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Bill Simpson  

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  • Chesapeake Midstream: Problems With Potential [View article]
    CHK is in the process of dropping down the Haynesworth assets, announced in December. I believe it closed about a month ago actually. Not surprising that they are not dropping down the second quickly, opting to sell that to third party instead. Still plenty of potential dropdowns from CHK, would look at the Haynesworth dropdown as evidence of CHK's intention to continue to work with CHKM.

    Tend to agree fairly valued in the high 20's on current cash flows. Two things of note though, CHKM came public with a pristine balance sheet, the Haynesworth dropdown is half cash and half debt putting CHKM's total debtload at $250 million post acquisition. 2nd, while I haven't seen anything to quantify the exact number, in the release/filings CHKM states that the Haynesworth dropdown will be accretive to cash flows. With the stronger than sector current balance sheet and the recent dropdown adding to future cash flows, one could make a valid case for the better than sector valuation here.

    expect two things in 2011 - A nice bump in quarterly distribution once Haynesworth acquisition is part of CHKM for a full quarter and another dropdown from CHK in the 4th quarter of 2011. If CHKM dips to 22 1/2, it would mean the entire group would fall pretty hard imo. 27-28 probably fairly valued, 22 1/2 undervalued to sector based on balance sheet and pending acquisition.
    Feb 22, 2011. 05:59 PM | 1 Like Like |Link to Comment
  • 4 China IPOs for the First Week of February [View article]
    LZEN has nearly $1 per share in short term debt. LZEN and other China micros roll this short term debt over as it becomes due making it essentially long term debt. go through the history of LZEN and others and you'll see what they're doing in that regard. No interest in getting into a debate on this stuff, been doing this a long time, just trying to help give an accurate picture of these stocks. They all look dirt cheap on growth and PE metrics, yet the stocks go nowhere. big reason is as noted above, cash flows are tepid at best and they will(including LZEN) dilute like heck going forward to push more aggressive growth.....growth(either organic or acquisition) via cash flows is the ideal, we just don't see that with these type companies. On first glance they appear to be making money hand over fist, reality though is far different. LZEN looks decent for what it is, too many think these China micros are something they are not however. Good luck to you, hope it works out. On a trading perspective, even if one was very bullish on LZEN prospects, no reason to own it until it has a close above the $4 ipo price.
    Feb 10, 2011. 08:09 PM | Likes Like |Link to Comment
  • 4 China IPOs for the First Week of February [View article]
    LZEN - you can throw out GAAP income. There is potential in some of this stuff but you must realize two facts: 1)LZEN(and others coming public) are thin margin commodity type manufacturers accessing public markets to allow them to grow quickly; 2)Cash flows are weak and have been. Forget about GAAP with these, look at cash flows and recievables.

    You cannot value these on PE's and market cap. LZEN and others will pour ipo/seco monies and loans into rapid hyper growth and usually management has little experience with this sort of growth curve attempt....As a shareholder you need to realize these facts and also realize you will be regularly diluted via secondaries, PIPE's and warrant deals as the companies do what they need to do to grab cash to fund growth,,,because cash flows are not there.

    Some may end up nice winners, but here and everywhere most are missing the point here when trying to value stuff like LZEN and the like....they are burning cash attempting to grow swiftly, the GAAP numbers are not indicative of what is happening. toss out the PE with LZEN, then decided if it warrants an investment. It may, I don't know...but too many using the wrong metrics with these.
    Feb 9, 2011. 11:35 PM | Likes Like |Link to Comment
  • Imperial Holdings IPO: Line of Business, Heavy Losses Cause Disinterest [View article]
    Well they haven't been viable the past two years because their costs to borrow/insure have exceedeed their gains from the policies...which is why the ipo here, essentially funding a change in the business model. The cost of capital during and in the aftermath of the financial crisis went up too much for them to make money.
    Feb 9, 2011. 03:11 PM | Likes Like |Link to Comment
  • Epocrates IPO Analysis: Long-Term Success Depends on Electronic Records Initiative [View article]
    stuff on IR is always more a sales tool for the company, same as the IPO roadshows. I rarely look at that stuff until after I've already looked at the prospectus as I don't want to be marketed or sold to....you've got to expect a company to put themselves in the best possible light. compared to some of the recent China micros from bottom tier underwriters, a trend line curving up is tame. Valuation here in $20's is factoring in success in their patient records initiative...We'll know by end of year how things are progressing on that front.
    Feb 4, 2011. 10:01 AM | Likes Like |Link to Comment
  • Ossen Innovation: Newly Profitable IPO With Competitive Advantage in Rare Earth Metals Space [View article]
    by the way I've no position in OSN long or short....I am simply tired of these low quality China resource ipos who pad GAAP numbers as a way to raise funds from worldwide markets,,,and then come right back to the trough to raise more money(and dilute shareholders) year after year by consistently offering more shares to keep raising more money...why the need to constantly raise more capital if they are really making as much money as they show on the GAAP bottom line? Because one after another of these China microcap ipos/reverse mergers from bottom tier underwriters and bottom tier auditors are actually burning through cash, not making it. OSN is just another in a long line.
    Jan 30, 2011. 02:09 PM | 5 Likes Like |Link to Comment
  • Ossen Innovation: Newly Profitable IPO With Competitive Advantage in Rare Earth Metals Space [View article]
    MCP/REE aim to source rare earth minerals, OSN is a middle man type operation with thin margins not remotely similar business models. the gross margins in the teens indicate the type of operation. Apples and oranges there.

    Also, OSN is utilizing IPO monies to expand while leaving nearly $60 million of debt on the books. Expect a very dilutive secondary as soon as possible to help clean up the cluttered balance sheet.

    Thin margin operation, with a lot of debt to asset base here and they will indeed dilute by the end of 2011. I'd expect a 5+ million dilutive share seco by summer to help pay down that debt.

    Combo of debt and thin margins and weak accounting firm here mean caution. OSN came public in late December yet did not include 9/30 quarter results in final prospectus.

    Also cash flows have been negative since inception, OSN has kept themselves going via bank loans...now they plan on growing aggressively while losing money annually, a dubious plan.

    Not trying to bash, been a lot of attention to this one due to the 'rare earth' catch words used throughout the prospectus....a little look deeper tells the real tale here.

    one of lowest quality ipos of 2010. If looking at China microcaps, must look at the auditor. Sherb has been involved in numerous low quality dubious OTC China based companies. In reality, OSN is a low margin, debt laden, money losing operation to date.
    Jan 30, 2011. 01:40 PM | 7 Likes Like |Link to Comment
  • Velti's IPO: Interesting Deal in a Strong Growth Niche [View article]
    Would love too....it is an issue of time. I do a piece for my website (tradingipos.com) like the piece above for nearly every US listed ipo every year. For a two week period here that is 20+ pieces. On top of that I have forum on the site in which I am posting often during the day.

    Both of these things are secondary to trading own account which is how I make a living....does not leave a lot of time to writing freelance pieces and in depth thoughts/looks on the ipo market. Unfortunately there just really isn't much money in doing those sorts of things these days and my slate is pretty full. I'd like to try and find some time at some point to do more of that sort of thing, I've 12 years of knowledge analyzing and trading these things week in and week out.
    Jan 30, 2011. 12:01 PM | 1 Like Like |Link to Comment
  • Demand Media's Long-Term Success Will Depend on Its Operating Expense Ratio [View article]
    they do wholly own 3 million articles...at 2 million+ clip a year, that wholly owned number is not their entire article list...did not see anything in the prospectus that gave a % of user contributed articles would be interested in that number as well.

    Thanks for the comment...My feeling is DMD will be bought out within 1-2 years of being public.
    Jan 26, 2011. 11:41 AM | Likes Like |Link to Comment
  • FleetCor: Unique and Exciting Deal [View article]
    FLT - $30-$35 is my sell zone if fortunate to see those,,,scaled sells from $30 on up. we'll see, hopefully will get there.
    Dec 20, 2010. 03:01 PM | Likes Like |Link to Comment
  • Dangdang Makes Round Trip to IPO Spike Price [View article]
    Mark, your ' fund' has gone to your head a tad it appears. you quoted directly from another article posted on the same site, simply give a nod as to where you took that from is all.
    Dec 20, 2010. 01:02 PM | Likes Like |Link to Comment
  • Dangdang Makes Round Trip to IPO Spike Price [View article]
    right here:

    www.sec.gov/Archives/e...
    Dec 17, 2010. 06:05 PM | Likes Like |Link to Comment
  • FleetCor: Unique and Exciting Deal [View article]
    No not really....It is the Federal Reserve, not Congress by the way. the Fed can regulate debit card interchange fees. FLT is a charge account operation for fleets, different rules apply to credit as opposed to debit. Plus 1/3 of revenues are outside US and the oil companies(and their retail outlets) are partners with FLT.

    Abstractly, the pressure on fees impacts all of the non-cash payment operations in some fashion, but no this propsed 12 cent debit card swipe fee limit shouldn't directly impact FLT.

    FLT is not in the prepaid card or debit card business. the do fleet accounts in which they front the money for charges(payable monthly usually) in which FLT actually purchases the fuel and makes money on both the customer via transaction/credit charges and the spread between what they charge the customer and what they pay for the fuel from their partner energy companies. When a tranaction occurs, it is not a transfer from customer's account to the retail location, FLT is the one paying the initial transaction. The spend quite a bit annually actually to Mastercard and to merchants in processing and commission fees, unfortunately they do not break out in detail what comes in and out on avg of each transaction.....think the current Fed debit card swipe fee reduction is pretty much a net neutral for them,,,however we'll see going forward if the trend on fee crackdowns spreads and continues. FLT a little different animal though.
    Dec 17, 2010. 05:59 PM | Likes Like |Link to Comment
  • Dangdang Makes Round Trip to IPO Spike Price [View article]
    He got the sharecount from my piece:

    seekingalpha.com/artic...

    Look at page 8 of the final prospectus..full post-ipo sharecount is 78.2 ADS equivalent shares,,,this does not include potential future options, those are not shares as of this time.
    Dec 17, 2010. 05:30 PM | 1 Like Like |Link to Comment
  • Dangdang Makes Round Trip to IPO Spike Price [View article]
    Mark, if you are going to lift stuff word for word from my pre-ipo piece, please note that, thanks.

    Lot of the recent 'hot' ipos are valued pretty dearly here,,,,right now the whole lot of them from VRA to DANG to SODA are just momentum plays. the ipos that have worked in 2010 are as expensive right now as ipos have been since 10/07. conversely there are a number of recent deals that have had their prices slashed and still are lagging...been a very divergent ipo market in 2010.
    Dec 17, 2010. 12:08 PM | Likes Like |Link to Comment
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