Friday, 25 March 2016

New Purchase - Pason Systems

In February 2015, I bought 100 shares of PSI @ $18.35 and sold them in December 2015 @ $21.23, for a 15.7% capital gain. If you count the $51.00 in dividends received, my total return was 18.5%. However, during this time, I sold a call on these shares which netted me $77.60.  Including this amout, my total return was 22.7% over 9 months. If only I had been so lucky with Ensco (I lost $15,000 on that one).

Anyway, on March 24, 2016, I decided to get back into PSI at a much lower price; 21.8% lower than my sell price.

Number of shares purchased
100
Price per share
$16.52
Commission
$9.95
Total cost per share
$16.62
Total cost
$1,661.95
Annual dividend per share
$0.68
Initial dividend yield
4.1%
Increase in forward 12-month dividends
$68

PSI isn't doing so well. Since the decline in oil, they've shrunk their work force by 25% and EPS have not been very stable:

2009201020112012201320142015
-$0.07$0.44$1.05$0.49$0.29$1.36-$0.17

On the bright side, the company has no debt and basically controls market share in Canada (94%), USA (61%), Australia (85%) and Latin America (70%). 

With this purchase, my 12-month forward dividend income is $10,418.

4 comments:

  1. I've never looked into PSI but I do have some experience with dealing with at least some of their systems at work. I don't know how the customers feel about Pason, for rig data monitoring/collecting, but I personally prefer to use MD Totco which does the same thing except they're owned by NOV. At least I'm pretty sure they're owned by NOV. Where I work, primarily in Texas and Louisiana the majority of the rigs use Totco. So seeing the market share at 60% for the US is surprising to me. There's not a big difference between the 2 though but Totco seems to be a bit more user friendly and allows more autonomy for me to change what data is going to where. So whenever one of the E&P companies asks for other information to be sent over I can make the changes myself but with Pason I usually have to make 2-3 phone calls because, in my experience, they don't seem to get it fixed right the first time.

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    1. Thanks for the info. It's great to get feedback from someone that has first had experience with Pason's products.

      I got the numbers from their 2014 annual report and admitedly was wooed by them. I think they will do well when oil rebounds. Management expects 2016 to be a tough year and I'm willing to wait it out. If the share price quickly rebounds, I'll probably sell a call one my shares as I don't see this as a long term hold.

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  2. I'm not at all familiar with PSI -- thanks for sharing. Along with the stock price drop, yield has climbed from about 1.94% to 4.13%. That's a great yield! Best of luck with your investment.

    Cheers
    FerdiS, DivGro

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    1. The dividend yield is definitely interesting but 2015 EPS doesn't cover the dividend which i don't really like. But I think oil will recover and when it does, Pason will do well.

      Good luck with your recent purchases - I had noticed that You've been busy in March.

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