases, raising funds via equity at such a low stock price has meant the large % increase in net income translates into very modest EPS growth. Once the investment bankers were paid, CHW only got $8.65 per share. The whole acquisition is looking just slightly accretive. Hopefully they can wring out some savings in the future.


----------



## jaybee

So, overall CPA? Whaddya think? You own this one?


----------



## CPA Candidate

jaybee said:


> So, overall CPA? Whaddya think? You own this one?


I own it and I still think it is a buy. If you annualize the 1st half earnings, you get $1.12 per share and with a SP of about $12, a P/E of 11 when the market multiple is much higher (15-16x at least). You also get a rich dividend that is covered.

It just would have been nicer to have made the acquisition when the shares were trading higher. The same about of money could have been raised with fewer new shares and this quarter could have been that much better.


----------



## al42

Here we go again...From $11.95 to $11.30 close to 6% on 3600 volume.
Someone playing with this share price?


----------



## doctrine

I've taken a closer look at Q2 results and found something interesting. As a result of their new consolidated credit line of $150M (expandable to $200M), they are only allowed to pay out 80% of free cash flow out in dividends, based on 12 month trailing metrics. This was set up before the acquisitions, although the acquisitions now have to be calculated as well. There is a table is on page 7 of the Q2 report.

FCF was $6,050k in Q2 and dividends paid were $3,451k, or a ratio of 57%. But based on trailing 12 month of CHW and acquisitions, the average FCF is $4,624 and thus the max permitted dividends are $3,699k. 57% is a dramatic drop based on their growth; a year ago, this would have been 72%.

The growth in EBIDTA is quite high; if business keeps growing, the payout ratio of permitted dividends (currently 93%) will trend much lower. FCF is bascially up close to 50% vs 30% increase in share count.

Some other notes - their acquisitions (Blue Chip and EcoHome) both have their own access to credit facilities, so possibly in another year or two you could see CHW consolidate all of them. Also, Windset has grown loans about 100% to $33M (compared to Pawnee which has $180M of receivables), quite significant organic growth for a business they started from scratch. They are also predicting they may tap the $50M of additional credit by the end of the year due to their growth in originations.

So all in all, the business looks solid and the company is likely to start building cash as well. Very happy holding here.


----------



## doctrine

Added 105 shares at $10.65 yesterday. Not a lot, but first time adding since 2012. 1400 total now.


----------



## al42

News..

Chesswood Group Announces Proposed Sale of Acura Dealership
2 hours ago - ACQUIREMEDIA

TORONTO, ONTARIO--(Marketwired - Oct. 5, 2015) - Chesswood Group Limited (TSX:CHW) ("Chesswood" or the "Company") announced today that it has entered into a definitive agreement to sell its Acura dealership, Acura Sherway, for an aggregate estimated purchase price of approximately $22.0 million (based on current vehicle inventory). Chesswood expects to record a gain on the sale of approximately $4.0 million. The transaction is expected to close during the current fiscal year and is subject to the purchaser obtaining customary consents, including the consent of Honda Canada.

The transaction allows Chesswood to complete its transformation into a focused North-American specialty finance company, following a number of transactions that began in late 2014, including a new corporate banking facility, the divesting of our legal finance business and the acquisition in March of our Canadian specialty finance businesses. Our North American platform now includes Pawnee Leasing and Windset Capital, providers of equipment financing and working capital loans, respectively, to small business in the United States and Blue Chip Leasing and EcoHome Financial, providers of equipment financing to businesses and consumers, respectively, in Canada.

Chesswood's portfolio consists of more than 35,000 loans and leases with gross receivables of more than $500 million.

"This transaction allows Chesswood to be solely focused on the growth and development of our specialty finance companies. We are thankful to our team at Acura Sherway for providing Chesswood with an incredibly consistent level of strong financial performance over the sixteen years we have been together" said Barry Shafran, Chesswood's President and Chief Executive Officer.

About Chesswood Group Limited

Chesswood Group Limited is a financial services company with operating businesses in both Canada and the U.S., including its North-American equipment finance businesses Pawnee Leasing Corporation of Fort Collins, Colorado and Blue Chip Leasing Corporation of Toronto, Ontario.


----------



## CPA Candidate

I like the move, the car dealership really didn't fit in the with the other segments or overall strategy and Acura sales have been struggling in the past couple years.


----------



## doctrine

They sold the dealership for 13 times pre-tax earnings. ACQ, by comparison, doesn't like to buy any dealership for more than 10 times pre-tax (and sometimes brags getting them for as low as 5 times), so it seems to me like they got a great price. My rough calculations indicate that it comprised about 7-8% of their net profit and they sold it for 12% of their market cap. Seems like a great move to sell while the market is at a peak and at a premium price.


----------



## CPA Candidate

This stock is making a fool of me. Really disappointing Q3 EPS. There is significant difficulty in getting increased operating earnings to the bottom line. Revaluation of financial instruments keep dragging net income down (their interest rate hedging has been a disaster). Net income margins are down.

In addition, as finance revenue has increased 50%, provisions for credit losses have almost doubled YTD. 

I need to take more time to analyze the statements, but there is no hope for a higher multiple in the near future with results like this.


----------



## doctrine

Results are okay, payout ratio hasn't jumped because of the higher credit losses, around 72% of free cash flow from the quarter. The Cdn operations really seem to be doing well. But probably in the penalty box a bit, depending on where they go with the ~$20M they raise from the Acura sale. And no, not likely to jump to $15 anytime soon. Might add again if weakness persists, depending how things go.


----------



## CPA Candidate

Downgraded today by Coremark securities. I don't care personally, but the market will probably react negatively. I could see this under $10 in the near future.


----------



## al42

Looks like we are heading too 52 week lows!


----------



## CPA Candidate

al42 said:


> Looks like we are heading too 52 week lows!


Yes and year after year they issue NCIBs and never use them. Now might be a good time.

Anyway, with the closing of the dealership sale they are set to record a 5.7M gain in Q4, so hopefully that will wake the stock up.


----------



## al42

almost at 52 week low today. looks like it will break then who knows where the bottom is.


----------



## CPA Candidate

al42 said:


> almost at 52 week low today. looks like it will break then who knows where the bottom is.


Right now stocks prices are fairly detached from any kind of business reality. Profitable? Good dividend? Long history of operations? Selling at near book value? We don't care because....China.


----------



## Killer Z

CPA Candidate said:


> Right now stocks prices are fairly detached from any kind of business reality. Profitable? Good dividend? Long history of operations? Selling at near book value? We don't care because....China.


So very true. Here are a few stats as per Bloomberg:

- P/E = 9.99
- Dividend = 8.67%
- Dividend Growth = 10.94% (5 Year Net)

Revenue has steadily increased over the past 5 years. Net Income has steadily increased over the past 5 years. Dividends have steadily increased over the past 5 years. Book Value per Share has steadily increased over the past 5 years.


----------



## doctrine

CHW sells EcoHome for $35M. It is now more firmly positioned as a commercial lending company.

http://www.stockhouse.com/news/pres...announces-agreement-to-sell-ecohome-financial

They now have something like $65M in cash, which is 43% of their market cap. Not sure what they're going to do, but it's a pretty compelling value buy, especially given most of their revenue and profits are USD. Although CHW is down, it's actually outperforming the TSX in the last 1 and 2 month periods.


----------



## CPA Candidate

doctrine said:


> CHW sells EcoHome for $35M. It is now more firmly positioned as a commercial lending company.
> 
> http://www.stockhouse.com/news/pres...announces-agreement-to-sell-ecohome-financial
> 
> They now have something like $65M in cash, which is 43% of their market cap. Not sure what they're going to do, but it's a pretty compelling value buy, especially given most of their revenue and profits are USD. Although CHW is down, it's actually outperforming the TSX in the last 1 and 2 month periods.


Further to that, the net assets acquired when they got EcoHome was about $25.5 million, and less than a year later CHW sold it for $35 million in cash, debt and stock (but mostly cash). That's quite a return.

Now that they have all this cash I'd like to see them get in the market and start buying back some of those shares they issued too cheaply early last year.


----------



## FrugalTrader

Maybe I don't understand the business, but can anyone comment on why they have so much debt on the books (2x market cap)? Up to Sept 2015 report, seems they have issued another $50M along with equity.


----------



## CPA Candidate

FrugalTrader said:


> Maybe I don't understand the business, but can anyone comment on why they have so much debt on the books (2x market cap)? Up to Sept 2015 report, seems they have issued another $50M along with equity.


It's a finance business, they lend or lease assets to small business. Their primary source of these funds to lend out is borrowing on their own credit lines.

That being said, their debt:equity ratio should be coming down from its higher than average level in the past year due to the acquisitions.


----------



## FrugalTrader

So their earnings are based on the spread between the interest rates that they pay on their credit line vs what they collect. So as a lender, their margins are reduced when interest rates rise.

Thanks for the information!


----------



## CPA Candidate

FrugalTrader said:


> So their earnings are based on the spread between the interest rates that they pay on their credit line vs what they collect. So as a lender, their margins are reduced when interest rates rise.
> 
> Thanks for the information!


In theory yes, but they have entered into interest rate swaps that convert their variable credit lines into essentially fixed lines. If rates go up their interest expense will increase but this is offset by gains on the interest rate swaps, so they are hedged.


----------



## al42

50 cent special dividend declared.

Press release from Marketwire
Chesswood Group Announces Completion of Sale of EcoHome Financial and Special Dividend of $0.50 Per Share

Thursday, February 18, 2016
Chesswood Group Announces Completion of Sale of EcoHome Financial and Special Dividend of $0.50 Per Share
10:48 EST Thursday, February 18, 2016

TORONTO, ONTARIO--(Marketwired - Feb. 18, 2016) - Chesswood Group Limited (TSX:CHW) ("Chesswood") announced today that it has completed the previously announced sale of its EcoHome Financial Inc. ("EcoHome") subsidiary to Dealnet Capital Corp. ("Dealnet") (TSX VENTURELN) for a purchase price of $35.0 million, resulting in a pre-tax gain of approximately $10.0 million.

Of the $35.0 million purchase price, $29.0 million was paid in cash and Dealnet issued to Chesswood 6,039,689 million common shares of Dealnet and a $2.5 million convertible note which will mature in February 2018 and provides for interest at 6% per annum and the right of Chesswood to convert in whole or in part at any time to acquire additional common shares of Dealnet at a conversion price of $0.64.

"As we previously announced, the sale of EcoHome completes our process of becoming singularly focused on our commercial finance businesses and the many growth opportunities they offer, while generating a significant return for our shareholders on the sale," said Barry Shafran, Chesswood's President and CEO.

With modest leverage, multiple funding lines, and a demonstrated ability to grow, Chesswood is well positioned to capitalize on opportunities offered by its Canadian and U.S. businesses and markets, and continue its pattern of long-term growth with superior returns on equity. Chesswood's finance receivables totaled CDN$480 million at December 31, 2015 excluding the EcoHome portfolio.

Special Dividend

Chesswood also announced today that its board of directors has declared a special dividend of $0.50 per share to shareholders of record as of February 29, 2016. This special dividend will be paid on or about March 15, 2016.

Chesswood has designated its dividends as eligible dividends for purposes of the Income Tax Act (Canada).

"Our balance sheet is very strong coming off another year of excellent earnings and sizable gains generated from the recent sale of our two non-core businesses. We are very happy to be able to share the benefits of these gains with our shareholders," added Shafran.


----------



## CPA Candidate

Completely awesome news. It reiterates my belief of how desperately wrong the valuation on this company has been over the past couple of years. I was a disappointed with raising equity at a low price a year ago to complete the acquisition but clearly they made a great strategic move and turned it around for a substantial and quick profit. With the booking of the Acura dealership gain in Q4 and the Ecohome gain in Q1, earnings are set to rise dramatically for the next couple reports.


----------



## doctrine

I have 1600 shares after adding 305 in the last 4-5 months or so, that's a nice $800 cheque coming my way in March, in addition to the regular $97.50 monthly cheque. 

They're sitting on probably $40M ish of cash as well after this, wouldn't be surprised to see an acquisition coming eventually, it's only about $8.1M or so for the special dividend payment.


----------



## DividendLuvr

Loved seeing the special dividend in my account today - I only have 350 shares but that's still a tidy $197.50!


----------



## 1sImage

DividendLuvr said:


> Loved seeing the special dividend in my account today - I only have 350 shares but that's still a tidy $197.50!


Oh yes, very nice added $1243 today!!!

Just collecting that dividend!!!


----------



## al42

Another pretty good year for Chesswood. Hopefully the share price starts to reflect this.

Press release from Marketwire
Chesswood Announces Results for 2015
Fifth consecutive record year of earnings

Thursday, March 17, 2016
Chesswood Announces Results for 2015
07:30 EDT Thursday, March 17, 2016

TORONTO, ONTARIO--(Marketwired - March 17, 2016) - Chesswood Group Limited (the "Company" or "Chesswood") (TSX:CHW) announced today its results for the three months and year ended December 31, 2015.

Chesswood posted its fifth consecutive year of record earnings from both a net income and operating income(1) perspective, during a very busy 2015 for the Company. Net Income was $19.8 million, up from $11.5 million in 2014, while operating income was $28.8 million compared to $19.6 million last year. Chesswood's two largest entities, Pawnee Leasing and Blue Chip Leasing, had originations growth of 37% and 47% respectively, to drive the record earnings.

The Company's operating earnings reflect the pretax profits from Pawnee Leasing, Blue Chip Leasing and Windset Capital. During the year, Chesswood sold the assets of Case Funding, as well as Acura Sherway, in February and November, respectively, and completed the sale of EcoHome Financial early in 2016. These businesses are reflected as discontinued operations in Chesswood's results for the fourth quarter and year ended December 2015 (and comparative values) and therefore their earnings and the net gains on sale are not included in operating earnings.

"We are very proud of achieving another record year and of the efforts of our extraordinary team" said Barry Shafran, Chesswood's President and Chief Executive Officer. "We believe that our North-American equipment finance businesses are extremely well positioned to continue to grow and to make use of our very strong balance sheet and access to multiple funding sources, in pursuit of market share" Shafran added.
Financial Highlights For the Three Mths Ended For the Year Ended
(in CDN $000's, except EPS) December 31, December 31,
2015 2014 2015 2014

Operating Income (1) $ 7,547 $ 4,002 $ 28,784 $ 19,632

Adjusted EBITDA(1) $ 7,395 $ 4,989 $ 32,429 $ 22,975

Net Income $ 8,052 $ 1,900 $ 19,804 $ 11,539

Earnings Per Share - basic $ 0.46 $ 0.16 $ 1.19 $ 0.98

(1) - See "Non-GAAP Measures" below.

Operating income for the fourth quarter was $7.5 million, compared to $6.8 million in the third quarter of this year and $4.0 million in the fourth quarter of 2014. Chesswood's gross receivables from continuing operations totaled $480 million at December 31, 2015, up from $451 million at the end of the third quarter.


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## doctrine

Very solid. A couple notes: 

-under their lending terms, they can now pay out up to 90% of free cash flow in dividends and buybacks, up from 80%
-they are currently paying out about 70% based on trailing 12 month results
-they were also allowed to distribute $17M in special dividends
-the 50 cent dividend counted for about half of it

It should be a little easier to sort out their financial statements with fewer lines of operation. Some of their results excluded the sold businesses but not all of them, so I'll be looking closely at the next few quarters.


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## DividendLuvr

Added another 200 shares today.


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## 1sImage

Up today No idea why!


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## hollyhunter

Chesswood Group Limited (TSX:CHW) announced a cash dividend of $0.065 per share for the month of April. The dividend will be payable to shareholders of record at the close of business on April 29, 2016, and will be paid on May 16, 2016.


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## CPA Candidate

CHW was featured in article in the G&M today and hence the increase in the stock price. Always interesting how shedding light on something in plain sight the entire time causes a stock price to change. According to efficient market hypothesis, this shouldn't have any impact.

The article noted how the shares were trading about 2 multiples lower than historic average and about 10 multiples lower than in 2013. The really interesting thing with CHW is as its EPS has steadily increased since 2013, the share price has steadily decreased. Strange how investors who worry about overvaluation and thirst for yield never find this company.


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## hollyhunter

Both technicals and fundamentals are looking strong. Looks like there was an opportunity to make money here.


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## al42

Oh Oh...http://www.theglobeandmail.com/glob...20160808&archive=ccnm&slug=201608081065265001


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## bettyboop

TDW shows a dividend payout ratio of 208.34%, how can that be?


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## hollyhunter

Technically, short term looks good. On watch for clear above 10.70.


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## CPA Candidate

CHW has announced that they are leaving the working capital loan business to focus solely on equipment financing (the core business). This is now a pure play equipment finance company.

I also noticed that they have commenced daily share buybacks. In fact, since they announced this towards the end of August, the price has shot up. The patient investors are finally seeing valuation turn up.


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## CPA Candidate

Well finally the day has come, dividend increase to 84 cents per year from 78 cents, a 7.7% increase. Business looks to be doing pretty well.


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## CPA Candidate

CHW received, I believe, its first top pick selection on BNN. Cited the exposure to US business and potential for tax rate decreases. The stock is up 8.4% this year (excluding dividends) and I think it can keep rolling higher. A year ago the stock was $9.71.


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## Killer Z

CPA Candidate said:


> CHW received, I believe, its first top pick selection on BNN. Cited the exposure to US business and potential for tax rate decreases. The stock is up 8.4% this year (excluding dividends) and I think it can keep rolling higher. A year ago the stock was $9.71.


I saw that too .......the guest also suggested that CHW could be a possible take out target by one of the larger financial institutions in the U.S. I'm just happy to see that this stock is finally receiving some love (although collecting the massive dividend while waiting is not the worst thing in the world).


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## CPA Candidate

Including dividends CHW is up about 44% in the past year. The stock market is the only place where people prefer to pay more rather than less for the same thing. Now that the stock is going up a 45 degree angle everyone is jumping on board.

My position got so big I had to sell the last block of shares I bought at $10.30 to keep CHW from dominating my portfolio.


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## Killer Z

CPA Candidate said:


> Including dividends CHW is up about 44% in the past year. The stock market is the only place where people prefer to pay more rather than less for the same thing. Now that the stock is going up a 45 degree angle everyone is jumping on board.
> 
> My position got so big I had to sell the last block of shares I bought at $10.30 to keep CHW from dominating my portfolio.


CPA, I have also owned this position for some time and have taken profits. Do you plan to continue to hold for the long term, or do you have an exit in sight?


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## CPA Candidate

Well, CHW back in the dog house with a absolutely terrible month of May. Sigh. Glad I trimmed the position when it was heading up.

I plan to continue to hold the stock, and I may add back now that it has gotten pretty cheap again. At a 7% yield, the need for capital appreciation to hit target returns is only 2% a year.


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## al42

Nice bounce back yesterday. Must have been a fund unloading their position.


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## al42

Back in the dog house again


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## CPA Candidate

al42 said:


> Back in the dog house again


The investment in dealnet shares has been a disaster. Off the top of my head, the investment has lost 2 million this year which is recorded immediately as a loss against income. It's impact on EPS is substantial.


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