CASE STUDY: Macro Enterprises (MCESF)

November 28, 2021

I first wrote up Macro Enterprises (MCESF) in January 2020, when the stock price was $2.79.  At the time, here were the five metrics of cheapness:

    • EV/EBITDA = 1.37
    • P/E = 3.72
    • P/B = 1.08
    • P/CF = 3.51
    • P/S = 0.26

Today the stock price is at $2.15.  Normalized earnings are $20 million.  And here are the five metrics of cheapness:

    • EV/EBITDA = 1.41
    • P/E = 3.35
    • P/B = 0.75
    • P/CF = 2.16
    • P/S = 0.30

The current figures are very similar to the previous figures, except that P/B and P/CF are both much lower.  Therefore, overall, Macro Enterprises is cheaper now than it was before.  Much of this is because the stock price has dropped from $2.79 to $2.15.

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company.  For more on the Piostroski F-Score, see my blog post here:

Macro Enterprises has a Piotroski F-Score of 7.  (The best score possible is 9, while the worst score is 0.)  This is a very good score.

Then we rank the company based on low debt and high insider ownership.

We measure debt levels by looking at total liabilities (TL) to total assets (TA).  Macro Enterprises has TL/TA of 38%, which is fairly low.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders.  Macro’s founder and CEO, Frank Miles, owns approximately 30%+ of the shares outstanding.  This is excellent.

Intrinsic Value

Macro Enterprises has been in operation for over 25 years.  Over that time, it has earned a reputation for safety and reliability while becoming one of the largest pipeline construction companies in western Canada.

Intrinsic value scenarios:

    • Low case: Macro is probably not worth less than half of book value, which is $2.83 per share.  That’s 34% lower than today’s share price of $2.15.
    • Mid case: The company is probably worth at least EV/EBITDA of 5.0.  That translates into a share price of $6.57, which is over 200% higher than today’s $2.15.
    • High case: Macro may easily be worth at least EV/EBITDA of 8.0.  That translates into a share price of $10.29, which is over 375% higher than today’s $2.15.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


If you are interested in finding out more, please e-mail me or leave a comment.

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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.