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  • GrafTech - A Fox To Guard The Henhouse? [View article]
    As you say: the actual problem is the physical borrowing of stock. M would be the natural lender. He could be providing the shares at a low rate to the party he swaps returns with. However, the proxy material appears to say that no arrangement regarding loans has been in place in the last year. Pls note: other statements refer to a period of two years. Borrowing stock from the market rather than from M himself is certainly more costly.
    Mar 25, 2015. 07:13 AM | Likes Like |Link to Comment
  • What Does ECB QE Mean For Germany's Two Largest Banks? [View article]
    I am always on high alert when US investors become the driving force behind a bull or bear market in the DAX....
    Mar 23, 2015. 03:56 PM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    - France is likely the additional restructuring in ES that they guided for; charge of $10m in H1; savings of $5m annually (or 10m cost for 50m to 70m value gain).
    - the note to be refinanced carries a 7% interest charge. I doubt it will be more after refinancing. They might need to refinance less than 200m (subject to FCF generation this year).
    - Graphene is very old hype; never gave anything on this; completely priced out; if anything an option I would not pay for.
    Mar 19, 2015. 03:25 PM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    I said nothing re a short position. But I have raised the question whether M has been hedged on his stake with a total return swap. A total return swap is actually a contract with respect to the RETURN of a security. M declared in proxy solicitation material that there have not been any contracts with respect to the SECURITIES of GTI. Whether this declaration does or does not cover a total return swap is something to be judged by a legal expert or to be clarified by M. If M has had a total return swap on, the contract party would have bought shares to reduce its own short position while the contract is step by step unwound. M's acutal holding would not have changed nor would he himself have purchased any stock. Short interest is down some 7.5m shares since Sep 30, 2014. Holdings of ten largest shareholders are down close to 10m shares in the same period. In case there has been a total return swap, it would have been stupid for M to buy stock in the market (create an announcement effect and a rising share price and thereby reduce the profit on the total return swap). That means if there has been one, it is first winding down the swap, then buying in the market. Not the other way around.
    Mar 19, 2015. 03:13 PM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    CLARIFICATION: Safe GrafTech filed (within its proxy solicitation material) the following declaration: "...none of the members of Save GrafTech, or the persons listed on Annex A of this Proxy Statement, including the Nominees, ... is, or was within the past year, a party to any contract, arrangement or understanding with any person with respect to any of the Company's securities including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies. IMPLICATIONS: The article above suggests that the short interest in GTI has exceeded the stake of Daniel and Nathan Milikowsky during the last proxy fight and during the sell-off in the shares in September 2014. It also points out that short interest exactly matched the stake of the Milikowsky's on Sep 30, 2014, ie at a time when short selling traders should have closed their shorts to realize their profits. While the factual statements remain valid, the declaration of Safe GrafTech, if correct, appears to be incompatible with the actual existence of a total return swap. This said, the declaration does not alter the fact that the representation of the Milikowsky's is already disproportionate to their shareholding and that the Milikowsky's interests are not alligned with outside shareholders given their position as a creditor to the company and a likely intention to expand influence beyond pure control of the board of the company. In addition, I completely fail to see how the boards' sector specific knowledge could be raised by adding the proposed candidates of Mr. Milikowsky, thus substituting current directors with a steel industry background or electronics industry background (relevance for GTI's ES business) with candidates whose proficiency is completely unrelated to the business of GTI.
    Mar 17, 2015. 09:47 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    Funny logic??? He needs votes to win the proxy fight. He has very little equity exposure as of now. And you would buy into GTI AFTER he won the proxy fight? I sold at >$11 after he won last year.
    Mar 16, 2015. 10:02 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    Let's put it this way: Given that M was 1/3 paid in stock for selling Seadrift and C/G Electrodes to GTI and given that he is now interested in taking over complete control, we are talking about the same person benefiting from extrems in the share price. This blaming game on management serves a purpose, in my view. And the arguments made are false on top: I am also critical of management holdings in GTI, but I am not happy about management getting so much stock within their compensation schemes. Their selling is program selling to pay for taxes upon vesting of shares. Having so much stock in GTI as a concentrated position does not necessarily argue for adding additional private funds. Every investment advisor would advise otherwise. All these arguments have been made bevor under the name of Gloria :o)

    I wonder whether the rise in the price of the price in the GTI note maturing 2019 from c $80 to c $90 is an idication for future performance of the stock ...
    Mar 9, 2015. 03:40 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    Indisputed that stock is risky; downside is max 4$, upside 8-12$ over three to four years. In my view, stock is much higher risk with M in control. I will be out if he wins the proxy fight. Management is not as bad as you think. Randy responds to M's letter is excellent. Again, management removed the refinancing threat for Nov, they did so as swift as you could have hoped for. They took tough action on savings. What is needed is a bit of tailwind on the demand and pricing side. If they get it now and we start with raw mat costs for new product from such a low level, we could get a really nice run. Again: a bit of tailwind would not hurt.
    Mar 7, 2015. 09:16 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    On inventory it is FIFO. H1 margins will be adjusted flat at best (Q4 was adjusted higher than expected). Margin recovery will come from H2. The proxy fight is until May and management will certainly see investors. I cannot imagine a better combination to market the company. Price at its lows, a fight for control, and a recovery story for a restructured business. I do however not know what story management will tell.
    Mar 6, 2015. 12:12 PM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    My view on Nathan has been made in all detail. If he wants control, he should buy the shares at a reasonable price. Otherwise I bet on a turnaround.

    The stock is were it is for the mistakes of the past. Management cannot change the storm they are in at this point. They did take cost out, the refinanced and removed the risk from the Milikowsky note. Being backward integraded implies more inventory and is a disadvantage when prices go down. We had prices -28% since 2012. Inventory needs to be worked through for lower raw materials each time. This effect has been taking away some 4-5% of margin per year. When the downside trend in prices comes to an end (ie just stabilisation), this comes back. If prices move up, all moves the other way (ie tailwind) when prices go up and raw material works through inventory with a lack. This business runs full capacity once the inventory adjustment is through. Slow booking now is easily explained by slow EAF steel production in Q4 (falling steel prices, destocking of end users and trading; and little purchases in g/e due to expectation for falling raw mats and unwillingness to pay up):

    Catalysts:
    1) Scrap prices dropped off a cliff in US and Europe; rel competitiveness to BOF improved
    2) Euro helps European steel; if prices stabilise, you will see inventory restocking of steel traders and consumers on top of normal demand growth.
    3) Italian and Spanish long-term yields were some 6-8% only 2.5 years ago; non residential contruction will recover on record low rates and recovering loan availability.
    4) G/E make up 2-3% in EAF steel production costs; a 10% recovery in prices does not matter in terms of overall costs of steel making when demand and steel prices recover (scrap steel accounts for some 77% of costs)
    5) aggregat demand for g/e is extremely price inelastic; suppliers act stupid responding to demand weakness with price competition as they confuse weak aggregate demand with market share loss
    ; price discipline will return with demand recovery and better utilisation.
    6) The China story on top of this all.

    This thing is high risk. Very high risk in the middle of the storm. But if things fall in place, GTI is a multi bagger.

    So what argues for Milikowsky????? That he has taken over Seadrift and C/E when they were almost bankrupt and sold them at a G/E price peak to GTI? That the deal was agreed in the spring, 1/3 of the price paid in shares, and share price was bid up from 14 towards 20 until closing of the deal?

    What again was the most remarkable sentence on moral in the movie Wallstreet...?
    Mar 6, 2015. 11:43 AM | Likes Like |Link to Comment
  • GrafTech International (GTI) Q4 2014 Results - Earnings Call Webcast [View article]
    See comment in http://seekingalpha.co...
    Mar 3, 2015. 03:15 AM | Likes Like |Link to Comment
  • GrafTech International's (GTI) CEO Joel Hawthorne on Q4 2014 Results - Earnings Call Transcript [View article]
    So what should management do differently today, in your view? Milikowsky is certainly no alternative! http://seekingalpha.co...
    Mar 3, 2015. 03:13 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    The call held several not so nice things: pricing was weaker than thought (indication -7 to -8% pre FX) and GTI's targeted volumes (and capacity use) also appear weaker than I would have expected. If lower decant oil reduces needle coke costs c30%, this might still be some 3-4% underlying margin improvement (this is accounting for the cost cutting). Q1 will be a loss (expected, due to higher cost inventory that needs to flow through). It is obvious that Europe is the weakspot in terms of demand. While I am bullish on a European recovery from a very low base level as a swing factor, it is clear that management is still very cautious in view of client activity and slow bookbuilding. But this alone is not the story at this point. The story is what Milikowsky will do. I continue to believe that M will lose the proxy fight unless the buys sufficient shares and votes. And this suggests to me that there is asymmetric risk return in GTI at this point (although the risk profile remains high).
    Mar 2, 2015. 01:12 PM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    I'll send you a message
    Mar 2, 2015. 10:12 AM | Likes Like |Link to Comment
  • GrafTech - A Fox To Guard The Henhouse? [View article]
    (1) company is out of quite period; and in the proxy fight now.
    (2) Old guidance was for FY loss of c218. On top are 66m after tax for goodwill impairment Seadrift = 284m; reported 285m loss; so no additional negatives.
    (3) Tangible bookvalue per share is $4.29 ps and BVPS is $7.38. Seadrift goodwill impairment could have been everything up to 495m. It was 76m, which is a huge threat out of the way.
    (4) Additional credit line 40m and revolver give flexibility to deal with Milikowsky; positive as well, I would not have had a problem to see a bit more so.
    (5) changes to R&D allocation, but improved margins in both IM and IS in Q4; good as well.
    (6) Disappointing to me: I would have expected a somewhat stronger revs recovery in ES (wait for call for infos), but margin improvement on the back of cost cutting, production line closure encouraging.
    (7) Bookbuilding in IM is slow (as expected due to oil price weakness); EBITDA guidance for H1 only; H1 suffers from higher cost inventory flow through.
    (8) Inventory flow through is a huge swingfactor for margins if and when negative pricing trends reverse.
    Mar 2, 2015. 10:11 AM | Likes Like |Link to Comment
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