Livermore Partners Founder Discusses The Deep Value In Volt, Zargon, Occidental Petroleum And California Resources
Tim: Okay, everyone, we're on with David Neuhauser of Livermore Partners out in the greater Chicago area. I've known David for a couple years now, we've had several conversations about stocks. He's been generous enough to come on and talk to us today and throw out some of his favorite names in the current market environment. David, thanks for being with us today.
David Neuhauser: Thank you, Tim. Glad to be here.
Tim: Now, you're from Livermore Partners. You're a smaller firm so far. Can you tell us a little bit about your firm and your investment philosophy?
DN: Sure. Livermore Partners has actually been around about six years. We're an alternative asset manager that specializes in small- to mid-cap names, and we're really focused on special-situation type investing. So, our focus is energy, industrials, and financials, though we are agnostic to investments, because we're looking at things that we feel hold tremendous intrinsic value relative to the current equity value. We're looking to become proactive, to search for ways to enhance the value of the securities.
Tim: Yeah, I have noticed since I met you- you're not shy when it comes to speaking with management and getting your hands dirty when it comes to companies when you really believe the value's there. Let's jump right in. The first stock we're gonna talk about today is one of your favorite stocks, and it's also one of my favorite long-term stocks, and that’s Volt Information Sciences. Can you tell us about that company and the investment thesis there?
DN: Yeah. We've been an investor in Volt for just over two years now. And Volt, I would say, epitomizes the exact type of investment we like to make- things that are big, that have potentially a lot of hair on them, as they say. So, they're stories that aren't very plain and vanilla. They're not Microsoft or IBM, things that you can pull up a research report or company report and say, "Oh, I get it, I know what they do and how much money they're gonna make, here's where the growth is, here's the valuation I'll put on it, so I'll buy the stock and sock it away." Volt's one that, it's very messy and a bit convoluted, but if you peel back the onion and you look at the industry and you look at the company and its history, you get a good sense as to there's tremendous value here, it's under-followed, and its underperformed.
And our view, coming into the situation, is that this is something that we feel has the potential to even double or triple when we got involved. So we had to do our work, and we had to look at things. And again, it's not just because the stock's cheap. There's plenty of stocks that are cheap. So we don't look at that stock and say, "Oh, something is cheap, so we'll buy the position and try to push for something." We're really looking to try to find things that the market isn't really reflecting, that we can take a position. And the view is that management is gonna unlock that value over time. There's short-term goals and long-term goals.
Imagine a team that says, "We're only looking at the long-term." When I hear that, all the time, I say, "What's your short-term goals?" So, you have to benchmark both short and long-term goals. Otherwise- you can hear about long-term plans that'll go on for a decade. And with Volt, that was the case. Volt was a case in which management overpromised and under-delivered for years. They tried to get involved in many different industries, which were just a total failure. And what they really needed to do, and what we thought when we got involved was, really just become more of a pure-play staffing company. And if they could get away from the computer systems business and other things, and soft real estate, you'd be left with a company that has between $1.5B-$2B of revenue, and a company that has tremendous opportunity to grow cash flow and free cash flow. Which, with a $20M share float and a $200M market cap, the upside is tremendous. So we got involved with that, and do what we usually do, which is talk to management, try to get the pulse on things.
And just, right away, it seemed like it was dead in the water. They talked and made some promises, and they have yet to deliver. So about a year and a half ago, we started becoming more proactive, sent, I think, a total of four letters to the Board of Directors, and we pushed them to ax their computer systems and other non-core assets, buy back stock, and also sell non-core assets like the real estate that they have- which, again, on a tangible, book-basis, if you take away many of the aspects within the company, you can see that the tangible book values is right around current market value, if not maybe a little bit above. So, if they can act on these things, and they can do so quickly, and at the same time get their operating margins- which were well below market, at, say 1%, and you can get that to industry margins of 3-4%, this company could generate $1.50 or even more of operating earnings.
And again, with that multiple- if you look at every single staffing company out there today, Manpower, On Assignment, you look at these companies, they're trading at 17-20 multiples. So you put that multiple in Volt and you come up with somewhere between a $20-$30 stock. And we looked at it when it was $7-$8 a share, and decided to build a pretty substantial position for a little more.
Tim: Right. And the core business of Volt is actually a very good business. They're in the staffing business, and they have great relationships with some of the leading tech companies, don't they?
DN: Yeah. They have long-term big companies, specific relationships, like Microsoft, like Boeing for Aerospace. These are big, Fortune 500, even Fortune 100 companies, that are looking to Volt as guidance as they look to increase their staffing needs. So, they've had these relationships a long time. They continue. The difference today is, Volt, with task-management scalings, used to sign up a bunch of contracts and not actually look at what their profitability was on those contracts.
So the focus now and even recently has been to let those under-performing contracts that have no margin to run off, and don't renew them. So, in essence, the revenue of the company will go down, but the goal of the margin will go up. And when we're talking with a company that actually has $1.5B of revenues, that 100 base point move in operating margins is tremendous. So, it's not so much the revenue here that's gonna matter. It's keeping profitability. So right now, the company, on a pro forma basis, going forward for this year, should be somewhere around 80, 90 cents a share pro forma. And again, that's still doing that at 2% operating margins, which is actually the highest they've got in the past several years. So, if that could continue to improve back up to that normalized 4% for the industry, even 5%, yeah.
Even on the lower revenues, the companies should increase their earnings per share, and therefore the equity has tremendous upside. The other benefit, too, of the company, is, these companies have pretty low-cap action and investment. So they generate a lot of free cash flow. And that's really why they trade at the multiple that they do, because though they're a service business, the one big benefit is the fact that these companies can have a lot of free cash flow without putting a lot of money into the company, as it's being generated. And you don't find many companies like that. And that's why service businesses, it's important, and that's why it's a good model for private equity.
We view this as something that, on a base case, should do well over $1 per share. And on a more positive, I would say better to best-case, could generate $1.50-$3 per share. And again, you put that 17-18 multiple on it, and you get a much higher stock price. I think it will take some time before that occurs. It's not something that you're gonna see one quarter or two quarters. But I think going forward, this quarter and the next two quarters, the company, you'll see- we got involved, we sent our letters.
Since that very short time period, we've seen- we helped instate a new Board of Directors, along with Glacier Peak Capital, which is a shareholder. We helped instill a new CFO, a new CEO now. So we have a completely new management team, we have a completely new board, and we have a company that has now exited computer systems, which was a burn of $20M a year, and is also now in the process of selling some other non-core assets. For example, they owned a company in Uruguay, which had some real estate there; they also owned, their non-core jewel is this California real estate they own in Orange County, CA, which has a value of about $400M, which has a very small mortgage on it. So, as the company exits some of those things, they'll generate a lot of working capital. Our view is they'll have close to $70M of working capital by year end. And that money, there could be some used to re-invest in the business; but, a chunk of that capital, we're pushing for them to put together a pretty substantial share buyback. We've also seen here in the past week, after the CEO Ron Kochman resigned.
We've also seen insider buying in a pretty dramatic fashion. We've had insider buying from Michael Dean, John Rudolph, again, the large holder, and even another director. So, those are the things- you take everything accumulatively, in terms of re-shaping the company, re-energizing it, and starting to generate really meaningful cash flow- to me, the equity has tremendous upside. So, we own it, we continue to buy at these levels. We bought at higher levels, because we feel the intrinsic value is, again, dramatic.
And it's something that, in my mind, too, has a relatively low-risk profile to it, given, again, where we're seeing unemployment numbers coming down, where we're seeing more part-time hires from companies instead of full-time employees. So, it really, I would say, manifests what a lot of people are looking for today, in today’s market, which is something that's gonna benefit from an improving North American economy, and at the same time, is a business that has been under-performing and mismanaged for a long time, that it's finally starting to come to light with a better management team and a strong board.
Tim: Okay. I know it's one of your favorite stock ideas, it's definitely one of my favorite long-term stock ideas. So, Volt Information Sciences. I forgot to mention the ticker, it's VISI. But you've bought some other names that I'm not as familiar with today. You've become a bit of an activist in a Canadian oil stock, Zargon Oil. Can you tell us about that one?
DN: Yeah, sure. Again, to give a little more background- I formed Livermore Partners, which is alternative assets. We're a hedge fund that focuses on these special situations. We like to focus a lot on energy. We have our background in it. 15 years ago, now, I worked for a hedge fund here in Chicago when I was growing up, about 24.
So for about 7 years, I worked for a large financier who taught me from risk arbitrage, to activist investing, to private equity. So, essentially, what I've done a little more, and Zargon's a perfect example, as well as Volt, is try to use that skill set that I was brought up with when I was a very young guy here in Chicago at 25, and took on a lot of responsibility back then at that hedge fund. And here I am now with my own hedge fund, and what we're trying to do is mimic a lot of those strategies.
So, we're not necessarily activist investments in terms of, we're looking at targets we can go into and press for change. We're actually getting involved in a much more proactive but yet collaborative fashion. Unfortunately, there are times where you have your ideas or view on strategy, and what should happen strategically through the business, and unfortunately, sometimes you will come across management teams or boards that will not see eye to eye. And when that is the case, yes, we wanna take a more of an activist investment.
But we're doing so really to protect our investment, because every other option to engage with the board or management has failed. And with Zargon, that is an example. I have great respect for Zargon's management team, I've gotten to know them very well over the past year or so. And I feel they're a good group. They're honest individuals. But at the same time, we didn't think the strategy was developing as fast as it should. Zargon is an oil exploitation company, not exploration company.
And since Zargon is now trying to find the oil, but you know where the oil is, and they're using different techniques to extract the oil which is called tertiary recovery, which is a secondary recovery that's used by many companies today. They have a project called Little Bowl, which, they've decided to change their profile and develop this project, which can develop over several thousand barrels of oil a day. It's a light oil. They actually have about 87% oil, Zargon. They're a small Canadian company. They're actually listed on the Toronto Stock Exchange. Our view on that company was, again, it was trading at a very low value to their NAS, and the project has suffered from delays. It does produce oil, and they're also doing some inflow drilling today to help accelerate that drilling. But, what's interesting about the company today, even right now, is the fact that they essentially have two businesses.
Everything is a conventional low-decline, low-risk, long-dated oil company, which is Zargon. And total BOE, they have about five thousand barrels a day of BOE equivalent. So, our view is they had a conventional side, which is their legacy business, which generates good cash flow. And then, again, they have this Little Bowl project, which is a new project that's starting to produce oil, but it's not producing to the level which they've told the market it should. That coupled with a 50% retraction in oil prices has seen the equity value of Zargon trade dramatically below what we feel is their NAV. So, we're, again, we've increased our position mightily.
We've engaged with the board of management. We said, "We wanna become more proactive with you guys and help develop a strategy that's workable in this situation." The benefit of Zargon is the fact that their decline rate is only about 13% or 14%. Meaning, they're not a shale producer, which is producing sort of on the treadmill, you hear, fronted by debt, not producing free cash flow, and has a 35-40% decline. Zargon has a 13-14% decline that is constant. The Little Bowl project also has about a 14% decline, which is constant. As you go to different phases, 1 2 3 4 of Little Bowl, the capital to get that production is minimal. So there's been a big capital investment up front, which they funded. And again, now oil prices are down to $52 a barrel. So there has been stress.
So, our view, Zargon's been a long-term dividend model for many. So it's paid 7, 8, 9% yield to many retail investors in Canada. Our view is that, given the tumultuous times today, they should pair back and actually stop paying the distribution, focus on the equity, focus on the project of Little Bowl, and at the right time, we'll see much more value happen on the equity appreciation than we would by just sitting there getting an even 7, 8, 9, 10% yield. So, we're in talks with the company today, I don't wanna mention too much. But my view is, this company has tremendous upsides from their current values.
We are owners of the company. We are buyers of the company. And we feel that we're gonna work proactively with management to achieve everyone’s goals. So we're looking out for shareholders. We are trying to work with management. I think we do see eye-to-eye on many things, but our view is, we wanna have a say on the future strategy of the company, and that's why we became more proactive, and what you call an activist.
Tim: Where is the stock trading now?
DN: Stock today closed at, I think, $2.15 or $2.16. And again, it's near its 52 week low or all-time low. I'll tell you- I won't really say too much what I feel the true intended value is today, I'll just say it's much higher, because we are still active and building the position. So, we think it offers a tremendous upside to the market. It's a contrarian investment, and one, I think, will pay out for a long time to come. That's something that we're active in, and it's one of our larger positions.
Tim: And what's the symbol on that?
DN: It's ZAR, and it's in Canada, so it's ZAR.TO.
Tim: Okay, thanks. Now, we've had a big move in oil over the past week or so. Unfortunately down, for those of us who own a lot of energy-related stocks. What’s going on there?
DN: With oil itself?
DN: Oil is obviously suffering from a glut. The glut is from the US shale revolution that began as the US economy was coming out of the 2008-2009 global crisis. So that occurred, money became very cheap, the dollar was weak, and there was a strong appetite for crude. And with new technologies, shale became the way that the US could essentially become almost self-sufficient on energy by drilling shale wells with new techniques and technologies and multi-pad drilling and the likes. And money was cheap, so you got a lot of guys, independent guys, forming companies and developing many plays, starts with the Bacchian, the Permian, and you can go forward.
So that led a five year tremendous growth to oil where we've increased our production, almost doubling it to close to 10M barrels a day, which is unheard of, if you'd have talked to guys that had been around in energy for the past several decades. Unfortunately, what that did do though, is it created a supply-demand balance globally, and it also created other issues regarding Saudi Arabia, which used to be the largest exporter, and essentially, they were starting to export less due to the growth of the US shale production. So, I think that hit a head here in the past seven months. And it didn't really come pronounced until you started to see global demand come off.
And then, of course, OPEC not making any moves as prices dropped around Thanksgiving. So, that led to a glut in the market. That glut continues today. It will take some time to run off. You've had a 50% drop at this point in time. You'll see less shale drilling, you'll see cap exits down to 3% down the board. It does take time for the market to correct itself. Meaning, we still have too much oil in the market today. We have issues with Iran coming back online. We have issues with cost coming down, which means you could actually become profitable at lower price of oil. And we have a lot of competition globally for oil. So, all those factors combine, and now the new factor is China potentially slowing down further, is causing oil to stay in this very low price band of $50-60 a barrel.
But our long-term view on oil is that sometimes, over the next 12-24 months, you will see continued depletion, and US production start to fall off. And as that occurs, along with strong demand globally, oil prices will start to be back on the upswing. And when it does, it's not gonna happen at $1 at a time, it's gonna happen pretty suddenly. And I think at that point, it'll hold a level for a while. Somewhere around- Brent, we're looking at $70-75 by sometime in mid to the end of 2016. And I think beyond, you'll see a little bit of a steer step from there. What people keep forgetting about oil is, demand is always increasing.
This isn't coal or another commodity that has gotten crushed. Oil is needed every single day. It's used every single day. So, we always have growing demand. And it's growing almost every single year. And the other issue is, oil is always depleting. So, unlike other commodities, oil depletes. So if you don't invest, production goes down. You have to invest. It's a manufacturing business. So, there's a margin to it. You have to invest to get the oil out. So if money doesn't go in the ground, oil doesn't come out of the ground. And the only way you're gonna do that is if you're making it with a strong enough margin.
So, what I'm trying to say is, the past several years, we've had great growth in shale. As costs go up and it becomes more difficult to find those sweet spots, you're gonna see production come off, and you're gonna see oil prices normalize and increase. And it won't happen maybe in a month or two, but it's gonna happen.
Tim: Okay. That's creating opportunities for long-term investors, and I know that you've got a couple energy companies that we've talked about before. California Resources is a holding of yours, and if I'm not mistaken, wasn't that a spin off from Occidental Petroleum not too long ago?
DN: Yeah. Occidental has been a holding for Livermore Partners for several years. We like the management team of Occidental, we think Steve Chazan has done a tremendous job, and we were pushing for him to separate the company and unlock further value, in a difficult time. So, they're on tap to do that. CRC was one that they spun off at probably the worst time ever, which was last December. They floated it with a bunch of debt, of course. So it's really more of a private equity company, even though it's publicly traded. So it's delivered.
And then, of course, you have this 50% dip down in crude prices, which caused the company stock to really take a beating. But our view is, we built the position, we continue to buy shares in the company. We like the management team, which is run by a guy named Tod Stevens. Tod was head of Occidental Petroleum's Merges and Acquisitions for about 15 years. He's a young guy, too. And he's grown up within Occi. So he knows these assets extremely well. His strategy, I think, going forward, is gonna work really well for shareholders.
It will take some time, obviously, to really unlock the value you need to see higher pricing. But I think many of the market don't understand, even with a $57 Brent- CRC is tied more to Brent than they are to WTI based on their location, they're in Southern California. They're also a large landowner in California, and they're focusing today, and their main assets on the San Joaquin basin. Given, they have unconventional resources, but they also have, just like Zargon, more of a secondary, tertiary recovery. So, again, else risk to that.
There are some fixed costs, which some guys have looked at and frowned upon and said, "Well, the company has higher fixed costs and therefore the value's not there." But I think they're gonna be surprised when they see what this company can do in a lower-price environment now, and then, what they can do in a higher-price oil environment in years to come.
So the equity at $5.5-6, and the $2B market cap, we feel the company, over the next 6-9 months is going to de-lever. And by de-lever, I mean they're going to look to either sell or joint venture on some of their mid-stream assets, which they have, and at the same time, joint venture on some of their reserves that they have with some large independents that would have always wanted to get into California, and this is their opportunity.
So, we think those two strategies is gonna help create a lot of cash, which will be used to de-lever and pay down debt. Even at today's oil prices, given the steam flood and tertiary recovery of CRC, they're actually generating free cash flow, even in this environment. So, if you look at that in this environment, and you feel that oil prices are going to normalize in the next 24 months, their decline also is about 15%. So we're talking about a low, low decline.
Free cash flow, assets that can be sold to generate further value for shareholders, and also you have torque, meaning that if prices actually do go up over the next few years, the torque to the equity, which means their cash flow will increase mightily, and they can even start drilling some unconventional wells. So, there's risk to it in terms to it's a lever balance sheet. But we think this is the right management team that's gonna show the market, over the next few years, that they have the assets and the operational capacity to increase shareholder value mightily.
And I don't mean by $1 or two. I mean, we feel the equity is tremendously undervalued, and just like a lot of these stocks, the Zargons and our California Resources, or others we feel they're traded at significant discounts to their intrinsic value, which means at a minimum, they're 30% below that.
Tim: Okay. Do you have any concerns because they're located in the land of goofiness we like to call California, are regulatory issues a potential problem?
DN: You know, I think there's always been regulatory issues, as well as the current drive in California. But again, I think the company has a good relationship there, and I think over time, just like a lot of these companies, their key driver is the California economy. I think it'll resolve itself. I'm not gonna say I'm never concerned. But we look at that concern and we try to balance that with the opportunity. And my view is the opportunity greatly outweighs any risk associated with that.
Tim: Okay. And the symbol on that one is CRC. And you had one other that you talked about, and that was Genel Energy, is that correct?
DN: Yeah. All these companies, again, they're portfolio companies, Livermore Partners, they are in our hedge fund. I don't wanna mention too much about all the companies, we tend not to be too public with it. But in this instance, I'm trying to share some of the things we have somewhat public already, whether it's being interviewed for things- I mean, the one thing, hedge fund managers tend not to be very outspoken and vocal.
They wanna keep their ideas and views close to the vest, and I agree with that, except there are times when you do have to be a bit more vocal. At the same time, too, I wanna be able to show people and other investors or potential investors, "Look, if we feel something and really have a strong belief in something, we should be more outspoken about it." Because you're gonna be wrong or right. You don't see many people come back to hedge fund managers and say when they're wrong. It's also difficult to be right all the time, too. My point is, when there's a high-level conviction, I'm okay with being more outspoken, especially if we're being vocal in terms of an activist process. And that pertains to, you mentioned, Genel. Genel Energy is listed explore, and it's one that's being run today by the former CEO of British Petroleum, BP, a guy named Tony Hayworth.
And it was started as a show company about several years ago, and they're developing in Kurdistan. So, fast forward several years later. The equity is done very dramatically from its IPO. Their production is up dramatically. And it creates a very unique opportunity for somebody looking at the story today. That's why we got involved in it here fairly recently. It's a fairly recent investment for us, but it's one we have a fairly high level of conviction on. It's about a $2.3B market cap. It's listed in London. And again, we think it has all the attributes we look for, which is a very, very strong and solid management team with Tony Hayworth.
I have tremendous strength in Tony's operational abilities, as well as his forward-looking strategy. He's someone I actually do truly admire. Second of all, it has world-class assets in Kurdistan. They have extremely low fining and development costs, extremely high net backs, just a wonderful, I would say, opportunity to invest in something like this. And the valuation is also extremely compelling, because even as $50 Brent, or $60 Brent, the company generates a lot of free cashflow, and is trading at tremendous discount to their NAV.
So, our thesis on it is, one of the things I told you earlier is, a lot of things are cheap for reasons. For example, oil is out of favor. It's in a bear market, oil. So obviously, those equities are gonna get hammered, and they have been hammered. So the question is, do you feel it offers an opportunity? Maybe not in the next 3 or 6 months, but over time, your opportunity to make money is gonna greatly outweigh the downside. Our view is, we see the opportunities, and therefore, Genel is one we feel has some risk to it.
It's in the world in Kurdistan. It's also having issues with the KRG, which is the autonomous government of Iraq, whereas they're fighting, of course, ISIS, whereas they're fighting, they need cash to fight. And the oil companies provide that, except that the government doesn't have money to pay for the oil that they're selling. If the oil companies aren't getting paid, they're not gonna be able to re-invest, and they're not gonna continue to drill. So, a number of Kurdistan explorers have been under pressure because of these payment issues, and Genel is one of those.
So, our view is, we feel this will be resolved, and as that gets resolved, the intrinsic value and the current value will start to get somewhat more in line. And we feel that offers tremendous upside. It's one of our larger positions in the fund, and it has all the attributes we look for. It's something we think is tremendously, deeply under-valued, has a very strong management team, and forward-looking, we think crude prices recover. And like I said, this company has no debt, and they're able to generate at $50 Brent. Brent today is somewhere around $56, $57.
Tim: Okay- I'm sorry, go ahead.
DN: I was just gonna say, you can just imagine if Brent stock at $70, $75; or, years out, back to $80; and Genel is able to continue to drill and increase production mightily, there's gonna be a sea of cashflow they can have. And it's very rare to find an oil company like that. We think Tony, who is moving to the chairman role soon, will still be able to provide the kind of oversight and strategic insight that will be needed for the company, and therefore we remain and continue to build our position in them.
Tim: Alright, good. We talked about another, and this is a stock that I have owned before, and I'm looking at it very closely now with the idea of getting back into it at current levels. It's Titan International, can you tell us a little about that company?
DN: Titan is here in our home state of Illinois. The company's been here a long time. This is more of an industrial side we're looking at. At Livermore, we focused on auto, with industrials, we like things that have manufacturing to it such as oil.
And Titan's interesting too because it has a commodity aspect as well, which means they're building machines and tires and equipment that are used for agriculture. Their business typically moves along the way of agriculture commodities. So when there's boom times, they do very well and sell a lot of equipment. And when there’s a time when commodities are in a bust cycle or a bear market, their revenues are down fairly dramatically and they're under pressure.
We feel that commodities have been and are in a bear market. But Titan has become extremely compressed, and I think it will take some time, but we do think- the intrinsic value of the company is dramatically higher than the current value, and we think the company is making adjustments that, over the next few years, you can see a strong recovery and low cost-structure. Therefore, there’s a lot of leverage to this company on a recovery. So, the stock is around $10 a share today.
And we feel there could be tremendous upside over the next few years on that recovery. So one of the things you have to look at when it comes to commodities is they’ve been in such a bear market, and it's very challenging to make money in a bear market of any kind. But bare markets don't tend to last forever. Depending on the value to these companies and when they come out of that bear market, the upside is then explosive.
So we're looking at things like Genel and Titan and even Zargon with the view of, we think there's tremendous value even today, but when things start to turn- and they don't have to turn a whole lot- then the upside is there to make strong list-adjusted returns.
Tim: Okay. Thank you for taking time to spend with us this afternoon. Those are fantastic ideas and you've been extremely generous with your ideas, so thank you very much.
DN: No worries. I appreciate it, Tim, and like I said, I think these are challenging times for sure and I think they'll continue, but I think global economies are on a very much of an easy mode. And with that, I think, at some point, you'll start to see some of the over-excesses of supply for many commodities and industrial names start to subside, and therefore demand increases, and therefore price increases.
So, we were investors, for example, in 2009 during the crisis, our biggest theme at that point was industrials. We owned companies out of Canada, which is a tier-one supplier, which is here in Ohio. Those stocks were left for dead, they were in a bare market. And the view is that if you understand the dynamics of the companies and they businesses and their intrinsic value, that at some point in time, that will turn.
And that turn could be a great contrarian play. Ottawa's now in a bull market. We've done extremely well with those companies, we know those management teams very well. My view is that this is the right opportunity to get involved with energy and industrials today because at some point, we too will come out of this bare market, and have brighter days ahead.
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