FROM CIGAR BUTTTO HIDDEN GEM

In 1956, a 25-year-old from Omaha opened a small investment partnership out of his bedroom. He had $105,100 in capital from 7 family members and friends. His name was Warren Buffett, and he would go on to build one of the most valuable companies on earth. But that was decades later. In those early years, he had a very different strategy. And it had a name.

He called them cigar butts. The idea was simple. Imagine a company that owns $10M worth of trucks, machinery, and cash in the bank — but its entire stock trades for $7M. If you bought the whole business and sold everything off, you'd walk away with $3M in profit before the doors even closed. The business didn't have to be good. It didn't have to grow. It barely had to function. You were buying a dollar for 70 cents and pocketing the difference. Buffett's mentor Benjamin Graham called it a margin of safety. Buffett called it a cigar butt — discarded, forgotten, but with one last puff of free value left in it.

Buffett made his early fortune doing this. Then markets got more efficient. More investors, more computers, more information. The cigar butts got picked up almost as soon as they appeared. Today, finding one is nearly impossible.

A few months ago, I thought I had found one. A Canadian company trading at $1.30 a share. The company's lending agreement requires it to commission an independent appraisal of its equipment fleet twice a year — trucks, turbines, trailers, light towers, microgrid panels — so the bank can assess the value of its collateral. According to management, the most recent appraisal values that equipment at roughly $1.40 a share. If you bought the whole company tomorrow and sold everything off, you'd recover more than you paid — before counting the cash on hand, the customers, the contracts, or a single dollar of future earnings.

That's what a cigar butt looks like. But the more I dug, the more I realized this wasn't one at all. Cigar butts are dying businesses with one last gasp of value. This company has 51% gross margins. Its cash generation grew 23% last quarter. Management owns 30% of the stock and is actively buying back shares. And last week, the company announced it is changing its name — shedding a 21-year-old oilfield services identity for something that reflects exactly what it has become. I didn't find a cigar butt. I found a hidden gem trading like one — and I bought it.

Picture a drilling rig two hundred kilometres north of Edmonton. No power lines. No grid. No infrastructure within reach. The site runs entirely on diesel generators that burn between 2,000 and 7,000 litres a day. At over $2 a litre, that's $4,000 to $14,000 in fuel alone, every single day, just to keep the lights on. A month-long drilling program can spend half a million dollars feeding diesel into engines before the first barrel is produced.

Multiply that by every active rig in Western Canada. Then add the mines, the construction sites, the gas plants, the pipeline pump stations, and every other remote operation that doesn't have a power line connecting it to the grid. Every CFO at every major energy producer has been staring at that fuel line item for years, waiting for someone to solve it.

One small Alberta company quietly did.

The company is called Enterprise Group. It trades on the Toronto Stock Exchange under the single letter ticker E — all prices in this issue are in Canadian dollars. Headquartered in St. Albert, Alberta, a half-hour north of Edmonton. Founded in 2004 by two operators, Leonard Jaroszuk and Desmond O'Kell, both of whom are still running the business today. They and a few directors own roughly 30% of the stock.

For most of those 21 years, Enterprise has done something deeply unglamorous. They rent specialized equipment to companies that work in remote places. If you're drilling a well, building a pipeline, or running a gas plant in northern Alberta or British Columbia, Enterprise shows up with everything you need — the trailers, the heaters, the light towers, the offices, and the power. They don't drill anything themselves. They're the crew that makes the work possible.

The business was built one acquisition at a time. Artic Therm International (2012) — flameless industrial heaters for extreme cold. Hart Oilfield Rentals (2014) — full-service site infrastructure across Alberta's Montney and Duvernay plays, the gas regions feeding Canada's LNG export buildout. Westar Oilfield Rentals (2014) — same model, based in Fort St. John BC, the heart of the Montney's BC side.

Those three formed the foundation. Through the brutal 2014 to 2021 downturn, when half of Enterprise's competitors went bankrupt, this foundation kept the company cash-flow positive every single year. Then in 2022, they launched Evolution Power Projects — a new subsidiary built to replace diesel generators on remote sites with mobile natural gas turbines. Fuel costs drop 60 to 100%. Harmful emissions drop 88 to 100%.

Then in May 2025, they made the move that changed everything. Enterprise paid $20M to acquire the Canadian operating business of FlexEnergy — manufacturer of industrial natural gas microturbines originally developed inside Ingersoll-Rand, a Fortune 500 industrial. With this, Enterprise became the exclusive provider in Canada for FlexEnergy turbines across every industry. These turbines have a 20-year operating life, 99%+ uptime, and work reliably at -52°C. Last winter, three nights hit that temperature in northern Alberta. According to management, everything on those sites broke down except the FlexEnergy units.

The demand side of the energy equation almost never goes down. It goes up — from every direction at once. Population adds 80 million people a year. Conflict disrupts supply every decade. Artificial intelligence is not a software story — it is a power story. Every model, every search, every automated system is adding load to a grid that in North America hasn't had meaningful maintenance investment in nearly half a century.

On May 14, 2026, Canadian Prime Minister Mark Carney announced Canada will double its electricity output by 2050 at a cost of over $1 trillion — with natural gas explicitly named as part of the solution. Provinces had been fighting Ottawa over this for years. This was the federal government finally admitting what engineers already knew: you cannot electrify a country this size using renewables alone in the next decade. Natural gas is the bridge. Evolution PowerX is already building it.

LNG Canada's first cargo shipped last summer. Three more terminals are under construction. Together, they'll take over 25% of Canada's current natural gas production to Asian markets Canada has never served before. The Montney and Duvernay plays that Hart and Westar serve every day sit directly in the path of that decade-long buildout.

There is also the data centre question. The hyperscale AI facilities being built by the world's largest tech companies are too large for this fleet — but the fastest-growing segment is smaller, distributed inference facilities in the 5 to 30 megawatt range, often in secondary locations where reliable grid power isn't guaranteed. That is exactly where this platform fits. Management is in active conversations. Nothing is signed. But the optionality is real.

Three numbers tell most of the story. No jargon. No abbreviations.

Revenue is growing. Q1 2026 brought in $12M — 16% more than the same quarter a year earlier. The full year 2025 came in at $36.5M. Management believes the existing fleet — with no major new purchases — is capable of $55–60M in revenue at full utilization. The growth runway is already built and paid for.

The balance sheet is healthy. As of March 31, 2026: $12.6M in cash, $29M in total debt — mostly equipment financing and a property mortgage. Net of cash, $16M in debt against $91M in equity. Conservative for a capital-intensive business.

The hidden revenue story. In 2025, a major customer went almost completely quiet for the entire year — pausing while completing a large corporate transaction. Without that pause, 2025 revenue would have been $41–42M, not $36.5M. That customer is back to normal activity in 2026.

Energy is my favourite industry to follow because demand almost never goes down. Population growth, global conflict, AI power consumption, the electrification of everything — every trend I watch points in the same direction. More power needed, from more sources, for longer than most investors are pricing in.

What makes this company specifically compelling is that it doesn't need everything to go right to win. The LNG buildout alone — four export terminals feeding markets Canada has never served before — represents a decade of sustained activity for the companies that power Western Canadian gas production. That single tailwind is enough. Everything else is upside.

And now, the company has told the market exactly who it is. The name change to Evolution PowerX Corp. is not a branding exercise. It's a declaration. Twenty-one years of building, one transformational acquisition, and a name that finally matches the business. The stock is at $1.31. The equipment is appraised at $1.40. Management is buying back shares every day at these prices.

The equipment is worth more than the stock. The market hasn't noticed yet.