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Arohan

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  • Full House Resorts: A Casino Operator That Might Be A Royal Flush [View article]
    Looking at the comments, it is fairly obvious why this company is as undervalued as it is today.

    A secondary is not always dilutive. They do get $1 in cash for every $1 of stock they sell. It is not like they are issuing stock for the heck of it. Whether it is dilutive or not depends on the use of the funds and how the stock is being valued in the market.

    There is significant value in this company based on the assets they have acquired over the years and the prices they have paid. It is a balance sheet story where the parts are greater than the whole.
    Jan 17 07:13 AM | Likes Like |Link to Comment
  • Maxygen: A Free Option If Ever There Was One [View article]
    Shareholder approved. As of Aug 29, the stock will be worthless after the liquidating distribution is paid and you will be unable to trade it as the company closes its stock transfer books and delists. I assume there will still be some market for its stock otc but the liquidity will dry up. The only claim that will remain is a potential $0.09/share in contingency reserves which is apparently worth 4 cents according to the market today.

    This is the end of the road.
    Aug 13 01:12 PM | Likes Like |Link to Comment
  • Maxygen: A Free Option If Ever There Was One [View article]
    MAXY plans to delist its shares and is going forward with dissolution subject to shareholder approval within the next week.
    Aug 12 11:58 AM | Likes Like |Link to Comment
  • Why Friedman Industries Is My New Pick To Click [View article]
    Sure Jae. Look forward to what you conclude
    Aug 12 11:56 AM | Likes Like |Link to Comment
  • Why Friedman Industries Is My New Pick To Click [View article]
    You are welcome MWinMD! Commodity businesses can be fickle and it is good to insist on a larger margin of safety for these kind of businesses. I am glad I could help.
    Jul 29 12:16 PM | 1 Like Like |Link to Comment
  • Why Friedman Industries Is My New Pick To Click [View article]
    Would like to elaborate on the after market equipment valuation.

    This is primarily the result of the long term trend in the steel industry as the steel companies of all types in the US have declined in numbers over many decades and most of the steel production has moved overseas (China, Russia, Korea, etc). As a result, there is a pronounced glut of the used equipment in the US market resulting from business closures with very few buyers and they mostly tend to get scrapped.
    Jul 25 01:46 PM | 2 Likes Like |Link to Comment
  • Why Friedman Industries Is My New Pick To Click [View article]
    In the private market, steel service companies this size tend to sell for 2-3 times EBIT or tangible book value whichever is greater, this being a commodity business. Primary reason being the steel price volatility and the bloated scrap market that values the equipment at pennies for a dollar of book (if you go for liquidation valuation). The LIFO book versus market gap can flip from being an asset to being a liability and back within a few months. Knowledgeable acquirers know this and will not put too much stock in the inventory valuation drift.

    In my previous life I have bought, run and sold whole steel companies like this. It is a hard business to make a buck when you are smack in the middle of the value chain as you have no control over prices, supply or demand. If any value is created, it is mainly by gaining economies of scale and/or scope. I looked into FRD 6-7 years ago and it looked attractive then as well but knowing the market dynamics I passed on it.
    Jul 25 01:39 PM | 2 Likes Like |Link to Comment
  • Maxygen: A Free Option If Ever There Was One [View article]
    The free option on remaining asset is worth zero. They are not going to spend any more time marketing G34.

    The only value you might have is an additional $0.09 from the current prices and that is not guaranteed. It is a bad idea to tie up your money in this stock at the current prices.
    Jul 11 08:18 AM | 1 Like Like |Link to Comment
  • Maxygen: A Free Option If Ever There Was One [View article]
    The gap between $81 m in cash and $70 million that is being distributed is for contingent liabilities for any lawsuits that may arise out of prior operations. This leaves very little to none to pay executive salaries if they were not to close shop right away.

    There is also a bunch of employee stock options that are exercisable in few months (I forget exactly when, but it is probably early next year. It is there in the 10-K) which would be highly irresponsible for them to payout given that there is no on going business. The management has been upstanding in returning value to the shareholders and they would wind down the business before the options become exercisable. If they stretch the inevitable end out until the options are exercised, and there is still no deal by then, than it is lawsuits waiting to happen.

    This tells me they are not planning to spend any more time on trying to sell MAXY-G34.

    It is indeed a free option as you state, but you incur the opportunity cost of money you tie up in this stock. Ultimately, the company came out with a press release stating they are closing the business. Not sure if it can get any more clearer.
    Jul 10 07:03 PM | 1 Like Like |Link to Comment
  • Maxygen: A Free Option If Ever There Was One [View article]
    Paulo, I think the time has passed. They spent about a year trying to monetize their asset before handing in the towel and calling it quits.

    Another thing you need to keep in mind is that their expenses run at about $2.7 million/quarter so the value of the cash keeps eroding longer they have to wait. At some point they would figure that waiting longer is detrimental to the shareholder value and I suspect they have already made that decision.

    We took a position in MAXY last year for this option value and sold out when they decided to liquidate taking it as a signal that the end is here.
    Jul 10 04:51 PM | 2 Likes Like |Link to Comment
  • Soon To Be An Energy Stock, Is Freeport-McMoRan A Good Value? [View article]
    yes, of course :-) Wonder if all that traveling was getting on their nerves
    Jan 23 06:30 PM | Likes Like |Link to Comment
  • Soon To Be An Energy Stock, Is Freeport-McMoRan A Good Value? [View article]
    Thanks Derek! All the articles seem to be forgetting Canada, but we shall see. A lot is happening in the sector for sure.
    Jan 16 03:09 PM | 1 Like Like |Link to Comment
  • Soon To Be An Energy Stock, Is Freeport-McMoRan A Good Value? [View article]
    This is concerning of course. There may be a strategic fit so the acquisition in itself may be okay, but who knows how they figured the price they should pay
    Jan 16 03:07 PM | Likes Like |Link to Comment
  • Soon To Be An Energy Stock, Is Freeport-McMoRan A Good Value? [View article]
    Arrgh, I did not even put the ticker for Southern Copper. Must have been added by the editor.
    Jan 16 03:05 PM | 1 Like Like |Link to Comment
  • Gencor Is Cheap - For Good Reason [View article]
    It is a great rundown of the issues Vince.

    Question for you: how undervalued do the shares have to be in your opinion to outweigh the management concerns?

    I have followed the company for a long while and despite the optics it seems to me that holding significant amount of cash was justified in case the highway bill passes (which it did). Any new business will require significant capital outlays so cash adds flexibility. As a shareholder, I would be annoyed if the company paid dividends and then had no way (short of taking debt) to fund capital expenses on the passage of the highway bill, which by the way was expected and anticipated.

    Now that the deed is done, it remains to be seen how the business performs and how the company manages its cash. I am willing to give them a rope for a couple more quarters.
    Jan 15 08:46 AM | Likes Like |Link to Comment
COMMENTS STATS
98 Comments
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