Aimia's NCIB Renewal: Closing the Discount to Intrinsic Value

The market’s undervaluation of Aimia Inc. (AIM.TO) presents a rare opportunity to capitalize on a stock trading at a significant discount to its intrinsic value. With its renewed Normal Course Issuer Bid (NCIB), Aimia is poised to bridge the gap between its share price and net asset value (NAV) through strategic capital allocation, signaling confidence in its core holdings and execution discipline. This article explores the mechanics of the buyback program, its implications for investors, and the catalysts driving a compelling risk-reward proposition.

The Mechanics of NCIB Execution

Aimia’s NCIB renewal in Q2 2025—authorizing up to 10% of its public float—builds on the success of its 2024 program, which saw the company purchase 60% of its 7 million authorized shares (4.2 million shares). The renewed bid, set to commence in June 2025, leverages its $94.7 million cash reserves to repurchase shares at prices below NAV, a stark contrast to its current trading price of $2.67 (as of May 13, 2025).

The 2024 NCIB demonstrated Aimia’s ability to execute buybacks without diluting shareholder value. With a $53.8 million gain from prior repurchases contributing to its Q1 2025 EPS of $0.55, the strategy has already delivered tangible results. The renewed bid’s focus on reducing the share price discount to NAV—a strategic priority—will further concentrate value in remaining shares, creating an upward bias for the stock.

Strategic Priorities and Capital Discipline

Aimia’s three-step strategy—cost reduction, NAV alignment, and tax-efficient capital allocation—frames its NCIB as a critical lever to unlock shareholder value.

1. Cost Reduction: HoldCo expenses are being slashed to below $11 million in 2025, from $12 million in 2024, through board restructuring, office rent cuts, and audit fee reductions. This frees cash flow to fund buybacks while reducing drag on NAV.
2. NAV Alignment: By obtaining independent valuations for its core holdings—Bozzetto and Cortland—Aimia aims to demonstrate their true worth. These assets generated $22.4 million in combined adjusted EBITDA in Q1, with Bozzetto’s 19.1% margin and Cortland’s 35% EBITDA growth underscoring their resilience.
3. Tax Efficiency: With $1.0 billion in tax loss carryforwards, Aimia can reinvest profits without immediate tax liabilities, further boosting NAV.

Undervaluation Catalysts: Bozzetto and Cortland

The valuation gap hinges on the market’s skepticism toward Aimia’s core holdings. However, recent performance highlights their intrinsic value:

• Bozzetto: A global leader in industrial textiles, it delivered $89.1 million in Q1 revenue and $17 million in EBITDA, driven by cost controls and product diversification. Its cash reserves of $47.5 million provide a buffer against macroeconomic headwinds.
• Cortland: The marine and industrial solutions firm saw $40.7 million in revenue and a $5.4 million EBITDA surge, fueled by demand in fishing and shipping sectors.

These assets, valued conservatively at their operational performance, likely exceed the current stock price. The NCIB’s focus on repurchasing shares at a discount directly transfers this undervaluation into shareholder returns.

Risk Factors to Consider

While the risk-reward profile is compelling, investors should weigh:
- Share Price Volatility: Aimia’s stock has fluctuated between $2.59 and $2.71 in May 2025, reflecting market skepticism.
- NAV Disclosure Lag: The lack of explicit NAV figures complicates precise valuation. However, the company’s focus on asset valuations and buyback execution implicitly confirms confidence in its NAV.
- Macroeconomic Risks: Tariffs and trade dynamics could impact Bozzetto and Cortland, though Q1 results showed limited downside exposure.

Conclusion: Act Now on the Risk-Adjusted Opportunity

Aimia’s NCIB renewal is more than a share buyback—it’s a strategic imperative to align its stock price with its intrinsic value. With $94.7 million in cash, a $1.0 billion tax shield, and core holdings delivering $22.4 million in Q1 EBITDA, the company is positioned to narrow its discount to NAV meaningfully.

Investors ignoring this discount do so at their peril. The buyback program’s scale, coupled with cost discipline and asset strength, creates a high-probability catalyst for valuation convergence. For contrarian investors, this is a rare chance to acquire a $2.67 stock with a NAV likely exceeding its current price—making Aimia a top pick for 2025.

Act now: The gap between price and value won’t last forever.