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Charles A. Smith

 
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  • Fuel Systems Solutions Is Worth $3.30 - $4.10 Per Share [View article]
    "The balance sheet is overstated by millions
    [i] Current assets are growing, despite revenue declines,
    [ii] Inventory is practically flat, despite revenue declines,
    [iii] Goodwill, etc."

    That's why I haircut current assets by 15% ($43 million) and EXCLUDED goodwill and all intangibles in my valuation. The $9.61 number allows for lots of bad surprises.
    Aug 21 08:07 AM | Likes Like |Link to Comment
  • Fuel Systems Solutions Is Worth $3.30 - $4.10 Per Share [View article]
    Competent managements ALWAYS have a choice between making a go of it as a "going concern" or liquidating. If they don't make the right one long enough, outsiders buy in and remind them who they work for, particularly if the public share price drops below liquidating value, as has been the case here. Successful investing is all about a margin of safety. Under $9.61, FSYS has it. It may be dead money for a while longer, but given that management owns substantial shares, a catalyst will arrive at some point.
    Aug 21 08:01 AM | Likes Like |Link to Comment
  • Fuel Systems Solutions Is Worth $3.30 - $4.10 Per Share [View article]
    Discounting current assets by 15% yields a value of $243 million. Subtracting current liabilities of $84 million leaves $159 million in net current assets (NYSE:NCA). Subtracting ALL OTHER liabilities of $9 million from this amount leaves a discounted value in the LIQUID ASSETS ALONE of $150 million, or $7.46 per share. As for non-current assets, the value of equipment and leaseholds (leaving out all intangibles, deferred taxes and other assets) is $54 million. Haircutting this number by 20% leaves $43 million, or $2.15 per share. Adding the two together gives a ROCK BOTTOM liquidation value of $9.61 per share. This compares with book equity of $13.31 per share, for a net discount to book of $3.70, or 28%. The only question anyone buying the shares under a price of $9.61 per share needs to answer is the following: Is management dumb enough and stubborn enough to piss away all of the value under this amount? Shorts using a target of 8X to 10X EBITDA obviously believe that they are.
    Aug 20 05:57 PM | 2 Likes Like |Link to Comment
  • Kinder Morgan: Saying Goodbye To The MLPs [View article]
    "Bottom line - ZERO "value creation" will occur outside of providing Kinder with increased ability to buy vs. build in a world where build is becoming more difficult thanks to regulatory hurdles."

    If you think about it, this statement pretty well summarizes the economic and asset market environment throughout the entire U.S. "recovery". IOW, doing "real" things (such as building pipelines) is way more expensive and time consuming than pushing financial markers around on a board. We have a financial analyst's conception of a recovery rather than the real thing.
    Aug 12 01:40 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: Saying Goodbye To The MLPs [View article]
    The investment banks had a huge interest in keeping the ATM (at the market) and periodic underwritten equity issuance game going, but Rich Kinder realized that this was way too expensive and simply created a giant round-trip "ATM" for the banks. What a great gig...collect a big fee for issuing MLP units and then advertise them as a great yield vehicle for individual investors in desperate need of income. Wash, rinse , repeat. Rich says: "how bout not."
    Aug 11 11:08 AM | 6 Likes Like |Link to Comment
  • Kinder Morgan: Saying Goodbye To The MLPs [View article]
    The MLP legal structure is dumb if you want to grow. To put it simply, why pay out 7% or 8% of your capital when you need to turn right around and raise it again for growth? Rich Kinder was first to figure this out.
    Aug 11 10:49 AM | 3 Likes Like |Link to Comment
  • Kinder Morgan +20%, KMP +27% premarket on merger news [View news story]
    With this deal, Rich Kinder is basically saying that the entire legal structure of the midstream/E&P biz is wrong if growth is the object. Why pay out all your cash flow when you just end up raising it again? The tax benefits of the MLP structure are just not great enough if you need capital to grow.
    Aug 11 09:31 AM | 2 Likes Like |Link to Comment
  • Juicy Details From The Allergan Lawsuit: Why Valeant And Ackman May Be In More Trouble Than They Are Letting On [View article]
    From the Globe & Mail piece:

    "Pearson takes pride in getting deals done fast."

    Pride goeth before a fall.
    Aug 8 09:06 AM | 1 Like Like |Link to Comment
  • Juicy Details From The Allergan Lawsuit: Why Valeant And Ackman May Be In More Trouble Than They Are Letting On [View article]
    VRX shares are acting like someone knows that ISS is not going to recommend AGN shareholders push for a shareholder meeting. We'll know in a few days.
    Aug 5 01:54 PM | Likes Like |Link to Comment
  • Juicy Details From The Allergan Lawsuit: Why Valeant And Ackman May Be In More Trouble Than They Are Letting On [View article]
    "The fall in Allergan's stock price is making it attractive to long-term investors. AGN is now trading at just 20 times 2015 earnings. As arbs get out, long-term investors should get in."

    Average daily volume in AGN more than doubled this year vs. last as the arbs entered. If this deal fails, the shares will not hold anywhere near current levels as they exit. I'm thinking $135 to $145 might be a decent entry range. Remember, the pressure to goose short term earnings will also be off AGN management if the deal fails. I wouldn't put a whole lot of stock in the out-year EPS estimates from AGN management at that point.
    Aug 4 12:03 PM | Likes Like |Link to Comment
  • Boeing to inspect fuselages after train derailment [View news story]
    BNSF
    Jul 7 09:30 AM | Likes Like |Link to Comment
  • Kinder Morgan: Is The Party Over? [View article]
    "I guess the confusion worked because a ton of people read this article. lol"

    Of course it did...and traffic is all that matters!
    Jun 23 10:42 AM | Likes Like |Link to Comment
  • Kinder Morgan: Is The Party Over? [View article]
    "Hey Chuck. I appreciate you reading my articles."

    You're welcome!
    Jun 23 08:47 AM | Likes Like |Link to Comment
  • Kinder Morgan: Is The Party Over? [View article]
    "Why would SA put up a misleading title? That's only going to annoy readers."

    The same reason Business Insider and other click-baiting sites use hyperbolic words and phrases like "the most awesome", "truly amazing", "always", "never", etc. etc.. They've analyzed which headlines get the most traffic, and if certain phrases happen to be a bit misleading but gather the eyeballs, so be it. This is the "salesmanship" referred to in the comment below, btw.
    Jun 22 08:32 AM | Likes Like |Link to Comment
  • GE set to prevail in its bid for Alstom, but some see a Pyrrhic victory [View news story]
    "GE's Jeffrey Immelt says it's not the straight takeover of the energy business he had envisioned, but that 86% of the deal's synergies - essentially the value of the energy business - were outside of the joint ventures."

    Immelt needs to be quiet about any positives for the deal for GE, even after it closes. If he touts any aspect of the transaction which benefits GE, then the French government is liable to change it by decree! Furthermore the government will have de facto veto power over any and all future operations. As we've seen over the past month, the French government will do whatever it wants, whenever it wants, depending on the political winds. A contract is meaningless. Good luck with this one Jeffrey.
    Jun 21 07:36 AM | 2 Likes Like |Link to Comment
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