tag:blogger.com,1999:blog-4631423976894080706.post6802385133714125436..comments2023-10-17T06:55:06.255-04:00Comments on the red corner: HALF TIME REPORT Part 2red.http://www.blogger.com/profile/04089263693762295793noreply@blogger.comBlogger68125tag:blogger.com,1999:blog-4631423976894080706.post-31692977412198037292014-11-15T07:20:38.221-05:002014-11-15T07:20:38.221-05:00I don't think anyone anywhere is suggesting th...I don't think anyone anywhere is suggesting that the business is impaired or that the cap ex was wasted. It will do $45 to $50 in EBITDA in 2015. <br /><br />I'm kvetching about the multiple that it will command over the next 12 months. It is not going to be as generous as it could have been and that has implications for my warrants.<br /><br /> red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-1153957900331312832014-11-15T07:09:06.146-05:002014-11-15T07:09:06.146-05:00Arent we a bit too pessimistic here. It could easi...Arent we a bit too pessimistic here. It could easily be because they signed some long term contracts and leased the equipment. It could be that they underestimated impact. This could be so they can quickly rent out the equipment they bought and it does not sit idle?<br /><br />I don't think the 26m$ was a complete waste just because of this?<br /><br />Seems like the CEO owns 3 million warrants. Not a huge number compared to his salary, but still enough to not be careless I guess. <br /><br />Im kind of hesistant to think that the capex is just pisssed away in the wind. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-4080199403948659602014-11-15T01:49:08.386-05:002014-11-15T01:49:08.386-05:00There is a much deeper psychology to the CEO trait...There is a much deeper psychology to the CEO trait identified by Thorndike of not paying any attention to the market. <br /><br />Frank Miles might just have something.<br /><br />Doesn't one have to buy management's line to be able to assume margins are recoverable?<br /><br />Meanwhile the macro is brewing (Keystone back on the table, possible Petronas FID). And if you look at Paramount Resources (itself an excellent study in Outsider management), they alone can spend $30bn in the Montney at terrific IRR's.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-90770474140225894232014-11-14T19:37:04.709-05:002014-11-14T19:37:04.709-05:00Well, that's surely at the heart of my mistake...Well, that's surely at the heart of my mistake. In a roll up, one's stock price is currency and the focus should be on protecting it: under-promise and over-deliver or just plain old do what you say you will. Trade at a premium, issue stock to do bigger and bigger deals and pretty soon you have a real business.<br /><br />Raising institutional money at $1 and driving the stock to $0.55 six months later is the opposite of all that.<br /><br />So, yes, I should have held out for a better price especially since I also knew that the shareholder base was mostly retail and therefore inherently unstable. This company tweets its own share price, for goodness sake :)<br /><br />What's done is done, I suppose, and since no profitable and viable business should trade at 2x run rate EBITDA. I'll probably still make out okay in the end. It's just going to be a more scenic route than it needed to be. (The warrants, though, seem to me quite probably permanently impaired).<br /><br />I had a similar issue with the management of Lombard Risk Management: nice business but CEO could'nt help telling anyone who'd listen that it is worth 3x its current market valuation. <br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-13308012626745126642014-11-14T00:40:46.247-05:002014-11-14T00:40:46.247-05:00Red - your earlier remark that this management tea...Red - your earlier remark that this management team is not one Bradley Jacobs rings in my ear. In a roll up management is everything and with it the kind of detailed, deliberate, patient, low key, discipline like the one that characterises Judges. In hindsight, when these guys went on a conference call earlier in the year talking about "making 3m a month"they definitively identified themselves as cowboys for those willing to listen to anything other than what they wanted to hear. Likewise, upsizing the Q1 offering and then promptly spending all the cash.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-65442098537906184532014-11-13T10:36:35.989-05:002014-11-13T10:36:35.989-05:00None of the reasons they have proffered make sense...None of the reasons they have proffered make sense and I no longer believe anything they say. Both their Q3 margin guidance and their after the fact excuses feel like a deliberate lies. That is the worst thing about it. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-23233673315262225022014-11-13T10:29:16.174-05:002014-11-13T10:29:16.174-05:00What a disastrous Q3 2014 Report. Substantial top-...What a disastrous Q3 2014 Report. Substantial top-line miss cobined with massive margin compression as demand has exceeded operating capacity necessitating the use of third-party equipment.<br />$14m EBITDA after 9 months vs. earlier management expectations of $33m (?) for the full year.<br /><br />It will have to be seen to what degree margins "normalize" when more self-owned equipment is used vs. subcontractors.<br /><br />It is unlikely that the market will put much faith in management's comments/forecasts going forward.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-15863095620409878012014-08-01T00:08:39.488-04:002014-08-01T00:08:39.488-04:00OUTR Q2 out...new post ? :)OUTR Q2 out...new post ? :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-3048083076964368382014-07-24T22:43:02.999-04:002014-07-24T22:43:02.999-04:00why not the 2015 options for demand? Seems like a ...why not the 2015 options for demand? Seems like a heavy catalyst driven stock right?johnnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-39174572334152523422014-07-23T20:09:25.765-04:002014-07-23T20:09:25.765-04:00Dolan & Unitek were high risk picks that were ...Dolan & Unitek were high risk picks that were contingent on one simple & clear-cut factor: their ability to refinance debt at materially lower interest rates. <br /><br />Dolan: on November 9 it filed this 8-K<br />http://www.sec.gov/Archives/edgar/data/1396838/000119312513428988/d622827d8k.htm<br /><br />That's lenders playing hardball. And that's not consistent with an ability to refinance, so I exited pronto. It got crushed a week or two later.<br /><br />Unitek: 10-Q came and they hadn't refinanced when that should have been their top priority. If they had'nt done it already it was likely that it was because they couldn't. Lot of liquidity that day and I exited without any regrets.<br /><br />Pretty simple though I was fortunate in that there was a pause between the signal and the bloodbath. <br /><br />I should never have gotten into those names when there was easy value littering the markets. I thought it would be fun/diverting but it was a bit sordid and a lot boring. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-45279895445858838642014-07-23T19:48:49.483-04:002014-07-23T19:48:49.483-04:00Hi Red,
One thing I'm amazed by is how you ti...Hi Red,<br /><br />One thing I'm amazed by is how you time your sells.<br /><br />For both Dolan & Unitek, you got out just in the nick of time, but before the crowd.<br /><br />Is it because you saw something that others didn't...or that you're much more risk averse than the other investors?<br /><br />------<br /><br />Also for your Mayur bet (which I know you exited much earlier), it's had a phenomenal run...up 300% gain not including dividends...any thoughts on that?RandomSaintnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-74333685657720341472014-07-23T15:28:06.923-04:002014-07-23T15:28:06.923-04:00Red
Talking about dividends. I'm from Spain a...Red<br /><br />Talking about dividends. I'm from Spain and the problem of investing abroad is the doble tax suffered. I always have to pay a minimun of 15% abroad and also in spain another 21%. So I've to bear very high taxes in the dividend.<br /><br />I suppose that investing outside of Europe has similar dividend taxes. Do you know any way of avoiding those frustraiting taxes?<br /><br />Thanks.<br /><br />davidnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-12814170851789844052014-07-21T18:19:50.163-04:002014-07-21T18:19:50.163-04:00The cash is really not much more than a buffer (an...The cash is really not much more than a buffer (and the stock is just an option with positive carry). This thing trades at 1.5x trailing EBIT, pays out, and is attached to a pretty good company. i don't think it'll make the GS Conviction Buy List but it's neither is it a terrible idea. <br /><br />The company could buy back up to 10% of its shares, yes, but liquidity would suffer and the discount to value wouldn't narrow all that much. <br /><br />On the other hand, there really isn't much point to the company accumulating even more cash, so one can envision a more generous dividend policy going forward.<br /><br />I'd expect this thing to trade on a dividend yield of ~5% so if the dividend goes up the share price goes up proportionately.<br /><br />Hard to think up reasons why it could earn less than, say, 9 million year, and a payout of 3/4 of that minimum would yield 9%. <br /><br />And that would be unsustainable (and even if it weren't it would be a pretty good way to park cash until one has the next bright idea).<br /><br />There's also the possibility of a special dividend, of course.<br /><br />p.s. Worth looking up French dividend withholding tax rates etc.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-65062884254120919272014-07-21T17:37:32.437-04:002014-07-21T17:37:32.437-04:00Red, how do you account for the cash on their bala...Red, how do you account for the cash on their balance sheet? If they pay it out in dividends, you pay 30% right? And it doesn't look like European firms buy back much shares. A large buy back would be nice at those prices. johnnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-66676889977698489562014-07-21T13:02:55.744-04:002014-07-21T13:02:55.744-04:002013 AR & H1 2014 available in French. Blogged...2013 AR & H1 2014 available in French. Blogged about -- and linked to -- here:<br />http://valueinvestingfrance.blogspot.com/red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-41378240556768089032014-07-21T12:58:19.401-04:002014-07-21T12:58:19.401-04:00Hi, GEA looks interesting...didn't see any upd...Hi, GEA looks interesting...didn't see any updated financials on their website...do you have access to anything more recent?<br /><br />ThanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-74495262612493345752014-07-20T10:50:50.825-04:002014-07-20T10:50:50.825-04:00thanks, much appreciatedthanks, much appreciatedAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-31231351490141797112014-07-20T10:12:29.546-04:002014-07-20T10:12:29.546-04:00Here you go:
https://www.dropbox.com/s/9oyjiuw6ld5...Here you go:<br />https://www.dropbox.com/s/9oyjiuw6ld5dl3o/North%20American%20Gas.7zred.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-31205616406124385472014-07-20T09:34:18.666-04:002014-07-20T09:34:18.666-04:00Red do you have any good reading material on what ...Red do you have any good reading material on what is exactly happening with the whole gas thing in north america? How likely it is that these terminals will all be built. How much gas there possibly is etc. <br /><br />What is holding off the building of terminals. Is is chemical companies lobbying to keep the gas cheap?<br /><br />Looking at the spread, gas is more then 3x as expensive in Asia, and costs of transportation is only a few $ at most commpared to the 12$ price spread or so.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-26521886145197061852014-07-17T17:05:59.292-04:002014-07-17T17:05:59.292-04:00YepYepred.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-54880875529023021092014-07-17T17:04:07.384-04:002014-07-17T17:04:07.384-04:00oh btw one more thing red, Outerwall has a very la...oh btw one more thing red, Outerwall has a very large short interest. There is a danger that shorts starting to cover from this price will drive the price up again. I think short interest is like 30-40% or something.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-12797251048544765882014-07-17T15:44:32.907-04:002014-07-17T15:44:32.907-04:00anon - I've usually got more ideas than spaces...anon - I've usually got more ideas than spaces on my dance card so, for better or worse, I generally don't mind missing out on individual names.<br /><br />I do see your point about the impact delay and I'll think about it some more over the next couple of weeks.<br /><br />--<br /><br />David<br /><br />Richard Beddard has written about operating leases here<br />http://www.iii.co.uk/news-opinion/richard-beddard/share-sleuths-notepad-finding-hidden-debt<br />red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-45367367767094536472014-07-17T14:57:47.019-04:002014-07-17T14:57:47.019-04:00Thanks Red,
I discovered your blog few weeks ago ...Thanks Red,<br /><br />I discovered your blog few weeks ago and I´m learning more from you than from the books I read. Also your comments are always very sensible and generous.<br /><br />I have to learn more about Reading anual reports to calculate the real net income in the present and in future.<br /><br />These days I´m fighting with the operating and capital leasing wich it seems to me a Little dificult.<br /><br />Thanks for sharing all your knowledge.davidnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-57926470666173640662014-07-17T14:08:55.477-04:002014-07-17T14:08:55.477-04:00There is a several month delay though. Since DVD&#...There is a several month delay though. Since DVD's are usually rented a few months after movie theater releases. Arent you afraid this is the sell off already? It already looks very cheap now. Wait a bit and you might risk it will just spike up on the news.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-78910110165659756102014-07-17T13:03:28.591-04:002014-07-17T13:03:28.591-04:00I see it that way, too. But Q2 box office doesn...I see it that way, too. But Q2 box office doesn't look good and so we might see a miss and a meaningful sell-off at Q2. I'm going to wait for that before getting into the LEAPs. (And I'd probably be more interested in the calls nearer the money than the $65s)red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.com