I bought EHL over a year ago on the basis that hire companies...

I bought EHL over a year ago on the basis that hire companies should do well in the resources boom, which includes building infrastructure, and because I suspected there would be takeovers in that field. I bought BOL and Coates too. I made a profit when Coates was taken over, but the share price retreat of BOL and EHL wiped out that gain (on paper).

I do not believe that EHL will soon get back to the $1.52 that I paid for it, but I feel it will gradually improve, so I hold on. I did not buy many EHL shares, so the dollar loss is petty (I wish I could write the same about BOL – boohoo).

On the positive factors for EHL are: a) firms in the equipment business would have to be crassly mismanaged not to be doing well in 2008 - read how well Tutt Bryant is faring, and how short supplied the world is for the equipment type that EHL owns; b); in past months institutional investors and directors have bought EHL shares (albeit when the price was lower than today); and c) the large holdings of some EHL managers should incentify them to improve the share price.

On the negative side: a) I do not like the geographical spread of EHL’s business - I would be happier if EHL stuck to making profits in its backyard, but I could be wrong in the longer term; and b) EHL carries more debt than companies in which I now choose to invest. The debt is well secured by assets that are in demand – the problem is that serving the debt should add to EHL’s expenses, and dampen profit.

Other than the debt metrics, the other metrics (PE ratio et cetera) are a neutral factor – neither being compellingly attractive, nor egregiously offputting.

Anyhow, let us see what happens to the share price over the rest of 2008. It should go up.

Pioupiou