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Input is an agriculture commodity streaming company with a focus on canola, the largest and most profitable crop in Canadian agriculture. Founded in 2012, the company builds on three years of pilot testing in the Input Capital limited partnerships. Importantly they are the only company in the world that does this specifically (According to them), not to say they don't have competitors in some form of financing or another, just not in their niche.
Input enters into canola streaming contracts with canola farmers in western Canada. Pursuant to the streaming contract, Input purchases a fixed portion of the canola produced, at a fixed price, for the duration of the term of the contract.
Canada accounts for over 70% of the world's Canola exports. There is a growing demand for the product with a 15-year Export CAGR of 8.6%. However this is a good time to mention that China has banned several Canada Canola export companies from trading with them, which i will mention how this impacts Input soon. Furthermore, Western Canada Farmland is growing extremely fast at a 10-year national CAGR of 12%.
The business has stopped taking on new streaming contracts due to the inability to find a suitable vendor financing to act as their source of financing for scalable streaming. They mention this is due to the uncertainty surrounding the industry due to the China export situation.
The business itself is run by Co-Founders with a large stake in the company. It has a proggressive dividend policy and actively repurchases shares below book value.
This is where the thesis gets interesting as currently the book value is $1.25/share with a share price of $0.75/share. They have just bought back 7.4m shares at a price of $0.70/share. This is a valuation of 0.56x Book value. They have also used their cash reserves to cut their long-term debt in half. The enterprise value being only $24m right now. which is covered in full by receivables whilst TTM operating cash flows are about that much as well.
After looking at some previous quarterly and yearly financial statements and they had some sizable unrealized market value losses and also credit losses and impairment losses. So you would need to dig into this to get some conviction on how solid the asset base is in a recessionary environment like this, and the business model around the streaming contracts.
They mitigate risk through very profitably mortgage streaming contracts, they have difficulty finding a new form of financing to get new contracts so the offset is diluted, hence the poor margins.
Anyway this is just an idea, it smells slightly speculative given the reliance on macroeconomic decisions of trade, however the asset base gives it a "Heads I win, Tails I don't lose much" appeal that i assume some of us would appreciate.