While at the Leadership Conference in Dallas this October, we had the pleasure of hosting a session featuring one of the most impressive managers we know – Alain Bedard, Chairman and CEO of TransForce (TFI CN).
The value we see in some companies comes from the business model itself: and economic moat it has leading to pricing power and cash flow generation. However in many instances our ownership is as much, or in this case more, about the people and culture of the organization. Alain is the reason we own TransForce and I believe he is one of the most overlooked executives in corporate Canada
The trucking business is a very difficult business. Commoditized offerings, capital intensity and economic sensitivity make it very hard to compound value. However, there are exceptions to every situation and TransForce is that exception in trucking, as seen in the following chart:
Source: Bloomberg (Aug. 31, 1995 - Aug. 31, 2015)
The stock performance is, in many ways, due to Alain’s intensive focus on cash flow and returns. This results in the ability to compound free cash per share over time, as seen in the chart below:
Source: RBC model
While the current environment is very difficult in Canada, the long term value creation Alain has been able to demonstrate is indisputable. The following link is a video of our conversation with Alain from the Leadership Conference this year: http://player.piksel.com/v/wi707778.
As always, thank you for your support.