Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: bmichaud on March 10, 2011, 09:15:33 AM

Title: IRM - Iron Mountain
Post by: bmichaud on March 10, 2011, 09:15:33 AM
The Company disclosed today that it received a latter from a hedge fund nominating a slate of four independent directors. The HF has a 5% stake, and is pushing for IRM to convert into a REIT and cut back on low-return growth CAPEX.

A quick back-of-the-envelope calculation shows adjusted net income at ~$300mm, but that includes depreciation of ~$350mm. Given the low capex requirements of a service company such as IRM, maintenance CAPEX could presumably be in the range of $150mm, which I assume is what the HF is looking at. The market cap is $5.6 billion, and assuming $150mm of maint CAPEX the PE is ~11x.

I am thinking of it from a special situations perspective where it's moderately undervalued but has a catalyst in the form of the HF. So from a SS perspective, it depends on the likelihood of these 4 directors getting nominated.

All that to say, my question is what is the likelihood of a slate of directors being nominated when the proposing shareholder has only a 5% stake? Or does the size of the stake not matter so much as the validity of the proposed plan (i.e. the REIT structure) and whether fellow shareholders agree?

Curious what others interested in special situations think.
Title: Re: IRM - Iron Mountain
Post by: magno111 on June 26, 2014, 04:57:22 PM
they have been approved to convert into a REIT , today is up 20%.

The new dividend will be around 2$, AFFO 570M, and 930M EBITDA.

Comparable store reit's trade at 16x EBITDA, 3-4% yield and 17-21x P/AFFO. that implies a prices for IRM of around 50-55$ ( assuming share count goes to 205M from 193M by especial dividend effect).

At today's price of 35$ you will receive by year end around 1$ regular dividend plus 3$ in especial dividend. At 31$ net price you could see a 60% potential upside.

Business is very stable, 80% revenue is recurring, growing at GDP rate, it did very well in the crisis( ebitda increased ).
Title: Re: IRM - Iron Mountain
Post by: LC on January 17, 2019, 04:59:58 PM
Bought a little bit of IRM today.

Frankly I am still torn - the business appears to be a good, stable business.

However I am not quite happy with management.

Debt has grown to aprox $8B from $6B over the past year or two (although to be fair debt to ebitda is relatively constant)

Shares outstanding has grown from 200MM to 265MM over the past 5 or so years. Again to be fair, EPS has been seemingly constant (or constantly fluctuating).

So some good, some bad. Like I said I am not convinced but open to being. A 7% yield is pretty good while i figure it out.

Title: Re: IRM - Iron Mountain
Post by: glorysk87 on July 11, 2019, 01:24:08 PM
What is the positive case to be made for these guys? The storage business would seem to be a secular decliner with destructions outpacing new storage volumes. Recycled paper prices are at 25 year lows, hitting service revenues. Dividend barely covered and likely going to be cut unless they can somehow stimulate organic growth. Seems like a case where the debt load is going to slowly crush them.

Am I missing something?
Title: Re: IRM - Iron Mountain
Post by: LC on July 11, 2019, 03:00:14 PM
I was actually just going to post given the downgrade today. Not much positive that I can imagine. The only area where new storage > destructions is the other int'l segments, which only make up 15% of the business and only growing at ~5%.

This is either dead money to me or I sell at about an 8% net loss. Probably wind up selling...glad I didn't sink more into it.