Air Canada Is Screwed
July 27, 2018
Iron Bridge Update
September 10, 2018


How the hell did Musk get to this point where he’s bidding $420/shr?


Probably went something like this…. haha

Board: Elon, you cannot call an international hero a pedo

Elon: ..but he saved the Thai kids and people laughed at my submarine

Board: You really need to grow up if you want to run a public company

Elon: Screw that, I’m a billionaire. I’m going to tweet whatever nonsense I want. I dont care what you people say anymore, I’m taking Tesla private

Board: …well, that’s impossible because we’ve maxed out our ABL, our bonds trade at 88, we aren’t paying suppliers, can barely make payroll  and we’re basically bankrupt, but if you can find someone stupid enough to fund an MBO, we can discuss further

(1 week later) Elon: The board and I have had multiple discussions on the benefits of being private and how to fund the transaction 

I’ve been hesitant to say anything on this site about Mongolian Mining Corp as it’s a combination of Mongolia, Mining and Coal. All risky endeavors. That said, it’s also my largest position and has recently declined towards my cost basis in the low teens (I bought most of mine in 2016 but added quite a bit more in the past few weeks). It’s up a few pennies this week, but it’s not up so much that it changes the thesis that it’s unusually cheap if coal prices and Mongolia remain stable (big if). In any case, my friends at AFC wrote about it and I wanted to flag it for readers, as I had not intended to write about it myself due to the obvious risks. Caveat Emptor!!

What are the odds that Musk actually has the financing in place?

About the same odds of him escaping prison by fleeing to Mars…


I’m trying to figure out the rationale for the $450M counteroffer by Aimia. As the “unidentified analyst” on the call (was it you?) described, there are a raft of reasons why Aeroplan is worth more than $450M to AirCanada, and Rabe obviously agreed with all the points laid out by this analyst. At the same, he supported the validity of the $450M counteroffer. Adding to the apparent contradictions, Rabe expressed incredible confidence–more so than needed for the sake of optics?–in Aimia’s ability to develop their own coalition.  If said confidence is well founded, then why bake into the counteroffer so much execution risk re: the go-it-alone strategy?  It seems to me that Rabe is trying to serve two masters here, namely, that there is a group of stakeholders who are eager to monetize Aimia’s assets on a shorter timeline.  I can’t imagine that Mittleman is the group who’s in a hurry, but who else is there?


Rabe is in a tough spot. On one hand, you have 5 legacy Canadian board members who may just be the dumbest people alive. Despite having a company with ~$200 a year of cash flow, they managed to destroy ~$3 billion in value over the past 5 years. Now that it’s pretty clear that they will not be re-elected in 2019, they’re trying to destroy as much value as possible on the way out, through pure spite. Fortunately, you have Mittleman protecting shareholders here. Rabe is stuck in the middle of it all. He’s doing a great job at diversifying Aeroplan and building shareholder value while the board solves their issues.

FWIW- Shareholders almost kicked out the whole board in 2018, despite my idea of withholding votes coming to me only 3 weeks before the AGM and not knowing at the time how to run a full activist campaign against them. If any of these fukwit Canadians run for re-election in 2019, I promise everyone that if I’m still a large shareholder, I will do all I can to remove them. I will start early and I will be organized. I don’t want a board seat for myself. I just want to ensure that adults join the board and Mittleman has a free hand to salvage as much value as possible for shareholders here.

Kup, What do you think Air Canada’s next move is?

Air Canada is in a tough spot. They 100% need to buy Aeroplan ASAP, before Rabe builds more airline relationships and cuts off Air Canada’s passenger flow. Remember, without Aeroplan, Air Canada is pretty screwed. Rabe is already going after key Air Canada routes with new alliances. I suspect Air Canada announces a hostile bid for the whole company in the next few weeks as a last ditch effort to buy Aeroplan after they already failed to get the incompetent board to sell it to them for a song. Fortunately, shareholders have a say in all of this. Even if the board wants to sell Aeroplan, under Canadian law, they need a 2/3 super-majority of shareholders to approve the sale. I know at least 40% of shareholders who won’t be accepting a price of $450 million and may struggle to accept $1 billion. Therefore, even if they can bribe the 5 legacy board members to cough it up, a deal will only happen if shareholders approve it. We ain’t approving it without a fair price. This is the fun part of the investment when Air Canada names prices and we laugh at them. By my math, they can pay $3 billion and still come out well ahead. I suspect that the next few weeks will be fun…


The next time you make a mailbag post on your blog, could you please enlighten those of us who arent finance professionals on how in the hell what Elon Musk is tweeting not illegal? Is this not stock manipulation? Or does the SEC just not care?


It is illegal. The SEC is a government agency, which means all of its decisions are political. There has almost certainly been an ongoing SEC investigation for most of 2018. They couldn’t come out publicly b/c it would look like a VERY political decision as there are 40,000 employees and Elon Musk is a hero to the greens. Now that he’s clearly done something illegal, that no one can deny, they can come after him for stock manipulation–which then leads to them “discovering” other things. This isn’t the beginning of the end, this is the end.

Musk is such a master bluffer and reality distorter. With everyone talking of the fake bid, what is he trying to hide?

You’re kidding right? Spend 30 minutes on any short thread on Seeking Alpha. The whole Ponzi Scheme is collapsing. This is a last gasp hope that some idiot injects capital.


Thanks for all you do. You were so right to use puts instead of shorting Tesla. I got run over on the move to 420. 

Look, this isn’t my first rodeo. When you’re dealing with criminals who are cornered, there’s no shortage of creativity. Why is the final price 420 and not some even crazier fake number? Use puts, sleep well at night and know that they need $10 billion of new capital + a lot of debt re-financing to make it to Jan 2020. That’s a pretty big hurdle to cross when your key product is a certifiable lemon, product quality is abyssal (as if it’s built in a tent by un-trained part-time workers) and they’re losing about $20k every time they produce it. Tesla is DOA, but as long as algos buy whatever nonsense Musk tweets, the shares can trade at any silly price–hence I’m using put spreads.

Based on your math, shouldn’t AIM shares be trading much higher? Rabe said 10x EBITDA is a floor value for PLM and we know Air Canada agreed to $325m thus far.

Yea, shares should be $7+ based on those numbers. This is why I like small-cap investments. It can be 100% obvious and validated by un-solicited bids and you still have weeks/months to act before the market re-values it. Sure beats mega-cap where the computers re-value it before you can even finish reading the PR

Is Turkey Cheap enough yet?

I have no idea, and no interest in finding out…

Any thoughts on Tidewater buying Gulfmark?

“Any Thoughts” isn’t a question I want to ever answer.

I think the deal makes a lot of sense. They’re overpaying on a vessel value basis, but there’s synergies and cost savings. It makes them #2 in almost every major OSV market. It’s the type of deal that would be illegal due to anti-trust concerns at the top of the cycle, but can be done at the bottom of the cycle when no one is making money. I tend to think it’s pretty smart and it’s becoming more clear by the day, that offshore is recovering.