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Christopher Begg, CFA

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  • Just One Stock: The High Yielder Central to Waste Industry Transformation [View article]
    I have not studied the competitive environment of VE's waste management business in detail so I do not have an informed opinion. I believe Waste only represents 26% of their total revenue. VE's water business 36% of revenue and 53% of operating income and their energy and transport businesses will require a different perspective as well. Thank you for the comment.
    Jan 25 12:21 PM | Likes Like |Link to Comment
  • Just One Stock: The High Yielder Central to Waste Industry Transformation [View article]
    Example this morning of the m&a actions of one of the regionals. Selling the recycling piece because it can't be run in house profitably. This is being discussed on the call as a "non-integrated" asset, however, we believe the regionals and municipalities can't due recycling really well without scale.

    Casella Waste Systems Inc. (CWST US) jumped 14 percent to
    $7.12 after rallying to $7.45 earlier, the highest intraday
    price since October 2008. The trash hauler agreed to sell some
    recycling assets for $130.4 million to Pegasus Capital Advisors
    LP and Intersection LLC.
    Jan 24 12:46 PM | 1 Like Like |Link to Comment
  • Just One Stock: The High Yielder Central to Waste Industry Transformation [View article]
    My apologies for the delay in responding to comments. To quickly reply to two main questions.

    1) Why WM versus RSG?: We own both. Our position in WM is more meaningful. Both have merit based on the thesis I discussed. Valuations are not drastically different. We do like the Waste to Energy assets that WM has that we feel we are not paying very much for.
    2) Debt: we prefer to own businesses earning good returns on equity while employing little or no debt. However, post consolidation both WM and RSG have leverage. Given all considerations, we feel WM has the right amount of leverage or may in fact be under levered. We like that they continue to lengthen maturities and take advantage of attractive financing at low rates. They continue to use cash to buy back stock and feel every dollar they use to buy back stock versus pay down debt at 6% is accretive. We couple this view with some inevitable concerns on inflation we have and feel maintaining leverage right now for both of these businesses makes business sense. I discussed our macro view on inflation in our 4Q2010 letter under section - Credit Bubble Epilogue. The letter is in the public domain and can be read on marketfolly. www.marketfolly.com/20...
    Jan 24 11:45 AM | Likes Like |Link to Comment
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