Seeking Alpha
  • Millennials: Bonds Aren't Just For Old People
    Editors' Pick AGG, BOND, BND Yesterday, 6:22 PM Matt Tucker, CFA 9 Comments
  • Unthinkable, Unimaginable And Unspeakable: Why Wall Street Clings To The Herbalife Myth
    Editors' Pick HLF Yesterday, 12:41 PM Robert FitzPatrick 43 Comments

    Summary

    • For many, the fraud thesis of Herbalife critics is beyond imagination, unthinkable. The view of Herbalife as transcending math, demographics and economics is seen as more plausible than the thesis.
    • The time has come to examine not just facts about Herbalife, but reactions to those facts, and to ask "Why?". This requires a forensic dissection of Herbalife's narrative.
    • The dissection reveals that conventional business language fails to communicate the reality of fraud and the momentous conclusion of the fraud thesis, leaving many confused and unconvinced.
    • The full truth of Herbalife raises far-reaching questions about multi-level marketing and regulation of it. Conventional business language evades those questions, making the truth more strange than the fiction.
    • Herbalife enjoys protection of a network of powerful backers whose own reputations are tied to the Herbalife myth. Their support makes the fraud thesis seem inconceivable.
  • A Discontinuity That's Not In The Market
    Editors' Pick LNG, UNG Yesterday, 10:55 AM Paulo Santos 20 Comments

    Summary

    • The market structure for U.S. natural gas is about to change.
    • This change is certain, yet not priced in the market.
    • This article explains what's about to happen.
  • 3 Micro-Caps With Persistent Insider Purchases
    Editors' Pick CRDS, FLL, IFT Yesterday, 7:47 AM Weighing Machine 5 Comments

    Summary

    • Market capitalization less than $300 million.
    • Insider purchases involving at least 2 different insiders over the past 6 months.
    • Selling at a discount to book value or at less than 12x my estimate of normalized earnings.
  • Currency Exchange International: Compounding Cash Machine At A Deep Discount To Private Market Peers
    PRO Top Idea CURN Yesterday, 5:00 AM Ariana Research 11 Comments

    Summary

    • A unique opportunity to own a compounding machine with organic growth in excess of 20% and high returns on capital.
    • OSFI approval to transition into a 'Banker's Bank' is a near-term hard catalyst for value creation.
    • Currency Exchange trades at a steep discount to recent private market transactions. We believe shares at minimum have upside potential of ~70%.
  • HCI Group: The Wizards Of Tampa
    Editors' Pick HCI Yesterday, 2:17 AM RH Analytics 4 Comments

    Summary

    • HCI is a Florida P&C insurer with a business model that is the product of the dysfunctional and politically driven Florida homeowners' insurance market.
    • HCI's extraordinarily high ROE is largely driven by state subsidies embedded in the timing and terms of takeouts from Citizens.
    • End of year assumptions in recent years have perpetuated the mirage whereby mispriced and risky takeout policies are transformed into a book of business with industry leading profitability.
    • Absent takeouts or acquisitions, we expect profitability to erode rapidly as it has in a past period without a substantial takeout.
  • MiX Telematics: This Looks Like A Bottom
    Editors' Pick MIXT Mon, Sep. 15, 12:15 PM Darspal S Mann Comment!

    Summary

    • Weak revenue growth, but fundamentally sound and subscriptions growing fast.
    • Operational changes, new products and geographic expansion should bring back revenue visibility and growth.
    • Trading near replacement value, stock may benefit from earnings and multiple improvement as the revenue stabilizes and margins expand.
  • How SpaceX Seeks To End Boeing And Lockheed's Russia-Dependent Rocket-Launch Monopoly
    Editors' Pick LMT, BA Mon, Sep. 15, 10:12 AM Jason Orestes 6 Comments

    Summary

    • SpaceX is significantly important for American space travel that is currently completely reliant on Russian cooperation and technology.
    • The Government exclusively uses a Boeing and Lockheed Martin joint venture for their satellite launches: a wantonly overpriced monopoly that is entirely dependent on Russian parts and technology.
    • SpaceX is close to receiving full Government clearance to compete for launches. Not only can they facilitate them at a fraction of the cost, but sans any Russian involvement.
  • Tracking China's Taper With Macro Indicators
    Editors' Pick FXI Mon, Sep. 15, 9:09 AM David Qian Zhang 2 Comments

    Summary

    • It takes non-official or China-specific indicators to track China's policy-driven economy.
    • Indicators of Equality, Employment, Inflation, and Credit Creation are explored.
    • These indicators show that China is rebalancing and tapering credit-led growth since mid-2013, but also easing since Spring 2014.
    • China's stock index can be invested opportunistically if China continues to reform and grow in a “two step forward, one step back" fashion.
  • Solazyme: Taking Advantage Of Healthy Food Trends And The Need For Innovation
    Editors' Pick SZYM Mon, Sep. 15, 8:10 AM Kevin Quon 44 Comments

    Summary

    • Solazyme recently gained its first customer for AlgaVia's Whole Algal Flour product.
    • The company offers natural product ingredients and is also able to improve the health profiles of food.
    • Solazyme's technology platform could be a disruptive innovation when it comes to oil profile variety.
  • FirstEnergy Corporation: Recovering Utility
    Editors' Pick FE Mon, Sep. 15, 7:39 AM James Bjorkman 5 Comments

    Summary

    • FirstEnergy is a utility in transition and recently had to cut its dividend to finance the closure of inefficient power plants.
    • The company is retreating from deregulation to shield itself from the vicissitudes of the market and has submitted a rate plan to regulators to accomplish this goal.
    • FirstEnergy stock pays a good dividend that, after the cut, should be sustainable and pays patient investors to wait for the company's rebuilding plans to come to fruition.
  • How Can You Invest In An Irreplaceable Island That Pays A 4.44% Dividend Yield?
    Editors' Pick NYRT Mon, Sep. 15, 7:15 AM Brad Thomas 23 Comments

    Summary

    • Like most non-traded REITs, equity is generated in a blind pool format, so investors really don't know what they're buying.
    • NYRT and ARC New York REIT have the same external manager, and they also have many of the same officers and board members.
    • Knowing that ARC New York REIT is well on its way to becoming a replica of NYRT, is it possible that the NYRT mergers with the twin?
    • "It's hard to go wrong owning real estate on this island" - Mike Happel of NYRT.
  • Checking Stock Quotes Regularly Is A Waste Of Time
    Editors' Pick Mon, Sep. 15, 7:00 AM Investing 501 62 Comments

    Summary

    • Stock prices can move up to 19 times more than the change in their intrinsic valuation would justify.
    • Investors tend to put too much emphasis on "new information", including changes in stock prices in the short term.
    • Focus on understanding the fundamental drivers of the business, not on understanding what a price reaction to "new news" may mean in the long run.
  • Skeletons In Plain Sight And Why Nu Skin Is Worth $10/Share
    Editors' Pick NUS Sun, Sep. 14, 1:33 PM Mohan Venigalla 6 Comments

    Summary

    • Various short theses on Nu Skin are synthesized.
    • A closer look at the company's management of cash reveals that the management not only lost focus, but also grossly mismanaged cash.
    • The company entered each of the last four quarters with a negative cash situation for operations during the quarter, which explains the company's recent scramble for cash.
    • Justification for setting NUS stock price target at $10 is presented.
  • AT&T: A Bullish Algorithmic Perspective
    Editors' Pick T Sun, Sep. 14, 11:59 AM I Know First Research 13 Comments

    Summary

    • AT&T, despite being the second-largest wireless telecommunications provider in the U.S., has recently been regarded as a problematic stock, because of high competition in telecommunications and T’s lower-than-estimated revenues.
    • Recent developments – including new mobile plans and phones, network expansion, novel technologies, and increased subscriber counts – make success foreseeable for T, especially when coupled with its steady dividend.
    • While lower revenues, a competitive market, and questionable investments are not going away, T is not the disaster some analysts paint it to be.
    • I Know First algorithm predicts a bullish forecast for T in the 1-month and 3-month time frames.
  • Nuverra Environmental Solutions: No Longer Investing In The Hope
    Editors' Pick NES Sat, Sep. 13, 11:20 AM Stone Fox Capital 11 Comments

    Summary

    • Nuverra Environmental continues to provide investors with hope that never materializes.
    • Large capital spending plan is unfunded.
    • Inability to hit financial targets suggests a large cut to the EBITDA multiple is warranted with downside potential of at least 35%.
    • Better opportunities exist in the oilfield services sector that don't involve high levels of leverage.
  • Allana Potash Continues To Drift Amidst Ag Malaise
    Editors' Pick ALLRF Sat, Sep. 13, 10:46 AM Stephen Simpson, CFA 11 Comments

    Summary

    • Allana shares continue to drift lower, despite a strong and engaged strategic partner in Israel Chemicals.
    • If efforts to increase royalties and taxes on resources produced in Israel stick, Allana's Ethiopian Danakhil project may become even more valuable to ICL.
    • Allana still needs to secure project financing, but these very risky shares look undervalued below $0.80/ADR.
  • How To Use Money Supply Statistics For Market Predictions
    Editors' Pick SPY, DIA, QQQ Sat, Sep. 13, 9:49 AM Austrolib 60 Comments

    Summary

    • Ultimately, what determines stock prices, and all other prices for that matter, is the money supply.
    • The most accurate picture of the money supply at any given time is the 1-week M2 average, published by the Fed every week.
    • In the past, a stagnant 1-week average for more than 20 weeks has immediately preceded stock market crashes, as happened in July 2011 and September 2008.
    • Currently, the 1-week average has remained stagnant for 20 weeks.
  • AngloGold Ashanti: The Restructuring Plan Could Fail
    Editors' Pick AU Sat, Sep. 13, 8:59 AM Vladimir Zernov 2 Comments

    Summary

    • AngloGold Ashanti plans to split into two companies.
    • One of these companies will own AngloGold Ashanti's South African assets, while another will operate its international assets.
    • AngloGold Ashanti also plans to raise $2.1 billion in equity.
    • This plan will likely meet heavy opposition from shareholders.
  • Asian Growth Sends Strong Bull Message For Apple
    Editors' Pick AAPL Fri, Sep. 12, 11:03 PM Nick Cox 157 Comments

    Summary

    • Apple iPhone increasing market share in Asia.
    • Samsung losing ground to Apple and Xiaomi.
    • Xiaomi gaining ground, but now Apple can fulfill potential faith its large-screen phones.
    • Analysts have failed to grasp the importance of Asia, excluding China and India, which represents a growing population of 1.8 billion people.
  • German Growth Prospects - The ECB And Russian Gas
    Editors' Pick Fri, Sep. 12, 4:34 PM Colin Lloyd 8 Comments

    Summary

    • The ECB cut rates and implemented the first phase of OMT.
    • Russia continues to retaliate against European sanctions.
    • European Natural Gas prices have risen but shortages seem unlikely.
  • Triangle Petroleum: Delivering On The Ambitious Growth Strategy
    Editors' Pick TPLM Fri, Sep. 12, 3:20 PM Richard Zeits 8 Comments

    Summary

    • Triangle delivered much stronger than expected fiscal Q2 2015 results in its pressure pumping business.
    • Given the favorable current environment in the pressure pumping sector, Triangle’s growth initiatives in Oil Services are very well timed.
    • Using an updated valuation range for the company’s Oil Service and Midstream segments, the implied valuation for the core E&P business is attractive.
    • However, the company needs to clearly demonstrate its ability to achieve competitive drilling returns in its operated upstream business.
  • Tesla Is Not All Glitter And Glamour
    Editors' Pick TSLA Fri, Sep. 12, 2:11 PM Harm Elderman 100 Comments

    Summary

    • Tesla could reach $1,000 per share if everything goes to plan.
    • However, such scenarios are fundamentally and empirically unlikely.
    • Tesla burns through cash at a pace of 279 MPH.
    • How will Tesla perform when stock markets hit a correction?
  • Colfax Still Enjoying The Fruits Of Superior Growth Potential
    Editors' Pick CFX Fri, Sep. 12, 12:38 PM Stephen Simpson, CFA 1 Comment

    Summary

    • Despite another miss in the second quarter, the Street is still on board with Colfax's significant margin improvement/leverage opportunities.
    • Welding end-markets seem to be in recovery and the gas handling business is doing well, but weakness in power gen and oil/gas could still be a short-term challenge for fluid handling.
    • Colfax offers excellent near-term and long-term growth potential, which the Street will richly reward, but a lot of those rewards seem to already be factored into the stock price.
  • How And When To Short Tesla
    Editors' Pick TSLA Fri, Sep. 12, 8:45 AM Edward Hoofnagle, CFA 115 Comments

    Summary

    • This round of gapping up seems to have peaked.
    • A window of opportunity is open in the range of 285 - 300.
    • It's a high risk trade, not appropriate for many investors.
  • Prosafe SE: Classic Value Opportunity For Long-Term Investor To Profit From Offshore Fleet Growth
    Editors' Pick PRSEY Fri, Sep. 12, 7:00 AM Stanislav Ermilov 9 Comments

    Summary

    • Operating earnings cushion through long-term contracts with near-record high backlog combined with capex investment program set to increase firm's assets by over 50% in the next 2 years.
    • Selloff on the back of upcoming dividend cut offers opportunity for contrarian investors to profit from outflow of the dividend seeking group.
    • Overreaction to short-term softness in operating environment offers additional value in light of long-term tailwinds for the sector.
  • Layne Christensen Bumping Along The Bottom
    Editors' Pick LAYN Fri, Sep. 12, 6:45 AM Stephen Simpson, CFA Comment!

    Summary

    • Layne Christensen continues to miss sell-side revenue and EBITDA expectations, though the Water Resources business was stronger than expected on improving water drilling activity in California.
    • Margin improvement potential remains large and LAYN is well-placed for a recovery in municipal water infrastructure spending, but the company needs a new CEO and must win higher-margin contracts.
    • Discounted cash flow suggests a mid-teens fair value while EV/EBITDA based on current and long-term EBITDA bracket a range between the low and high teens.
  • Priceline: Value And Growth At A Reasonable Price
    Editors' Pick PCLN Fri, Sep. 12, 6:09 AM Investing Doc 5 Comments

    Summary

    • Priceline's shares have started to trend negative on little news-- is this an opportunity or a sign of something more ominous?
    • The company's competitive position, particularly against Expedia and Orbitz, is compelling, and getting stronger with time.
    • The negative price action looks to be an opportunity to get a strong growth story at an excellent value.
  • Spin-Off NOW, Inc: Market Leadership, Experienced Management, And Pristine Balance Sheet Point To Compounding Value
    PRO Top Idea DNOW Fri, Sep. 12, 5:00 AM Value Plus Incentives 19 Comments

    Summary

    • DistributionNOW or NOW, Inc. (DNOW), the recent spin-off from National Oilwell Varco, Inc. (NOV), ranks second by market share in the fragmented but fast consolidating energy distribution market.
    • DNOW’s pristine balance sheet – $236 million in cash, no debt – and low cost of capital should facilitate organic market share gains and rapid growth via M&A activity.
    • In contrast, DNOW’s primary competitor and market leader, MRC Global (MRC), has much higher leverage and now needs to enter a period of de-leveraging, which will likely slow growth.
    • DNOW’s management team has a 10 year, successful track record of accretive M&A. The spin-off is only the most recent in a long series of strategic actions to create value.
    • DNOW’s operating margins are likely to inflect significantly higher after digesting two large acquisitions and transitioning to a global ERP system.
  • Prospect Capital: What Comes Next? Part 5
    Editors' Pick PSEC Fri, Sep. 12, 4:07 AM BDC Buzz 151 Comments

    Summary

    • This article discusses dividend coverage for Prospect Capital.
    • The company has a few initiatives to increase returns and improve dividend coverage over the coming quarters.
    • Most likely Prospect Capital will cut dividends by 10% to 20% once its spillover is used up.
  • Glu Mobile: Laying Out A Valuation Based On Revenue And Earnings
    Editors' Pick GLUU Thu, Sep. 11, 5:32 PM MTF Investing 26 Comments

    Summary

    • Glu Mobile is a high growth stock that has its value rise 150% over the past 12 months.
    • While past performance develops a reputation, forward guidance should help form a valuation and target.
    • Other companies in the sector are over reliant on one or two big hits, adding risk should one of those fall in popularity.
    • Glu faces a similar problem as Kim Kardashian: Hollywood will likely supply well over 50% of revenue this quarter.
    • Despite the Kardashian effect on the stock, the company has a good base of strong performing games that help to de-risk the company compared to peers.
  • Mountain Province Diamonds Offers 65% Upside
    Editors' Pick MDM Thu, Sep. 11, 2:22 PM Christopher De Sousa 4 Comments

    Summary

    • Mountain Province's Gahcho Kué diamond project could generate $4.1 billion in net operating margin for the 12-year mine life.
    • The presence of large diamonds within the reserve improves the longer-term financial outlook.
    • Shares are trading at a 39% discount to our 12-month target price of $8.30.
  • In The Eurozone, What Goes Around Comes Around, Even For Germany
    Editors' Pick EZU Thu, Sep. 11, 12:59 PM Elliott R. Morss 1 Comment

    Summary

    • Some journalists are bullish on the Eurozone: "We are starting to see growth".
    • Take care - the Eurozone should not be viewed as a single entity. It is made up of 18 very different economies.
    • The article looks at each country separately and offers investment advice.
  • Quest Diagnostics Offers A Good Long-Term Opportunity
    Editors' Pick DGX Thu, Sep. 11, 10:50 AM Options Calling 2 Comments

    Summary

    • Quest Diagnostics Q2 FY2014 revenue from continuing operations grew 4.8% to $1.9 billion, while EPS grew 1.9% to $1.08.
    • Quest Diagnostics has lowered its outstanding share count by 30% over the last 10 years.
    • Quest Diagnostics and Lab Corps have perfected the game of consolidating and standardizing lab tests, and eliminate smaller competitors through acquisitions.
  • Hercules Technology: BDC Risk Profiles
    Editors' Pick HTGC Thu, Sep. 11, 10:11 AM BDC Buzz 28 Comments

    Summary

    • This article discusses risk indicators for investing in Hercules Technology Growth Capital.
    • I consider Hercules Technology Growth Capital to have a much safer profile than other BDCs due to having 100% of debt investments in ‘true’ first lien senior loans.
    • Kroll has reaffirmed its corporate rating of HTGC as a BBB+ with a stable outlook.
    • Many BDCs do not disclose relevant metrics for indicating portfolio credit quality and this series will attempt to provide investors with this information.
  • Lull Ahead Of Major Investment Cycle Provides Low-Risk Opportunity For EXFO
    Editors' Pick EXFO Thu, Sep. 11, 6:00 AM John Leonard, CFA Comment!

    Summary

    • EBITDA is likely at trough levels due to the impact of lower network operator spending over the past two years.
    • However the intermediate-term outlook remains bullish; there are already signs of a recovery as evident by the improving book-to-bill ratio.
    • EXFO is highly levered to this recovery with its high market share, increasing exposure to the strong wireless market and new products that benefit from the trend towards network virtualization.
    • The 15% EBITDA margin target to be reached over the intermediate term is less aggressive in light of the considerable progress already made (11.5% margin in the mrq).
    • The downside is limited by the high insider ownership, improving cash flow and strong balance sheet (no debt and cash that equals 20% of the market cap).
  • Short Famous Dave's With 33-48% Downside
    PRO Top Idea DAVE Thu, Sep. 11, 5:00 AM Ross O'Toole, CFA 8 Comments

    Summary

    • Famous Dave's is a fundamental short due to deteriorating fundamentals, namely negative SSS trends.
    • The company trades with a "growth" valuation despite virtually no current new unit growth.
    • The current valuation is already giving credit to a successful turnaround, yet there is currently no evidence to support improving fundamentals.
    • At current prices, Famous Dave's has 33-48% downside.
  • Long Run Exploration: Cheap Canadian E&P With Huge 8.4% Yield
    PRO Top Idea WFREF Thu, Sep. 11, 5:00 AM Thomas Lott 47 Comments

    Summary

    • Long Run Energy (LRE in Toronto) is an E&P company trading at a 15% FCF Yield and a huge 8.4% dividend yield.
    • Technical pressure has pushed the stock down 10% in the past month as shares issued to fund an acquisition recently hit the market.
    • Management grew production organically 5.5% in the last quarter, and at under 4x TEV/EBITDA, the stock is excessively cheap and misunderstood.
  • Jobs Friday---When Bubblevision Misses The Epic Failure Of The US Labor Market
    Editors' Pick Wed, Sep. 10, 7:46 PM David Stockman 73 Comments
  • Look At These Juicy Yields - Are They Really Appropriate For Your Retirement Portfolios?
    Editors' Pick AINV, HGT, KMP Wed, Sep. 10, 3:48 PM Chuck Carnevale 261 Comments

    Summary

    • Are high-yield stocks appropriate for retirement portfolios?
    • It’s imperative to analyze the entire spectrum of the plus and minuses that a given class of security possesses and offers.
    • Deciding whether a given equity class is appropriate for your retirement portfolio is a complex issue.
    • This important decision is best made by the individual retired investor according to their unique needs and psychological makeup.
  • 21Vianet Group Exposed
    Editors' Pick VNET Wed, Sep. 10, 9:30 AM TrinityResearch 88 Comments

    Summary

    • We rate VNET a zero due to overwhelming evidence that the company is falsifying financials and reported operating metrics.
    • VNET overstates cabinets and utilization for its core IDC hosting business, about two thirds of revenue.
    • A substantial portion of the MNS business, the other third of revenue, operates an illegal bandwidth reselling network.
    • To make up for the overstated performance of hosting, VNET acquires non-core assets and shells from which to fabricate revenue.
    • VNET uses constant financings and acquisitions to help deliver overpromised growth and mask that it is technically insolvent.
  • The Australian Dollar Finally Breaks Down Amid Signs Warranting Increased Caution
    Editors' Pick BHP, EEM, RIO Wed, Sep. 10, 8:20 AM Dr. Duru 2 Comments

    Summary

    • The Australian dollar breaks down to 5-month lows versus the U.S. dollar as part of the U.S. dollar's progress against high-yielding currencies.
    • It is likely fresh 5-year lows and an upcoming labor report are also weighing on the Australian dollar.
    • Pressure on iron ore should continue to increase as Chinese steel mills face decreasing domestic demand - should also feedback to the Australian dollar at some point.
    • Conditions pointing to caution, even shorts, on iron ore companies and emerging market indices.
  • There's Very Little Chance Of Beating A Balanced Portfolio From Here
    Editors' Pick AGG, SPY, TLT Wed, Sep. 10, 8:01 AM Dale Roberts 69 Comments

    Summary

    • This is now the 4th longest bull market in history. We're in the 2nd longest period without a 10% correction. Every day, we get closer to the next correction.
    • A re-balanced growth portfolio that holds a modest 25-35% bond component offers the possibility of delivering stock market like gains (or better) with a much lower risk profile.
    • The risk return proposition is likely swinging in favor of a balanced portfolio. It might be time to listen to Mr. Benjamin Graham.
  • 'High Cotton' For Highwoods Properties
    Editors' Pick HIW Wed, Sep. 10, 7:00 AM Brad Thomas 29 Comments

    Summary

    • One of the key differentiators separating the “wheat from the chaff” with Highwoods has been the very consistent revenue stream.
    • Highwoods has demonstrated that prudent capital management and disciplined risk control deliver durable earnings results.
    • I’m recommending Highwoods (at the current price of $42.55) as I believe the margin of safety (as defined by dividend coverage) is exceptionally strong.
  • Paradise Entertainment: 80% Upside On Strong Earnings From Casino Management, Gaming Equipment
    PRO Top Idea PDSSF Wed, Sep. 10, 5:00 AM Hidden Value 12 Comments

    Summary

    • Non-mainstream stock pick on Macau gaming sector: Strong 2-pronged earnings growth strategy driven by (1) Casino management and (2) Gaming equipment.
    • (1) Casino management: Increased capacity and continued yield enhancement with sticky grind mass focus.
    • (2) Gaming equipment: Overseas sales upside in US and Australia from distributorships, Macau local sales upside from upcoming new Cotai casinos, and long-term upside on product mix upgrade.
    • Recent sell-off post-1H14 results offers attractive valuation now for an entry point, especially when expectations for Macau gaming sector are lowered and reset.
  • Callon Petroleum Expands Permian Footprint With Core Midland Basin Acquisition; Stock Will Expand Too
    Editors' Pick CPE Tue, Sep. 9, 7:35 PM Michael Fitzsimmons 34 Comments

    Summary

    • Callon Petroleum scoops up 3,862 net acres in the sweet-spot core of the Midland Basin.
    • For the $213 million price tag, the deal includes existing production of 1,465 boe/d (68% oil).
    • The acreage is considered de-risked for 3 zones and contains 4 more prospective benches.
    • If Callon continues to execute in Permian, the stock could easily hit $15 over the next 12 months (up 50%).
    • Long term, the risk/reward profile is excellent: Callon could be 3-4x higher by the end of 2016.
  • Pacific Coast Oil Trust And Measure P
    Editors' Pick ROYT Tue, Sep. 9, 6:58 PM Casey Hoerth 47 Comments

    Summary

    • Measure P should not have significant impact on the trust's current operations.
    • Future impact could be substantial.
    • Despite the risk, the trust is very reasonably priced here.
  • Arcos Dorados Hits Bottom, Finds A Shovel
    Editors' Pick ARCO Tue, Sep. 9, 3:54 PM Stephen Simpson, CFA 4 Comments

    Summary

    • Continued erosion in Brazilian same-store sales, stubborn costs, and increasing competition are sapping Arcos Dorados' key market.
    • Weakness in Venezuela, Argentina, and Mexico are only making a bad situation worse, and Arcos Dorados looks increasingly squeezed between a weak balance sheet and capex commitments to McDonald's.
    • Valuing Arcos Dorados at $7/share (8x 12-month EBITDA) may be harsh and DCF suggests more than 35% upside, but management needs to earn back the benefit of the doubt.
  • Charles & Colvard: A Diamond In The Rough... Sort Of
    Editors' Pick CTHR Tue, Sep. 9, 10:54 AM Nick Manley 9 Comments

    Summary

    • Consistent operating losses and concerns about upcoming issues have driven the stock price below book value.
    • The company is transforming itself to take advantage of industry trends and reinvigorate margins.
    • The upside catalysts are coming (+80%-200%).
  • Paragon Offshore PLC: What It Is, What It Isn't
    Editors' Pick PGN Tue, Sep. 9, 9:00 AM Casey Hoerth 14 Comments

    Summary

    • Company at extremely low valuation.
    • Majority of Paragon's business comes from jackups and not deepwater floaters.
    • Do not expect Paragon to be a secular growth story at this time.