ONEX Corp

I follow this stock because I once owned it. I bought it at the end of 2001 and sold in April of 2008. I made some 5.9% return including dividends. I mistook this stock for a Dividend Paying stock. Sometimes it is a good idea to review the sort of stock that we should not buy.

Why I say I mistook it for a dividend paying stock is because they pay a dividend. However, if you look at the spreadsheet, you will see that there has been no growth in dividends over the last 10 years. In fact, the dividend paid has not changed since 1995. They are currently paying out some 1% of its cash flow in dividends. The current yield at .43% is way below 1%. I seriously do not know why they even bother to pay a dividend.

The only really good growth I can find is for Revenues and these have grown at 9.5% per year and 11% per year for the last 5 and 10 years. The growth in total returns for the last 5 and 10 years is 5% per year and 6% per year. Their web site says you should invest because the company has returned 14% per year to the shareholders over the last 20 years. It would seem that all this return is way past for this stock.

When you look at the Insider Buying and Insider Selling, you find that there has been some $8.2M of selling and some $2m of buying. Most of the selling is by the CEO, who is Gerald Schwartz, a major owner of this company’s stock. For the current year P/E, I get is 42. The sites that show the P/E based on last 12 months of earnings show no P/E, as there were negative earnings.

When I look at the Graham Price, I get one of $12.93. This is some 97% below the current stock price. Although, I must admit this Graham Price fluctuates a lot because earnings fluctuates a lot. When you look at the Price/Book Value Ratio, the current one is only some 55% of the 10 year average. And, the P/BV ratio at 2.06 is not high. However, the Book Value also fluctuates and growth shown for Book Value is probably not representative of what really is happening.

When I look at the analysts recommendations, I find these recommendations to vary from Strong Buy to Hold. The Buy recommendation is the consensus. Analysts seem to feel that this stock will increase their earnings over the next couple of years. (See my site for information on analyst ratings.)

I tried to cover this stock as quickly as possible. As I said above, I once mistook this stock for a dividend paying one, but no longer. I currently have no interest in buying it. I do not see how I could make a decent return if I did buy it.

Since 1984, Onex has acquired and built great businesses as a private equity investor. More recently, we have leveraged our investing expertise to build an asset management business. Onex currently manages over US$7 billion of third-party capital through its Onex Partners and ONCAP fund families. Its current focus is on growing its real estate and credit securities platforms. They have offices in Toronto and New York. Its web site is www.onex.com. See my spreadsheet at www.spbrunner.com/stocks/ocx.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.