Do you lay awake at night wishing you could invest at the lowest possible rate of return? Or, better yet, do you wish you could invest your money in a company that will never earn you a penny? Do you dream about slowly losing your buying power to inflation? Then Bombardier (TSE:BBD.B) might be the perfect investment just for you:
Look at that. It’s been ten years. Ten long, damn interminable years and Bombardier has STILL not made me a cent of return. In fact, it trades lower than its own damn price 10 years ago. It goes down, then up, then down, then up, then down again, and again, and again. Perhaps they should start building roller coasters because its own stock is fairly good at it. Somehow, Bombardier have managed to not achieve anything at all in ten long years.
Do you want a recovery from the crash of 2007? You won’t get it here.
The financial crisis began in 2007: it lasted three years and caused the DOW Jones to lose 54% of its value at its top. Here is what happened to the economy and several big Canadian companies from various industries since then:
Here are even more reasons to love Bombardier:
1. A mediocre 2.69% yield that is never, ever raised. And that might not even be safe.
Stock price not rising? No worries, you can enjoy a lackluster 2.69% return on your investment. And that’s only because Bombardier is at such a low price; back when it was above $5, the yield was under 2%. That’s basically below inflation. In ten years, the dividend was completely cut once and never raised in six years. If you’re looking for high-risk investments with lousy yields, then Bombardier is perfect for you.
2. The absolute worst management in the history of Canada. Even Indians managed their buffalo herd better than Bombardier.
To call the company’s managers “incompetent” would be doing a disservice to linguists worldwide. Bombardier could be led by a group of sixteen-year-old in a drug-induced coma and probably do a better job at managing its resources than the moron they just kicked out, another loser who would do a better job by taking his decisions at random and who led the company into the ground for far too long.
Bombardier is the most efficient cash-burning company that ever existed
When Bombardier began its C-Series program, it estimated the total cost at $3.5 billion dollars. Does it make sense for a company valued at $6.6 billion dollar to start a program that is worth more than half its market capitalization? I don’t know, but the cost was hiked by nearly a billion last February, to $4.4 billion. A small increase indeed for a project that still is very far from a first official delivery – a project with a delivery date that was already pushed back three times and that is about to be pushed back into 2016. Oh, and the debt skyrocketed by $500 millions in under a year as well. Just wonderful: you can be sure that while the C-Series might never fly, its debt level sure will.
3. The only stock that never rises, even after signing a 1 billion pounds deal
One would expect an unannounced 1 billion pounds deal to have a positive effect on the price of the stock of a company, especially given the fact that company was valued at only 7 billion dollars at the time. But no!
Of course not! That would be too easy, wouldn’t it? A billion pounds deal that Bombardier wins and the stock doesn’t move a penny up. In fact, it falls 15% in the coming days because why not, it’s Bombardier. At this point, you’ll have to wonder whether even a 10 billion dollar deals would change anything for the company. Ever read a news, “Company X signs a record deal” and felt sad about it? This is what owning stocks of Bombardier feels like.
5. The only company that can increase its revenues by 30%, triple its profit margin and still see its share price fall
For people who aren’t investors, Bombardier went from selling CAD $15.6 billions of stuff in 2005 to $18.2 billions in 2013. Its profit margin kicked from 1.5% to 4.9% during the same period, meaning that it went from earning $234 millions in profits in 2005 to $891.8 millions in 2013That’s pretty good, right? Sure, it excludes depreciation (the fact that stuff gets used and loses its value) and amortization (having to pay for something over the course of several years instead of a big lump sum paymentupfront), but we can agree it’s certainly a good start. So… why isn’t the stock price moving?
I don’t know, you don’t know and nobody knows. This is Bombardier and it’s impossible to make money off Bombardier.
But wait! There is more!
6. A stupid plane program that goes absolutely nowhere and that will never, ever be released.
Originally planned to begin in 2004, then 2005, then cancelled in 2006, then restarted in 2007, then planned in 2008, then 2009, then 2010, then 2011, then a first flight planned for 2012 which actually happened in 2013, then planned for sale in 2014, then in 2015 and soon to be 2016, the C-Series is the only plane that will never be made. Imagine if Bombardier was a military contractor and if Canada was waiting for this plane to win the war. By now, Canada would have been long obliterated.
The C-Series are by far the best planes in their category with a 15-year edge over their competitors – in theory. I say “in theory,” because these planes will never actually be made. Okay, I might be a little bit pessimistic here: these planes might end up in the sky some day, but I will be long dead by then, and even there, you can bet BBD.B‘s stock price will still linger in the mid 3’s.
7. Everything that can go wrong will go wrong with Bombardier!
Canadian dollar is too strong and reduces foreign profits. Canadian dollar is too weak and prevents them from investing in foreign countries. Then, there’s Russia and a hold on a massive order, and another massive controversey in South America. And who could forget the engineers who aren’t really engineer? Even in its home province, Bombardier is not immune to accusations and controversy. At this point, Bombardier will be lucky to even sign one contract without being sued by at least five parties.
Investing in Bombardier: a surefire to never make money
Do you want to risk your capital without ever making money? Then Bombardier is for you. Finally a company for people who feel bad making money to profit from the stock market. And you know what the worst is? Every year since I owned this stock, I believed in it. That [NEXT YEAR] (insert: 2008, 2009…, 2015) could be a big year for them. Even right now, we get a “Bombardier is gearing up for a strong 2015.” It has been like that for every. single. year. Is it true? I suppose that eventually, it will be. In fact, I would not hold Bombardier if I did not believe it was significantly undervalued and about to breakout – eventually.
So, would I recommend people to buy Bombardier? Based purely on the numbers, certainly. BBD.B has the best planes in their categories coming, two sectors that work very well and a large backlog of orders. Its share price is cheap and ratios are attracting to investors. Or at least that’s in theory. In practice, Bombardier is one of those companies that will never make you money. It makes no sense, I have no idea why, but that’s just how things are. I’m pretty sure that I will re-read this post in 10 years and Bombardier will still be at a feckless level.
I’ve been holding that shit stock since nine fucking years now and I’m fucking sick of it. I could have put my money into Apple and basically earned a 1,000% return over the same period.