Aimia Inc. (AIM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Aimia Inc. Annual Meeting. My name is David Rosenkrantz, and I am Chairman of the Board. Today's meeting will begin with a business presentation by members of Aimia's executive team, followed by the formal business of the meeting. After that, we will conduct a question period, where all inquiries of a general nature will be dealt with at that time. Instructions on how to ask questions and the voting procedure will appear on your screens. As with any technology, unexpected glitches may occur, but we will do our best to ensure that the meeting runs as smoothly as possible. The meeting will now come to order. In accordance with Aimia's bylaws, I, as Chairman of the Board, will act as Chair of the meeting. I will ask Eric Blondeau to act as secretary of the meeting and Bertrand Gely and Isabelle Vachon of TSX Trust Company to act as our scrutineers. The scrutineers have provided proof of mailing of the notice of the meeting, the forms of proxy, the proxy circular and the MD&A and annual financial statements for the years ended December 31, 2021 and 2020. I direct that a copy of the notice, together with the proof of mailing, be kept with the minutes of this meeting. The corporation's bylaws provide that a quorum of shareholders is present at a meeting of shareholders if 2 or more persons holding not less than 25% of the shares entitled to vote at the meeting are present, in person or represented by proxy. The scrutineers have advised me that we have such a quorum. Notice of this meeting having been duly given and a quorum of shareholders being present, I declare that the meeting is properly convened and constituted for the transaction of business. This morning, I'm accompanied on the webcast by Philip Mittleman, Chief Executive Officer of Aimia; and Michael Lehmann, President of Aimia. Also joining us virtually are our directors and members of senior management. Before I invite Phil Mittleman to begin the business update of the meeting, I will ask Tom Tran, Head of Investor Relations and Communications, to cover the forward-looking statements. Tom?

Thanks, David. Before we get underway, I'd like to remind everyone to review our forward-looking statements and the cautions and risk factors pertaining to the statements, which can be found in front of you on your screen. As well, please review the slide on non-GAAP financial measures displayed in front of you. I will now invite Phil to begin the business update of the meeting. Phil?

Thanks, Tom, and good morning, everyone. I'll begin my remarks by covering the strategic highlights in 2021 and priorities for 2022, after which, Michael Lehmann, Aimia's President, will speak to you about the performance of our major investments. 2021 was an exciting year for Aimia. We continue to advance our strategy of maximizing the value of our existing investments while deploying capital towards new opportunities to deliver strong returns to our stakeholders. The key strategic achievements during the year included: Successfully shepherding PLM through Aeromexico's bankruptcy, while receiving over $26 million in distributions, positioning us for the subsequently announced binding letter of intent to divest the stake for approximately $484 million in net after-tax proceeds adjusted for currency upon closing of the PLM transaction. Selling our stake in AirAsia's loyalty program, BIGLIFE, for $22 million, realizing a gain of $6.9 million on this transaction as we transformed an illiquid holding into a valuable source of additional liquidity and upside. Aimia now owns an equity stake of over 3% in Capital A, formerly AirAsia, which was acquired from the sale of BIGLIFE and our investment in Capital A's private placement and rights offering. We initiated new exciting investments, including TRADE X, a rapidly growing business-to-business cross-border automotive trading platform, as well as other opportunistic investments such as a new special purpose vehicle established to pursue a leverage buyout. In the first quarter of 2022, TRADE X generated gross vehicle sales of $248.3 million, up 714% year-over-year. Successfully navigating our investment in Clear Media through its privatization, which is now positioned to benefit from valuable partnerships with its new industry-leading shareholders. Generating additional cash at the holdco from realized gains of over $16 million from the sale of shares in JCDecaux and Newmark. And finally, reducing our expenses to achieve our targeted annualized cash expense of $14 million, excluding transaction-related costs. Overall, 2021 was a strong year, which positioned us very well for 2022. We continue to make progress towards closing the PLM transaction as the application for Mexican antitrust approval has been filed and we advance towards completion of the definitive agreement. We expect the transaction to close within the next 3 months. Against the backdrop of ongoing dislocations in world markets, the nearly $500 million in proceeds from the PLM transaction will allow Aimia to capitalize on investment opportunities, shielded by over $740 million in available tax losses. Aimia's priorities in 2022 are centered on 3 strategic objectives. The first is to invest in cash flow generating businesses with taxable income that ideally can be shielded by our sizable legacy tax losses. The second is to continue maximizing the value of our existing investments. And the third is to continue buying back our common shares opportunistically, which we believe are undervalued. As a permanent capital vehicle with pro forma cash and liquid investments of approximately $550 million, no doubt, and over $740 million in operating and capital tax losses, we have the unique ability to hold investments for long durations of time, allowing for the greatest value to be realized with maximum tax efficiency. Aimia intends to deploy the majority of the proceeds from the PLM transaction towards the acquisition of majority or significant minority stakes in one or more cash-generating businesses operating in either the U.S. or Canada. When applying modest leverage at the subsidiary level, our pro forma cash will provide Aimia with up to $1 billion of buying power. Ideally, these acquisitions will utilize our sizable net operating tax losses. We are focused on investing in businesses that exhibit durable economic advantages, evidenced by a well-established track record of substantial free cash flow generation over complete business cycles, guided by strong experienced management teams, with a focus on assets that can generate income to upstream to the holding company. We have a robust pipeline of exciting potential targets, and we remain patient and disciplined in identifying and capitalizing on the best investment opportunities we can find. Our second strategic objective is to continue growing the value of our existing investments. We employ an active owner's mentality to growing our investments through Board representation and has engaged shareholders while leveraging our deep network of potential professional contacts to assist our portfolio companies grow their businesses. By investing in Aimia, public investors have access to participate in private businesses that are not otherwise available to them such as Clear Media, TRADE X and Kognitiv. Our final strategic objective is to allocate up to $75 million of the PLM proceeds towards opportunistic buybacks and/or tax-efficient special dividend to common shareholders. Our intent is to utilize a combination of our current NCIB, plus its subsequent anticipated renewal, to enable total buybacks of up to 14 million common shares, which represent approximately 15% of our outstanding share base. After a year being restricted from repurchasing stock, due to trading restrictions mostly caused by PLM negotiations, we recently began share repurchases under the current NCIB, buying back more than 340,000 shares year-to-date at an average price of $5.19 per common share. Over the past 3 years, we have repurchased more than 40% of our outstanding shares, and we continue to have a heightened interest in executing accretive buybacks as we believe our shares are undervalued. I will now turn the floor over to Michael to discuss the performance of our major investments. And after that, I will wrap up the business update with concluding remarks. Mike?

Thanks, Phil, and good morning to everyone. We'll begin our discussion with PLM, where I'll be speaking to the operating performance in USD, which is PLM's functional currency. PLM continued to demonstrate strong recovery in its operating performance. Its member base grew by 8.6% over last year to 7.6 million enrolled members in 2021. Gross billings were $186.9 million in 2021, up 26% over last year, due to an increase in accumulation volume as a result of the continued recovery of the travel industry from COVID-19. Adjusted EBITDA was $55.6 million in 2021, up 47% over last year, mainly due to higher gross billings, partly offset by higher cost of rewards and operating expenses. Moving on to Kognitiv. We're pleased with the continued commercial progress made by Kognitiv over the past year. Under a new management team, led by President and CEO, Shawn Pearson, Kognitiv is executing its business plan to drive engagement in its collaborative commerce platform. Kognitiv has been successful in securing contract renewals and extensions with major global brands, including HSBC, Avis and National Australian Bank (sic) [ National Australia Bank ], among many others. Kognitiv has seen a continued strengthening of its pipeline with several new global brands across different verticals that are prime candidates to benefit from its approach to empowering businesses to grow, adapt and transform through collaborative commerce. In 2021, revenues from continuing operations were $56.4 million, and adjusted EBITDA was a loss of $45.1 million. Kognitiv continues to focus on expanding its current client subscription base through consistent member growth as well as widening the scope of service engagements. Having successfully completed a financing of $48.5 million, led by Silicon Valley Bank, which includes Aimia's $10 million convertible note investment, Kognitiv is well positioned to accumulate -- to accelerate its commercial efforts to achieve its growth plans. Kognitiv is also improving its cost structure by identifying and removing inefficiencies. Moving on to Clear Media. For the year ended December 31, bus shelter advertising panels increased 22% year-over-year to 72,000 panels and digital panels nearly doubled from a year ago to 536 as Clear Media accelerated its digital transformation. Total revenue for the 12 months ended December 31, 2021, was CNY 1.26 billion, up 22% from last year, which was impacted by COVID-driven shutdowns in China and resulted in a challenging operating environment. EBITDA on a post-IFRS 16 basis for the 12 months ended December 31, 2021, was CNY 689.8 million, up 37% over 2020. Recently, COVID-related shutdowns have triggered full and partial lockdowns in many Chinese cities in which Clear Media has a significant market presence, such as in Shenzhen, Guangzhou and Shanghai. This is creating a challenging operating environment for outdoor advertisers in China. As in the past, we anticipate these shutdowns to be temporary, and we expect demand for the outdoor advertising to rebound. We believe Clear Media is a high-quality business that stands to benefit from its sizable market position and enhanced digital offering. And we're monitoring the current developments closely as they navigate their business through this headwind. And finally, turning to TRADE X. TRADE X continues to grow at a remarkable rate through acquisitions and organic growth as it opens new global trade corridors to facilitate cross-border automotive transactions between Europe, Latin America, Africa, the Middle East and Asia. The addressable market for exporting preowned vehicles is immense, estimated to be approximately USD 100 billion annually and is almost exclusively conducted off-line. As the only global platform to offer an online cross-border solution to the automotive trade, we believe TRADE X is well positioned to capture a meaningful share of this trading volume by automating and streamlining vehicle commerce through its highly scalable AI-powered digital platform. TRADE X transacts with major automotive customers such as Carvana and Enterprise Holdings, among many others. It is also actively pursuing a robust pipeline of accretive acquisitions, targeting companies in current and complementary business lines that can help TRADE X scale quickly in key growth markets and expand its market reach. In 2021, TRADE X generated gross vehicle sales of $275.1 million, which represents an annual growth rate of 273% over 2020. Full year 2021 included $105 million of gross vehicle sales from acquisitions. I'll now turn it back over to Phil to wrap up with closing remarks. Phil?

Thanks, Mike. This is an exciting time to be a shareholder of Aimia. We continue to execute our strategy of maximizing the value of our current investments, while redeploying our capital into new opportunities with significant upside. 2022 is off to a strong start as we progressed towards completing the PLM transaction, while continuing to accrue our pro rata share of PLM's distribution and cash. In the meantime, we are actively reviewing potential investments and look forward to providing you with further updates in due course. I will now turn the session over to David to begin the formal business of the meeting. David?

Thanks, Phil. Before commencing, we would like to provide instructions for how shareholders and duly appointed proxy holders may vote using the online platform. To the extent you have voted in advance of the meeting and do not wish to change your vote, you do not need to do anything. As we proceed through each item of business, those that joined the meeting using their control number will see the resolutions to be voted on displayed on the screen as the item of business is being discussed. To vote, click on one of the voting options available. Your vote will be automatically submitted for our scrutineers to include in the vote tabulation. Votes may be changed until the voting is closed on that matter. Once voting for a particular matter is closed and we move on to the next item of business, the screen will change to show the next item of business, and you will no longer be able to vote on the previous matter. If you do not press for, withheld or, if applicable, against, when voting is open, your vote will not be recorded, and you will be regarded as having abstained from voting. Again, if you have voted in advance by proxy, your votes will be counted. Preliminary results will be announced after voting closes for all matters, and final results will be publicly available on our website and sedar.com. For today's meeting, a simple majority of the votes cast during this meeting or by proxy is required to approve the matters voted on at this meeting. The annual meeting was called to consider 4 matters. We will conduct the votes on the matters subject to voting before us by a poll. On a poll, every shareholder entitled to vote on the matter has 1 vote in respect of each share entitled to be voted on the matter and held by that shareholder. Certain shareholders or proxy holders have agreed in advance to introduce the motions on the agenda. I will invite them to do so at the appropriate time. Now let's move on to the first item of business. The consolidated financial statements for the year ended December 31, 2021 and 2020, together with the auditor's report thereon, were sent to the shareholders who requested them and are available on the corporation's website and on sedar.com. I direct the secretary to file a copy of the financial statements with the minutes of this meeting. Moving on to the next item of business on our agenda, the election of directors. Our proxy circular sets out a list of 7 directors for election as directors of Aimia until the end of the next Annual Shareholder Meeting or until his or her successor is appointed. All of the 7 directors are currently members of our Board. The nominees to be elected as directors are: Karen Basian; Sandra Hanington; Michael Lehmann; Jon Mattson; Philip Mittleman; Jordan Teramo; and myself, David Rosenkrantz. Biographies were included in the management information circular. Each of the persons nominated has confirmed that he or she is prepared to serve as a director of the corporation, and all nominees meet the qualification requirements for directors under the corporation's bylaws. I would also note that pursuant to the terms of the corporation's advanced notice bylaw, no other nominations have been received and that nominations are thus closed. I will now ask that Sandra Hanington, a shareholder and Director, move to elect each of the nominees as directors.

Mr. Chair, I so move.

Thank you, Sandra. Would Steven Leonard, a shareholder and member of the executive team, second this motion?

Mr. Chair, I second the motion.

Thank you, Steven. Is there any discussion of this motion?

Mr. Chair, there is no discussion of this motion.

Thank you, Tom. As there is no further discussion, I now call for a vote on the motion before the meeting. If you vote in advance and do not wish to change your vote, there is no further action required. Otherwise, please enter your votes on the voting platform. [Voting]

Voting is now closed for the election of the directors of the corporation. The next item of business is the appointment of the auditors. I will now ask that Sandra Hanington move that a resolution appointing PricewaterhouseCoopers LLP as the independent auditors of the corporation and authorizing the directors to fix the auditors' remuneration be approved.

Mr. Chair, I so move.

Thank you, Sandra. Would Steven Leonard second this motion?

Mr. Chair, I second the motion.

Thank you, Steven. Is there any discussion of this motion?

Mr. Chair, there is no discussion of this motion.

As there is no further discussion, I now call for a vote on the motion before the meeting. Again, if you voted in advance and do not wish to change your vote, there is no further action required. Otherwise, please enter your votes on the voting platform, and we'll wait briefly while that is done. [Voting]

Voting is now closed for the appointment of the auditors. The last item on our agenda today is the consideration of the nonbinding advisory resolution on the corporation's approach to executive compensation. The Statement of Executive Compensation section of the corporation's proxy circular discloses in detail such approach. The results of the vote will not be binding on the Board. However, the Board will consider the results of the vote, together with other pertinent information or comments from shareholders, when considering the corporation's approach to executive compensation. The full text of this resolution is reproduced in the proxy circular. And I will now ask that Sandra Hanington move to approve the advisory vote on executive compensation as more fully set out in the proxy circular.

Mr. Chair, I so move.

Sandra?

Mr. Chair, I so move.

Sorry. Thank you. There's a small technical glitch. Thank you, Sandra. Would Steven Leonard second this motion?

Mr. Chair, I am pleased to second the motion.

Thank you, Steven. Is there any discussion of this motion?

Mr. Chair, there is no discussion of this motion.

As there is no further discussion, I now call for a vote on the motion before the meeting. If you voted in advance and do not wish to change your vote, there is no further action required. Otherwise, please enter your votes on the voting platform. Again, we'll have a short pause here. [Voting]

Voting is now closed as it relates to the approval of the advisory resolution on the corporation's approach to executive compensation. We'll now wait for a brief period of time for the scrutineers to tabulate the votes. We appreciate your patience here. That was short. The scrutineers have completed their preliminary report. According to the scrutineers' report, I am pleased to announce that all 7 nominees named in the circular have received majority votes that have been elected. PricewaterhouseCoopers has also received majority of votes and was reappointed as our auditor. The advisory resolution on the approach to executive compensation has also received majority votes and was passed. As mentioned earlier, final detailed results will be posted on the company's website and on sedar.com. As there is no other formal business to come before this meeting, I would ask Sandra Hanington to move that the formal part of the meeting be concluded.

Mr. Chair, I so move.

Thank you, Sandra. Would Steven Leonard second this motion, please?

Mr. Chair, I second the motion.

Thank you, Steven. I declare this motion carried, and this concludes the formal part of the meeting. So with that, we will now open the meeting to questions.

[Operator Instructions] We will begin with questions that have been submitted to our IR team ahead of today's meeting, if any.

Mr. Chair, the first question reads, can you provide context for the sizing of the shareholder buyback allocation of $75 million?

Thank you for the question. I'm going to ask that -- I'll turn that over to Philip Mittleman, CEO of the company, to answer that question.

Thanks, David. Capital allocation is a balancing act. We believe our shares are undervalued. You've seen us very strongly advocate for shareholder buybacks over the years. We bought back over 40% of our outstanding shares. And just to remind you, over the last year, we were unfortunately restricted from buying back shares due to our blackout period, primarily as a result of our negotiations in the PLM transaction. But while we have committed and we have said that we intend to allocate up to $75 million for buybacks now, we also are evaluating investments that can provide multiple times that of our investment -- of the value of our investments, which has a much larger long-term impact on NAV than buying back shares. So don't forget, we have now over $700 million in tax losses we'd like to utilize. They're also very valuable when used to offset taxable income. So it's all about doing the best thing to create the maximum NAV increase for our stakeholders. Some of that will be through buybacks. Some of that's going to be through buying companies that can provide significant cash flows to us and capital appreciation, shielded by our tax losses. So we think this is a fair allocation. It also ties into the availability of our NCIBs, which are capped at a certain number of shares per NCIB. So for now, we think this is the right way to allocate that capital. And we're happy with it and hope it will yield the results that we expect.

Mr. Chair, our next question reads, can you provide additional commentary on the structure of the SPVs? Is there a lockup period or a redemption period?

Good questions, too. I'll ask Mike Lehmann to answer that question.

Thank you, David. Yes, there is a lockup period, but it's not been disclosed by the company. But we are very pleased with the negotiated terms that we negotiated with our partner. Thank you.

Mr. Chair, the next question reads, why hasn't a transaction yet taken place on the first SPV?

Again, maybe, Mike, you could handle that question, please.

Yes, absolutely, David. The parties continue to be in discussions with one another, and we will provide an update to the market when there is something to announce. Thank you.

Mr. Chair, our next question reads, Mr. Phil Mittleman, please explain to me like I'm a 5-year-old child. What does Kognitiv do? And why are you investing in Kognitiv?

Yes. This is the most -- I guess I'll take that question. Kognitiv is one of the most complex businesses we've been involved in, so I understand why it's confusing to people. And they're also innovating an entirely new type of technology, which makes it even more confusing because it's not easy to relate to. But if you really want to go to the 5-year-old level, I would say that, when you buy a hotel on Expedia, you go to Expedia, you say, "Oh, I got a great deal. I paid $400 for this hotel. It's usually a lot more expensive. I did really well." In reality, the hotel that sold that room probably got $80, and you paid $400. So it's been marked up and sold 5 different times to 5 different people to make it to Expedia to where you purchased that room. So the hotel lost the difference between $80 and $400. They didn't get that value. They didn't get that return on investment, but a lot of other people did, the middleman did. So what Kognitiv is doing is creating a platform where companies can go on this platform and they can transact in their different currencies, whether it be hotel rooms or loyalty points or whatever it is, discounts, anything they want to use to try to attract customers. And it allows companies to say, "Okay, I'm a credit card company. And I know through his spending habits that Phil Mittleman likes to go to this hotel. And look, that hotel is on the Kognitiv platform." Well, look, I'm going to now say to them, "Okay, I want to put your hotel room as part of my loyalty offering, and I want to offer it to a bunch of people in conjunction with some other things maybe on the platform or not on the platform." And so what ultimately happens is these companies are allowed to utilize their products and their offerings with a much more significant return on investment because the hotel is going to get the full value of what it's offering to the credit card company as part of its offering. So what happens is you have companies that no longer have middleman to collaborate between, no longer they have a middleman to mark up. And middleman, unfortunately, is similar to my name. They get a higher yield on investments. They get higher revenues, and they transact what's called zero-party data. So they get to actually participate in the data that is accumulated from these customers, but they don't own it or keep it. So it allows them to utilize the data, to increase their yields, increase their revenues, increase their ROIs and to also not have the issue of, well, did somebody just steal my customer and take the data from them? So that's the general concept there. And I think that the process of getting a company to understand that and trust in transacting in that is the process and why you see losses over the years as people develop the technology and market to customers. And it's hard to get. You can imagine getting customers is hard in general, but getting a Fortune 500 company to trust you to transact in their products and their currencies and that you're going to do it in a way that's going to benefit them and also not put them at risk or reputational risk or financial risk, and that's the -- what we're seeing now is an inflection point with Kognitiv is that people are starting to have not only trust them and sign up, but that feeds on itself. It's like a bar you walk by, and there's 3 people in the bar, no one wants to go to the bar. Walk by a bar, it's bustling and crowded, you say, "I might go in that bar and take -- have a drink." So it's a process that's accelerating. We're seeing it start to work. We're seeing customers recognize what they do. And then when you talk about the 5-year-old explanation, it's really funny you say that because it took us a long time to get our arms around what they were doing because it was so incredibly complex. And we learned later that customers have that same problem. People were -- later would say to us, "Wow, I didn't even understand what they did. Now I do, and I'm signing up." So the explanation -- it's not a bad question, it's not a stupid question. And it's something that I think one of the big changes in Kognitiv's business under Shawn Pearson, the new CEO, which has been a big impact as Shawn can translate the genius of what's going on behind the scenes into something that customers and investors can understand, and that's a huge thing. So we're seeing that resonate, and we're seeing it across the board in their business model, and we're excited about their future. And hopefully, that explains a little bit the basics of what they do.

Mr. Chair, our next question reads, can you disclose who the lead investor in the latest Kognitiv round is?

Thank you for the question. I'm not sure that I can, and I'm not sure that we're at liberty to do that. But I'll ask -- maybe I'll ask Phil. Do you know the answer?

Sure. We can't disclose -- some of the investors don't want to be -- their identity disclosed, but I will say that Silicon Valley Bank allowed us to tell you that they are. But in terms of the equity investor, I would just say, well, they're not named, they are well known and they are reputable. And something to remember here, and I think it's very important, is that the investors that came into this Kognitiv round, excluding us, are new -- what we call new money investors. And they came in with the same level of skepticism and confusion about the model or just -- anytime you're going into a company that's losing money, you tend to have a much higher level of scrutiny in terms of what you're getting involved in because no one wants to be investing into a black hole. And what they came away with was a very strong bullish take on the future of Kognitiv to the point where they wrote significant checks, as you saw. So for investors, it should be a nice validation to have what is effectively an outside audit of their business model and projections and their future prospects that are completely untethered to any previous investment or commitment or belief. So it was -- not only should it be exciting for you, it's exciting for us to see that we're not -- we like to see our beliefs validated also. Because sometimes, you're alone in there and you hope you're right, but you're never sure, obviously, especially in a starting -- an earlier-stage tech company. But these investors are very well versed in the tech space, very well versed in the customers and the type of model that Kognitiv is trying to execute. And they completed their diligence, and we're very excited to write those checks.

Mr. Chair, the next question reads, does Aimia plan to fund Kognitiv if it needs more cash?

Phil?

I'll just take that as well. Listen, we never say never, and we always look at every investment case by case on its merits. It's easy for people to say -- I know that people -- a lot of people said in the past, why do you put more money to Kognitiv? All because what you see is losses. You've seen quarterly losses. And that, I would say, if you base every successful technology investment up to those standards, you wouldn't have invested in 99% of the biggest successes in history. So it never looks appealing when you're losing money. I would say, obviously, we have a lot more insight into what's going on than an outside investor. But I think the funding that we just did, we hope, gets into the finish line. If it didn't, we would evaluate it at the time. And I think that when we make a decision to invest, if we do invest more money like we did in the past, it makes sense. We're not doing this for any other reason than because we think it's going to yield a significant return to Aimia. So we never say never. We don't expect to, but we would evaluate that if it came to that at the time.

Mr. Chair, the next question reads, Mr. Phil Mittleman, you have mentioned that the company is really undervalued and are frustrated by that. My question to you is, why are you investing in leverage buyout deals and investing more money at Kognitiv and not purchasing at least 50% of the outstanding shares of the company? Is that not a better use of capital?

Well, first of all, I think I addressed the Kognitiv question, but it's -- everybody wants you to buy back as much stock as you possibly can at all times, and that's just not the right way to allocate your capital. We obviously believe our shares are undervalued. But at the same time -- and you can't comment on this as an outsider without knowing what we're seeing and planning and expect to do. And obviously, you can't see the future, but if we were to invest in a company that is going to make us 3, 4, 5x our money, I think you would prefer that to the incremental NAV increase you get from buying back stock. And that money that we invest in deals that yield those returns is recycled later, generates cash flow, it can be recycled and put towards buybacks later and along the way. So we're never forgoing the opportunity to buy back shares. It's something we love doing or always going to be looking at and we have been doing whenever we can do it. But we also have to weigh our capital needs for the opportunities we're seeing. And the opportunities we're seeing are -- provide exponentially larger returns for stakeholders than buying back stock at this moment. Long term, we know the benefits of the NAV and compounded benefits of buying back our shares over time. And as I've said, we not only recognize that, but the proof is in our actions, in the pudding, which is that we've bought back a lot of stock. So we have -- at the same time, I understand investors say, well -- the only sure thing in an investor's mind is a buyback because they say, "Well, I know this is worth more, and I want to buy it today and do that." But you have to trust that we know what we're doing on the investment side. You have -- you've seen some of what we can do with some of the legacy assets. You've seen us make some investments. I think TRADE X should give you an idea of how good we are finding things that are going to yield significant returns for stakeholders. But in this instance, we're looking at a larger game, and we're looking at things that can really move the needle for NAV, and that requires capital. And like I said, we're not leveraging up the holdco. So we're not sitting here having access to a large amount of debt at the holdco. We have to work with what we've got. And we think it's -- there's a mixture here. And we're going to continue to -- we make decisions as it goes. Listen, if the stock -- if there was a nuclear bomb went off somewhere and our stock traded at a dollar one day, you would see a larger allocation go towards buybacks to get that stock at a dollar. So it's a function of where the stock is, where our investment opportunities are, what we're seeing. We do this budgeting in our minds on a daily basis. And I think that you'll be happy with the allocations that we are making. And I think you just have to look back in a couple of years, not -- it's hard to say today we're sure that you'll be happy with it, but we think you will be.

Thanks, Phil.

Mr. Chair, the next question reads, Mr. Phil Mittleman, Ben Graham wrote in The Intelligent Investor that good managers produce good stock prices and bad managers produce bad stock prices. Why have you not buy back more shares of the company to get the stock price to close its intrinsic value? This is a question on closing the holding discount.

Yes. I think there's the -- the first part of that sentence is different than the second part of the sentence. Ben Graham is talking about producing good stock prices by investing your capital wisely and generating returns that make your stock rise based on the performance of your investments. When you talk about buying back shares of the company to get the price close to its intrinsic value, you're saying why are we not forcing the stock there more quickly than it might get through a normal market activity. So for us, the first part of the sentence is the key. We want to make investments that will make our stock price rise based on the performance of those investments. We are -- or buying back stock is not -- there are smart buybacks and there are dumb buybacks. So most of the buybacks I've seen are dumb buybacks. There are people that go out and they say, "Our stock's down. We're going to throw money on it. We're going to buy it and make people feel better short term." It's like somebody that -- it's just a shot of adrenaline short term and it wears off, and the stock goes to where it was going to go anyway. So we're not looking to just prop up our stock. We're not looking to make ourselves feel better in the next 30 days. We're looking at what's the best long term. And we're -- and also, we're not delusional about long term. So we're not investors that want to sit back and just hope, buy stock. We look at catalysts. We want things to happen sooner than later. We want our stock to go up. We want to narrow the discount to NAV, but the way to do that is to perform and to invest wisely. And that's how your stock is going to get up and stay up and rise. Narrow your gap. Sometimes trade at a premium to your NAV. And when you show people what you can do with that capital and you give them the confidence to believe in you as investors and in your company and wanting to own the shares of your company and not part with them and hold them for the long term. So the first part of the question should yield the second part. And we are, as we say, buying back stock, but it's not to get -- our goal is not to get the stock price closer to intrinsic value. Our goal is to get stock at a good price that yields a great return for our investors because we're paying a discount to intrinsic value, not in -- if the stock is trading at fair value, we're not as interested in buying back stock, obviously. We want to treat it -- we treat this money like it's our own money and what would we do with it if it was our own and how would we invest it and how would we trade it and how we would buy our stock. So that's a fundamental thing for us. And I think you should have great comfort in knowing that we would not do anything with Aimia's money that we wouldn't do with our own money. We feel the pain if we lose money. We feel the pain you feel when the stock drops. We're not going to act in a way that's just going to be based on a short-term need to feel that we're going to do what's right long term, and I think we're doing that.

Thanks, Phil.

Mr. Chair, we have no further questions.

Excellent. Thank you for all those questions. As there are no further questions, that completes our meeting today. On behalf of the Board and management team, we thank you for joining us. We appreciate your ongoing support and confidence in the Board and the management team. We look forward to speaking with you again at next year's Annual General Meeting.