Lands' End: Spin-Off Situation With 60%-90% Upside
- Lands' End's recent listing and subsequent price drop seem to indicate a classical spin-off special situation that should generate excess profits for investors.
- The company's online/catalog business produces stable FCF yield of 13% on current market cap. Increase in debt load will not affect results materially.
- Relative to peers, Lands' End appears to have a potential upside of 60%-90%.
- Catalysts include reduction in after spin-off selling, potential reinstatement of dividends and increased awareness of the company among investors.
Why The NeuStar Bears May Be Proven Wrong
- NeuStar became a deep value with a catalyst story.
- Huge short interest (23% of shares out) may trigger a substantial short covering rally.
- Catalyst imminent on May 6th with an asymmetric risk/reward very skewed to the upside.
Whiting Petroleum Working On The Second Act
- Whiting has established a sizable acreage in the Williston/Bakken, and continues to have years of attractive drilling prospects.
- Whiting's Redtail prospect in the Niobrara will likely be the next major source of production growth.
- The Street seems to be worried about the "maturity" of Whiting's asset base, but the valuation looks too low today.
Dividend Growth Investment Or Compounding Machine? Brenntag Could Be Both
- Brenntag is the global market leader, and enjoys strong competitive advantages.
- The company will likely continue to grow organically and through acquisitions, further increasing its profitability.
- Being highly diversified among industries and geographies makes the company largely independent from the volatility of any single specific market segment or region.
- With little net debt, a dividend well covered by earnings and excellent growth prospects, the company is worth being considered by dividend growth investors as well.
Why I'm Buying Aviat Networks Hand Over Fist
- Net cash represents nearly 70% of market capitalization.
- Currently trades for just 7% of revenue (EV/Revenue basis).
- Trades 30% below tangible book value.
- Management forecasting a return to profitability during second half of calendar 2014.
- Bullish long-term outlook in a growing industry.
Health Insurance Innovations: Positive Outcome Looks More Likely In This Binary Stock
- Health Insurance Innovations is still a good investment for investors willing to stomach risk and volatility.
- Revenues are ramping and meaningful profits should materialize this year and double next year.
- The stock looks like a binary play - in five years it will probably have been either massively profitable for investors or a complete flop.
- Earnings releases and management commentary are supportive of the positive outcome.
- Cincinnati Bell recently agreed to sell its legacy wireless business to Verizon for $210 million.
- The company holds a 69% interest in CyrusOne with a stated goal of liquidating the investment over the next several years.
- Asset sales will help Cincinnati Bell delever itself, and focus on its higher growth Fioptics segment.
SolarCity Retained Value Redux: The Utilities Strike Back
- With increased solar penetration, utilities are looking at a dramatic reduction in energy sales and the threat of having to write off the uncompetitive or underutilized assets.
- Connection charges and rate tiers are examples of the powerful option that utilities have to slow down solar penetration.
- Companies like SCTY and SUNE are likely to see significant compression in retained values as the utilities fight back.
Same Stuff, Different Year: Should Shareholders Stick With IBM?
- In all my articles on IBM, I have argued that new money was better off in other stocks.
- Now I examine whether existing shareholders should sell their IBM shares.
- Was this poor Q1 "the last straw?"
Ignite Restaurant Group: Hidden Value In The Company's Attractive Assets
- IRG's valuation has been weighed down by the Macaroni Grill acquisition, but the company's other assets are worth much more that the current enterprise value.
- Recent management shake-up at Macaroni Grill and management commentary leads me to believe that this segment is stabilizing.
- If we were to assign a valuation of zero to Macaroni Grill, instead of its current negative valuation, we could see IRG's stock move into the $20-25 range.
- Even if the business does not stabilize, the segment's attractive real estate portfolio allows for conversions to Brick House Taverns at a lower cost than new builds, or possible monetization.
Staples: Industry Consolidation Leading To 50% Upside
- The poor quarter was negatively skewed by difficult comps against a 53rd week, unfavorable foreign exchange rates, and 109 store closures.
- The market systematically underestimates the speed at which industry consolidation will take place between Office Depot and Office Max.
- The street under appreciates Staples market leading position, as well as its growing e-commerce business.
- Private equity is likely a potential suitor in a non-levered high free cash flow retailer with significant hidden value in its online business.
- Business trades at around 10x LTM earnings, with significant free cash flow levers starting in 2015.
VASCO Data Security To Benefit From Heartbleed Bug, Opportunity To Unlock Value Via Tender Offer/Special Dividend
- VDSI positioned to benefit from Heartbleed bug raising awareness of fixed password vulnerability.
- Wall Street expectations for FY 2014 look too low, Q1 earnings should be catalyst.
- VDSI should conduct tender offer for 10% of the shares outstanding at $8 per share and pay a one-time dividend of $1 per share.
- The economic situation in Europe is on the mend, will benefit VDSI order intake.
Weight Watchers International - Is The Fat Lady Singing?
- WTW is currently valued at a 39% discount to a conservative estimate of intrinsic value for its business.
- Discount is due to 50%+ decline in share price over last 12 months, attributable to recent negative trends and business underperformance.
- Negative trends are temporary, while underperformance is attributable to operational issues which are all fixable - they are not indicative of permanent flaws in WTW's business model or prospects.
Do Mako Investors Realize Their Tenuous Security Position In Oceanica?
- Mako Resources investors appear to have few rights to Oceanica assets due to senior OMEX payable security. Mako investors need to ask serious questions.
- Did Josh Adam of Mako negotiate this transaction at arm's length with OMEX in line with his fiduciary duty?
- Josh Adam, SVP Finance, used Highly Questionable brokers to raise capital for Neptune (OMEX's other mining venture), according to recent disclosures.
- Is the vague J.P. Morgan Oceanica connection merely through a local Chase Private Client Florida branch attempting to sell unregistered securities to HNW investors?
BofI Holding: After H&R Block Transaction, Still Overpriced At Almost 4x Book Value
- BOFI is over-earning and overpriced, and the H&R Block deal doesn't change that.
- Five other banks looked at the deal and passed or bid less than BOFI, indicating the low value of the asset.
- Prepaid-card issuing banks have much lower valuations and lower returns than BOFI does today, supporting our view that BOFI's profits are unsustainably high.
Lifetime Brands: A Mundane Company, With Exciting Profit Potential
- Lifetime's mundane business belies its profit potential.
- The company expanded gross margins during the key holiday quarter, alongside rising revenues and EPS.
- With insiders owning 22% of outstanding shares, capital is being deployed in an accretive fashion.
- Continued moves to enlarge brand portfolio and international presence will increase Lifetime's addressable market.
Qiagen: Why I Prefer Waiting On The Sidelines
- Qiagen tries to drive revenue growth by boosting the global adoption of QIAsymphony and QuantiFeron-TB.
- It is highly unlikely that these products would drive shareholder value in terms of earnings and share price growth.
- The company is increasingly taking inorganic route for generating cash, which is worrisome.
- The management needs to understand that there is a fine line between responsibly growing shareholder value and doing whatever is needed for generating cash.
Hotel Industry: Competitive Factors And Discussion Of Hotel Franchisors As An Investment Opportunity
- Both hotel franchisors and franchisees experience inflation resistant growth, helping to deliver positive real returns to investors.
- Hotel franchisors exhibit strong competitive advantages and impressive returns on capital, especially amongst market leaders, making a strong case for investing in the sector.
- The hotel industry goes through regular, predictable cycles, which affects the number of guests staying at hotels, the revenue per room, and growth in the number of hotels.
- This market cycle dramatically affects the profits of hotel owners due to their high level of operating leverage, but has a diminished impact on franchisors.
- Many of the top hotel franchisors have reached lofty relative valuations, and would warrant a pullback before purchasing shares, with IHG presenting the best buying opportunity.
Immune Pharma Tackling Orphan Disease Bullous Pemphigoid
- Bertilimumab is a first-in-class fully human monoclonal antibody that is directed against eotaxin-1, a potent chemoattractant and activator of eosinophils.
- Eosinophils are implicated in the inflammatory changes seen in various inflammatory disorders such as inflammatory bowel disease (IBD), asthma, and dermatological diseases such as bullous pemphigoid (BP).
- BP is an orphan dermatological disease that affects approximately 12,000 people in the U.S. each year.
- Eotaxin-1 plays a role in the recruitment of inflammatory cells to skin lesions in patients with BP and represents a novel therapeutic target for this disease.
EMC Corp.: 20% - 25% Upside In 1 Year
- Trade: Long EMC Current price: 26.75 Expected price: 33 Upside: 23% Time: 1 year.
- Thesis: Cheap valuations, EMC on a stand-alone basis (excluding VMware) is significantly mispriced, huge cash pile, share buybacks, market leader, taking market share from competitors, sticky business, focus on innovation.
- EMC is trading at a discount even on a very conservative basis and the market is ignoring its competitive advantages including quality, breadth of offerings, strong distribution, after sales service.
Small Is Beautiful: My Favorite Bank Stock Has A Strong Quarter
- One of the country's strongest community banks, Hingham Institution for Savings showed strong growth in Q1 on several metrics.
- The stock is cheap on price:book as well as price:earnings, and has a competitive yield.
- Investors are warned that liquidity in this equity is poor.
La Quinta's IPO Should Provide An Extended Stay Of Share Price Appreciation
- Bad luck with IPO timing could price in a share price discount that would make a new position attractive.
- LQ's majority owners, Blackstone, bring an incredibly valuable active management to the company that will pay huge dividends.
- LQ's growth strategy is well planned and I expect them to execute it effectively.
Ziopharm: Attempting To Rise Again In A Crowded Space
- A year removed from a significant trial disappointment, Ziopharm is attempting to once again gain traction.
- With enough cash to carry the company through mid-2015, Ziopharm's upcoming phase two data release could be a massive boost to future prospects.
- With innovative therapeutic technology in its corner, Ziopharm's lead compound could make a noteworthy impact on considerable markets.
- After restructuring in mid-2013, Ziopharm has become leaner and meaner, putting it in a better position to achieve.
- A considerable amount of ambiguity surrounding Ziopharm's 2013 trial failure leaves many investors skeptical and suspicious.
Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story'
- The article provides illustrative valuation analysis of Kodiak’s drilling inventory, including risks and upsides.
- The stock is priced very reasonably relative to its value potential.
- The transition into full development mode and substantially reduced operating risk should help to close the gap between the stock price and the underlying NAV.
1347 Property Insurance Holdings: An IPO Left For Dead With Upside Of 50%-100%
- National property insurers continue to reduce their exposure to Louisiana and other coastal markets.
- Premiums have skyrocketed in certain states allowing Maison to cherry-pick high margin policies.
- The volatile insurance climate as it pertains to more weather losses has been overrated and biased by Katrina.
- Lower reinsurance rates should be a nice tailwind in the near-to-medium term.
Halcon Resources: Strong Read-Across From Goodrich's TMS Result
- The outstanding Blades 33H-1 well result in the TMS reported this morning by Goodrich Petroleum has a strong positive read-across to Halcon.
- Halcon's first TMS well, the Horseshoe Hill 11-22H-1, is expected next month, and another five wells are planned to be spudded by July.
- The Blades well provides a potent catalyst for Halcon's stock. Another half a dozen offset operator well results are expected within two months.
Citigroup: High-Risk, High-Reward Turnaround
- Citigroup was severely wounded by the financial crisis, and was rescued by the U.S. government.
- Much of the repair to the balance sheet is done, but the task remains incomplete. Risks remain elevated.
- But there is light at the end of the tunnel. After that, it's a matter of realizing their true earnings potential.
- The stock is attractively priced at a 17% discount to tangible book value.
Crown Holdings: Boring, Safe, And Hugely Profitable
- Crown Holdings is a high quality company operating in an industry with high barriers to entry.
- Costs in the beverage division are lowest in the industry, incremental return of 20% on past ten years of capex.
- Business is highly cash-generative, sells at significant discount to the amount of cash that will be generated over the next five years.
- Investing heavily in growth in developing markets. Acquisition of Mivisa supports these attributes.
Is Now The Time To Buy Atrion Corporation?
- Atrion Corp. has historically been an outperforming company.
- Atrion's multiple markets and product diversity provides increased stability.
- Long-term contracts have helped provide revenue consistency.
- Despite solid performance, the stock may be outpacing the company's growth.
Stalwart Tankers Should Delay Their IPO Indefinitely
- STST operates with massive levels of debt and leverage that make this a risky position.
- STST will need to raise debt, or dilute shareholders on a regular basis going forward.
- STST will need a flawless execution of their growth strategy and help from financing to remain solvent.
Weight Watchers - Bear Side Of The Argument
- The company seems to be in permanent decline in its offline segment, and the number of subscribers in online business have also started to drop recently.
- Due to intense competition from free aps, as well as network effects of similar type of businesses, the rebound of Weight Watchers is very unlikely.
- Management has not acted in the interest of common shareholders, are selling stock right after option conversions and have only immaterial holdings in the company.
- Weight Watchers' significant annual interest payments are likely to consume majority of the earnings in the upcoming years, and might even cause liquidity concerns.
- Currently, there does not seem to be any upside for long investors.
Franklin Wireless Has An Unannounced Megadeal
- Apparently, the company is manufacturing devices for Verizon.
- Q1 earnings will likely take off.
- The company only trades at a small premium to cash on hand.
Northwest Pipe: Addition By Subtraction, Street EPS Estimates Missing The Full Benefit
- The divestiture of Houston and Bossier City OCTG pipe mills removed a money losing business from the Tubular segment, allowing the Atchison mill’s performance to shine.
- My pro forma ex-items EPS for 2013 improves by $0.62, from $1.75 to $2.37.
- NWPX’s future earnings contributions to be primarily from Water segment. Outlook for large projects with significant potential order profiles looks the best in years.
- Water peer group valuation suggests NWPX currently trades at over a 40% discount based on P/E multiples for my 2014 EPS estimate of $2.51.
- Management continues to successfully transform the return and earnings profile of this company. With increased capital flexibility post-divestiture, look for future tuck-in acquisitions in the Water segment.
IAC InterActive Is Unlocking Value By Potentially Breaking Up With Match Group
- IAC InterActive provided a "tell" to investors in December 2013, portending a spin off of its online matchmaking and ancillary businesses into the Match Group.
- Consolidated results are obfuscating the underlying value in the Match Group.
- Management has a history of effecting spin offs, and appears poised to separate its crown jewel from the rest of its digital properties which face tougher competition.
Sportsman's Warehouse: No Cash, No Credit, And Ownership Ringing The Register
- SPWH is leveraged to obscene levels, and will continue at high levels after the IPO.
- SPWH's majority shareholder has taken significant amounts of risk off the table for themselves, while maintaining their top-end potential.
- SPWH's CAPEX and borrowing fueled growth strategy has little room for error.
Catalysts Present For Northeast Community Bancorp's 2nd-Step Conversion Offering Attractive Risk-Adjusted Returns
- Mutual thrift conversions continue to provide investors a time-tested way to earn attractive risk-adjusted returns.
- Northeast Bancorp management miscues have led to poor performance post first-step conversion.
- Joseph Stilwell's continued lawsuit provides a catalyst to add additional board members who will institute a second-step and better shareholder value in the near term.
Eagle Warns Shareholders Of Possible Lower Share Price From Dilution And Substantial Doubt In Its Ability To Continue As A Going Concern
- Eagle Bulk Shipping is working under waivers for violation of debt covenants to avoid default, which require agreement to terms of a Restructuring by April 15.
- The company's March 31 10-K is clear that unless they agree to restructuring terms by April 15 they have "substantial doubt about our ability to continue as a going concern."
- The company states: "it is expected that any Restructuring transaction would be substantially dilutive to the Company’s current shareholders, driving down price per outstanding share substantially."
Nexstar Broadcasting: Growth Story Unraveling
- Nexstar is worst hit due to new joint sales agreement (JSA) regulation as it has high JSA revenue exposure.
- Nexstar's growth story is likely to unravel as it has to adjust to new regulation.
- My base and pessimistic case point to a steep 31-45% downside potential.
- Catalysts to de-rate Nexstar substantially are 1) its eventual disclosure of sizeable JSA sales exposure 2) growth story unraveling and 3) some pending acquisitions not obtaining regulatory approval.
- Market-neutral pair trade strategy: Short Nexstar, Long Gray Television.
Tronox - Time To Focus On The Future
- Tronox is in a solid cash position.
- The TiO2 industry is stabilizing.
- Tronox could make an acquisition or be acquired.
- Nice reliable $1.00 per dividend per share.
- Tronox’s bankruptcy and litigation are now a thing of the past.
Intercept Pharmaceuticals (Part II): The Short Story Is Over, Time For The Long Story
- Now that the crowd euphoria has faded, we amend our bearish view on Intercept and currently view it as a compelling asymmetric trading opportunity from the long side.
- Positive top-line Phase 3 POISE data that substantially derisks the FXR pathway in chronic liver diseases increases our confidence in the pharmacology of OCA in chronic liver diseases.
- Intercept’s pipeline has been progressively derisked during 1Q14, while the share price has continued to decline 33%, in our view represents a mispricing of the fundamentals of Intercept.
- In our fundamental assessment, Intercept has a fundamental floor value of $257/share and we view this as a favorable risk/reward trade setup leading into the EASL conference.
The Cheapest High Growth Stock In The S&P Is... Rowan Companies?!
- Earnings and the stock have been stuck in a funk. But that all could be about to change.
- RDC is the cheapest stock in the S&P 500 right now (on a 1yr forward PE basis).
- RDC has the 16th highest 5yr earnings growth expectations in the S&P 500.
- The stock currently trades just above rock-solid historical support.
- The result is a massively positive asymmetric 18-month trade with an attractive entry point right now.
Brazil Fast Food Corp. Remains Undervalued Despite More Investor Awareness
- Details in the 2013 take-private proposal indicate long-term value.
- BOBS is a fundamentally strong company, offering an attractive franchise business.
- It's operated by a well-incentivized management with a track record of creating shareholder value.
- Its market valuation does not reflect its underlying fundamentals.
Premier Financial Bancorp: A Community Bank To Watch Going Forward
- Community Banks will profit from pick-up in lending.
- The regional banking sector continues to undergo consolidation.
- Premier Financial Bancorp, is a well run acquirer that is undervalued compared with peers.
Next Chapter In The Acorda Story Will Be A Page Turner
- FDA approval of Plumiaz (3Q14 or earlier) is a key 2014 event that stands to boost revenues by 30%+.
- Advancing clinical development of Ampyra (dalfampridine) in post-stroke deficits may support multi-factored growth of leading asset’s revenue capabilities.
- The early-stage rHIgM22, a remyelinating asset for the treatment of MS, could be a breakthrough, and initial proof of concept is due in early 2015.
- Although shares remain in-line with levels when initially recommending Acorda, we still view the company as an attractive investment that continues to build out its revenue base through product diversification.
Tesla - 20 Key Risks That Longs Are Ignoring
- Tesla, considering its nearly $27,000,000,000 market cap, is priced to perfection.
- When a company is priced to perfection, the smallest change in investor sentiment can have large consequences on the stock price.
- Longs currently are ignoring 20 key risks facing Tesla; once the market rationally assesses these risks, Tesla's stock will be repriced much lower.
- Even if each risk has a 90% chance of NOT occurring, the odds that all 20 risks will not occur is only 12%.
JPMorgan: When To Nibble, When To Bite
- The earnings season is upon us, and JPMorgan is due to report at 7 a.m. ET on Friday.
- Prices climb in anticipation of earnings, and adjust to new information after the earnings release.
- JPMorgan is priced for perfection. And in this post, I set out nibble and bite levels which ought to tempt buy and hold style value investors, should the opportunity arise.
Rio Alto: Potential Double, Limited Downside
- Market has failed to account for excellent resource update in February.
- This resource update gives RIOM the financial flexibility to build Phase II of the La Arena mine without diluting shareholders.
- Phase II feasibility study results this summer offers catalyst for sudden repricing of stock higher.
- The market currently values Phase II at nearly zero. As such, Phase II is a nearly free call option on 4 billion pounds of copper/4 million ounces of gold.
- Existing operations are worth roughly $2/share, limiting downside even if Phase II doesn't work out.
Gaiam Keeps Unlocking Value And Accelerating Organic Growth
- Gaiam continues to unlock balance sheet value by divesting and utilizing NOLs, while still squeezing in a small, targeted acquisition.
- The company achieved 20% total organic sales growth in 2013.
- Gaiam includes a Netflix-like streaming TV unit with 100% sales growth expected for 2014.
- Based on sum-of-parts valuation, the spin-off of video streaming subscription unit should result in at least 17% higher total stock price due to P/S expansion.
- However, Gaiam in undervalued even without the spin-off.
Free At Last: New Pure-Play Energen's Permian Basin Push
- If 2014 is a transition year, what does 2015 look like given raised Midland Basin reserve estimates and Energen's Midland push?
- Ditching the gas utility makes a new pure-play identity for Energen, a positive catalyst for future growth.
- Compared to other E&Ps, especially smaller firms, Energen has diversified energy assets that hedge for both oil and liquids plus gas opportunities.
- Value-added assets like the Central Platform and San Juan Basins offer other avenues for growth.
- After the sale announcement, target price expectations have been raised for Energen.
SodaStream's Yonah Lloyd Participates In Q&A Session With Investors
- First Ever Q&A session for Seeking Alpha participants with SodaStream management.
- SodaStream's Yonah Lloyd discusses various topics with investors.
- Seeking Alpha participants are empowered to ask SodaStream related questions directly with Yonah Lloyd.