I like and own CNAM at this point in time. I don't like their current business though, the gross margins fluctuate all over the place from quarter to quarter...So its mainly a buy for the new recycling facility.
The one thing that keeps me from making CNAM a very large holding, is that I am not sure how they will manage working capital with the new facility. With fairly low margins in the new business, huge revenue numbers, unless the DSO they achieve is incredibly low... I can't see how they escape working capital issues. They would need very significant short-term loans from banks to manage those requirements, IMO.
If I could get a satisfactory answer to that issue, i'd double my CNAM position.
Thats my take on it anyhow.
-Fernando
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