I read a recent article that put forward a long thesis for Macquarie Infrastructure (MIC).  MIC cut their dividend in February of 2018 and the stock plummeted ~40%. Since then, management / insiders have been buying shares and despite the dividend reduction, the current yield is ~8.5% based on recent share price of just under $47.00 per share.  I was intrigued to research the stock further.

MIC owns infrastructure assets in 4 key groups:

  1. Atlantic aviation which provides fuel, terminal and aircraft hangering at 70 locations across the US (34% EBITDA)
  2. IMTT which operates bulk liquids terminal and storage business in US and Canada (45% EBITDA)
  3. MIC Hawaii – natural gas utility in you guessed it…Hawaii (8% EBITDA)
  4. Contracted power – renewable power projects (13% EBITDA)

Key discussion points from my research include:

  • Analysis of the dividend and payout ratio historically
  • Management fee structure and potential conflicts of interest
  • Increase in both sharecount and leverage since 2013
  • Recent activist letter from Moab capital