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  • Does The ECB Finally Get It? What This Means For Deutsche Bank [View article]
    I fear what we get is rising lending rates on the back of a collapse in financial markets. This whole game is insane, in my view. Central banks try to fight deflation (which in my view is essentially excess capacity) by trying to stimulate demand artificially. We will not heal the real economy and its deficiencies by putting the financial system at risk via overleveraging again. And that is what we do.
    Jan 23, 2015. 12:06 PM | 1 Like Like |Link to Comment
  • Does The ECB Finally Get It? What This Means For Deutsche Bank [View article]
    Rates are too low to make money. You get a mortgage in Germany (10y) for 1.5%. So where is the margin in this for a bank? What you add to your balance sheet is essentially risk pure. Risk costs (provisions are low), earnings are low, and business you add brings risk w/o buffer. This is nonesense for Germany. I does help in the south of Europe.
    Jan 23, 2015. 12:00 PM | Likes Like |Link to Comment
  • Does The ECB Finally Get It? What This Means For Deutsche Bank [View article]
    Liked your article although I would not agree on all aspects. I am German. I dislike QE as a ex Bundesbanker. QE works better in US, UK as a higher share of lending is securitized. It is all on banks' balance sheet in Europe (c80%). And Jain is actually right that low rates hurt, and you may actually be right that rates will go up. To the extend that levarage rules are limiting banks to lend, buying bonds in QE helps (bond gains + leeway) to lend more to the private sector. If risk weighted assets are the bottle neck, it does not really help. Sovereign bonds are assumed to be risk free. Corporate + private household debt matters. Still, there should be a benefit, and it is for Sovereigns to have lower refinancing rates and thus a bit more spending leeway... Back to Jain and your point: we need to return to higher rates for banks to make money. As long as banks get money for free from the ECB etc, the whole deposit business is worth just the provision revenues you can generate. If banks started to earn money again, their capital would grow and their balance sheet could...
    Jan 22, 2015. 03:49 PM | 4 Likes Like |Link to Comment
  • More on GrafTech's Q3 [View news story]
    GTI lost 15% in three days, sharpest decline on Friday after Holiday when most Investors were out (and last trading day in November). There was another bit of News beside oil (see comment below). Comp renegotiated revolving credit facility. The max amount was cut from 470 to 400m, some of the covenants relaxed. First read is 70m less (which is good News for shorties). Second is: they could not have used the old max anyway due to covenants. Asked IR what the Change in available was. Unused end of Q3 was 277, she said on New Terms it would not have been materially different.
    Dec 5, 2014. 01:43 PM | Likes Like |Link to Comment
  • More on GrafTech's Q3 [View news story]
    Lower Input costs are good as Long as you are able to hold selling Prices steady or to raise them. Graphite Electrode Producers are currently in the process of negotiating Prices for next year. The two market leaders, GTI and SGL have publicly stated that they ask Clients for a 10% Price increase to recover some of the 20%+ decline over two years. Both Companies have cut capacity by 60kMT, which is 11% of capacity outside China (6% including China). With such a sharp drop in oil, Clients will likely be very slow to accept Price hikes, ie the bidding process will likely be very slow, challenge Price discipline and it is not at all certain where we will end. Two things that are positive however: Both GTI and SGL have guided for Q4 about flat on Q3 (normally Q4 is the strongest quarter on sales) and GTI had announced in Sep that they expect 5-10% of H2 sales to be shifted into next year (GTI guided down and planned for lower production, also to reduce inventory itself). No graphite electrode Producer is currently making Money. they are all sitting in the same boat, and Clients appear not to have gigantic inventory. If demand surprises to the upside (things not as bad as anticipated), we could be fine.
    Dec 5, 2014. 01:31 PM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    On Q3 2014 results:
    (1) Guidance for full year is unchanged
    (2) Write-offs due to GT Advanced Technology bankruptcy filing of c$5 million: this had no analyst in his estimates and explains 100% of the so perceived miss.
    (3) Extent of drop in thermal management for consumer electronics was enormous (-26%), but should we expect Samsung to go out of business? Japanese Wacom reported tonight that mass production of Samsung Galaxy Note 4 had been shifted out. Samsung reported they reduced tablet production to clear excess channel inventory, and AAPL replacement demand will also, in my view, accelerate upon innovation (iPad Air Pro next year). Share price drop following Sep 24 warning wiped-out complete value of ES-business.
    (4) Management said decant oil prices (key raw material for own needle coke production) should fall in line with crude oil prices. GTI tries nonetheless to establish price increases in graphite electrodes after sharp drops of recent years. I expect more modest price increases than the 10% GTI is dreaming of, but:
    a) price increase in G/E
    b) lower decant oil and therefore needle coke costs (41% of COGS)
    c) high capacity use due to capacity cut by 60kMT, plus additional cost savings.
    (5) A core shareholder, whose board influence is not backed by actual capital exposure, and a short-interest that needs to be covered. GTI - About to be taken over? http://bit.ly/1rlWI3Y
    Oct 31, 2014. 11:04 AM | Likes Like |Link to Comment
  • More on GrafTech's Q3 [View news story]
    On Q3 2014 results:
    (1) Guidance for full year is unchanged
    (2) Write-offs due to GT Advanced Technology bankruptcy filing of c$5 million: this had no analyst in his estimates and explains 100% of the so perceived miss.
    (3) Extent of drop in thermal management for consumer electronics was enormous (-26%), but should we expect Samsung to go out of business? Japanese Wacom reported tonight that mass production of Samsung Galaxy Note 4 had been shifted out. Samsung reported they reduced tablet production to clear excess channel inventory, and AAPL replacement demand will also, in my view, accelerate upon innovation (iPad Air Pro next year). Share price drop following Sep 24 warning wiped-out complete value of ES-business.
    (4) Management said decant oil prices (key raw material for own needle coke production) should fall in line with crude oil prices. GTI tries nonetheless to establish price increases in graphite electrodes after sharp drops of recent years. I expect more modest price increases than the 10% GTI is dreaming of, but:
    a) price increase in G/E
    b) lower decant oil and therefore needle coke costs (41% of COGS)
    c) high capacity use due to capacity cut by 60kMT, plus additional cost savings.
    (5) A core shareholder, whose board influence is not backed by actual capital exposure, and a short-interest that needs to be covered. GTI - About to be taken over? http://bit.ly/1rlWI3Y
    In my view, the drop in the share price has nothing to do with results. It was pushed up towards $5 on purpose to open a short-trade into results (which was hedged with $5-strike calls. These Calls are still around and can be used again, when successful short-trade is closed and share price goes up again. It is time the SEC has a look on trading behavour in this stock.
    Oct 31, 2014. 10:53 AM | Likes Like |Link to Comment
  • GrafTech - About To Be Taken Over? [View article]
    Short interest per Oct. 15 delined 4.6m shares to 10.7m from Sep 30 to Oct 15, and SI is down 8.2m shares in the time Sep 15 to Oct 15. The short interest per Oct. 15 is now 4.6m below the Milikowski stake of 15.3m and I would expect SI to have fallen further since the reporting date. GTI will publish Q3 results on Thursday (Oct 30). It will be interesting to see whether Management will buy shares after the release of results. They are likely not in a position to do so ahead. Insider buying at a time of low visibility due to severe restructuring would likely provide strong support for the share price.
    Oct 27, 2014. 02:49 PM | 1 Like Like |Link to Comment
  • GrafTech - About To Be Taken Over? [View article]
    GTI short interest per Oct 15 is due for release on Friday, Oct 24 (after close of trading). Look for a reduction in short interest, which stood at 15.3m (matching the Milikowsky stake) per Sep. 30, but beware that SI could well be unchanged although stock is collected for closing this short.
    Oct 22, 2014. 11:46 AM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    I prefer driving in a bus where it is not up to the driver to throw me out of the vehicle somewhere on the way. This bus would potentially reach the destination I wanted to go to, but I might find myself sitting somewhere I never wanted to be. If M has been fully hedged on its stake, but claimed he is the one with the most skin in the game when going for votes, if he has also misrepresented the performance of old management in order to be elected, then I would not feel comfortable to be completely dependent on him. He needs to buy shares to get actual exposure to the company. If there are other buyers that challenge his dominance, he will have to buy at higher prices to underpin his claim for control with a sufficiently strong holding. If other holders are indifferent to his dominance on the board, he might find opportunity to collect stock on the very cheap. I prefer a rising share price trend and a board that is in the position to control M squared (Management, Milikowsky).
    Oct 21, 2014. 11:34 AM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    IM capacity cut was in place w/o M (not justified for M to claim credit as GTI competitor SGL acted likewise). Two other restructuring steps mirror M suggestions. Impairments and share Price derating help M if he was hedged on his stake (SI per Sep 30 matched his stake). I do not question that a more active board is helpful. I am however worried about M having too much influence and I cannot believe that this will turn out to the benefit of outside Investors if it is not corrected. For now M Needs to remove hedge and to build up his stake. I hope the larger mutual funds get this and wake up in Terms of the board issue.
    Oct 21, 2014. 03:01 AM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    Dear Stan, every single of your arguments was equally valid when the stock stood at $8 a few weeks ago. M is not taking this effort for you and me. He is taking this effort for himself. And he is not aiming to pay more premium than necessary. If you control 3 in 7 seats and you have one other director on your side - however you bring this about - you have control of the board. And there are decision that will be taken differently when the yardstick is M's as opposed to the benefit of all shareholders. To put it pluntly: with M having too much power I might be offered $6 or $7 in a bid (if I am happy). IF IM recovers and ES does grow, the stock could go into the teens (admittedly with a far different investment horizon).
    Oct 20, 2014. 10:40 AM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    Get it: Milikowsky is part of the problem and not part of the solution. However, he is also part of the attractive entry opportunity which we would not have seen w/o him. If remaining fund managers wake up, we might end up with more investors than M going for the shares. This is the upside. People need to recognize the value creation that they could be part of and that they won't be part of if M stays on the board. Action required.
    Oct 20, 2014. 09:21 AM | Likes Like |Link to Comment
  • GrafTech: Cost Optimization, Hidden Asset, And Panic Selling Offer Outstanding Upside For Contrarian Investors After 60% Sell-Off [View article]
    The Problem is Milikowsky on The Board. The risk is him collecting stock (whatever Way)or trying to Take comp private at disadvantage of outstanding shareholders. If you Sell ES as a second step The comp has very Little net debt (Change in Control could require Sellin ES). For This, M Needs to have a very positive Long-Term View on IM Business. I Share This positive View and I want to participate in The upside. And I Do not want to See ES Sold, but to form a newco with another Player that benefits both parties. Share Price Needs to go up and mutual Funds Need to remove M as quickly as possible.
    Oct 19, 2014. 05:18 PM | Likes Like |Link to Comment
  • October Is Not Too Cold For Shorts [View article]
    This title is really great!
    Oct 17, 2014. 05:17 PM | Likes Like |Link to Comment
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