Enerpac Tool Group (NYSE:EPAC)

Lean? Cliff Ransom Investment Thesis

In my short, 46-year career as an investor, I have declined, consistently, to take any responsibility for excessive expectations by Mr. Market. My preferred course of action suggests that I should strive to be patient and wait for entry and exit opportunities. With the arrival of a new management team in the spring of 2016, I foresaw the promise of a focused culture steeped in well-executed Lean Thinking. I knew that lean conversions require, at a minimum, 2 to 4 years of “gestation” before “outsiders,” meaning we investors, see the benefits in the financial statements. The strong second half of fiscal 2018 looked to be an early and positive tipping point. Unfortunately, the market reacted very negatively yesterday to what I thought was a superb earnings announcement for the fourth quarter of fiscal 2018. Essentially, on the 26th, the Street took the stock out and shot it. I would ask that investors scrutinize the very heavy trading volume in both the opening and closing minutes of that tumultuous trading day; does anyone else smell panic selling?

In any event, I offer the following simple graphic, the four-day stock trading chart on Actuant, to express why I’m writing this piece:

Diversified business with a large rebound in sales and profit over the last three years. Recent purchases in treasury stock shows the company sees value in their stock price that the market isn't picking up on, and although they have a high weight in intangible assets, they have done well in the last year to pay down debt.