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Christopher Wallace  

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  • Detour Gold: Maybe A Good Gold Speculation But Not For The Faint Of Heart [View article]
    This is certainly a deep value play. The market has been brutal to high cost, high debt miners.

    A point to note about the valuation tables: they were compiled with November 14 closing price data. Detour closed @ $5.48 on that day, fully 47% higher than today ($3.73 CDN). Which means as of today, P/CF is 3.62x and P/NAV is .22x. That really is crazy.

    Are the Paulson shares a potential overhang on the stock, causing the low valuation??
    Dec 5, 2013. 08:05 PM | Likes Like |Link to Comment
  • Detour Gold: 4 Different Insiders Have Purchased Shares During The Last 30 Days [View article]
    High cost producers with lots of debt just get punished in a market like this. Some day that will change and names like Detour will make a big come back. I have got in early on these trades before, and have the scars to show for it.
    Dec 5, 2013. 07:40 PM | 3 Likes Like |Link to Comment
  • North American Palladium's Liquidity Squeeze [View article]
    It is getting cheap, that is for sure, but I would not call a bottom until they get their next round of financing.
    Dec 4, 2013. 03:58 PM | Likes Like |Link to Comment
  • SAExploration: My Variant Point Of View [View article]
    SAEX has just announced a nice large new contract, their first in Brazil and their third in Alaska: http://bit.ly/1hwBGA4
    Work will be preformed in Q2 and Q3 14. It will be interesting to see what the margin is on that work.
    Dec 3, 2013. 05:23 PM | Likes Like |Link to Comment
  • The Impossible Situation For North American Palladium [View article]
    PAL recently expanded their Brookfield financing by $21 million which pushed the interest rate up to 19%. Not enough money in my opinion so I would look for a dilutive equity financing to be in the cards.
    Dec 3, 2013. 03:13 PM | Likes Like |Link to Comment
  • North American Palladium's Liquidity Squeeze [View article]
    They have re-financed an additional $21 mil with Brookfield, upping the rate 19%. They will need more; I expect an equity raise soon. http://yhoo.it/1bE3Oz0
    Dec 2, 2013. 12:37 PM | Likes Like |Link to Comment
  • In The Words Of Joseph Granville, 'Sell All Stocks.' Well, Almost All [View article]
    Those hedges are critically important, as we are all so fallible. I have been playing some mid-cap and small-cap names that either do not trade options or have huge spreads. In those cases putting in a stop-loss (usually at 10%) has saved my sorry a**.

    BTW, lest it get lost, the message of the article was to exit the market, or most of it. It was Granville who said "in a bull market, 80% of stocks go up. In a bear market, 90% of stocks go down". Just one more reason to not fight the tape.
    Dec 1, 2013. 03:45 PM | Likes Like |Link to Comment
  • SAExploration: My Variant Point Of View [View article]
    Steven, thank you for your very thoughtful comment.

    I have not been able to find rental expense anywhere as a line item in their 10Qs so I do not know how much to increase margin by if it were to reduce. If you are able to share that information with us that would be helpful.

    As to SG&A, I have modeled declining expense as a % of sales, even though their history to date has been one of rising SG&A%.

    PB has admittedly less relevance to a cash flow business and I merely provided the data and did not comment, leaving that for others to do as they wish. The peer group is almost identical to the peer group used in the fairness opinion provided in the merger docs, that is they are the Company's chosen group of peers.

    Time will tell if SAEX will improve its margin by reducing rental expenses and if they will grow revenues faster than SG&A. If those outcomes are as you predict, this becomes a good story.

    I came to this story as a bull. But my further research showed me that at this point, I am better off on the sidelines. As to the future, I hope that YOU are right. If Q4 comes in as you predict I will likely join you as a long, hopefully not having to pay too much more in PPS than $10. But if the margin goes back into the teens I would put the chances of a re-fi at nil and would worry about the downside. I won't short this stock, so in order for me to make any money off of all the time I have put into this, I have to buy some shares.
    Nov 29, 2013. 11:35 AM | Likes Like |Link to Comment
  • SAEXploration: Bull Response To The Bear Case (My Variant Point Of View) [View article]
    Thanks for putting forward the variant, variant view! A gentlemanly and interesting debate!

    A few questions/points:

    1. I could not find rental expense on their financial statements. Where did you get this info?
    2. If SAEX were to re-fi in Q1, and lower their int costs, that would be a very good thing. I am less confident than you that they will be able to pull that off. Time will tell.
    3. Q4 will be very telling. If they are able to get right back on track, that would change my thesis substantially, at that time. It has not happened yet. But if you read the reports of the peer group, most are forecasting softer times ahead. Oil price declines are not good for seismic pricing and volumes.

    Happy Thanksgiving!
    Nov 28, 2013. 11:01 AM | Likes Like |Link to Comment
  • SAExploration: My Variant Point Of View [View article]
    EBITDA for 2014 - 2017, respectively, I calculate at:

    $29.90 $42.67 $59.47 $82.81 (millions)

    EV, today would be funded debt of $92 - cash ($16) + market cap $120 for $196. That puts forward EBITDA at 6.55 times, a substantial premium to the peer group. Others may not deduct the cash from the EV given it is needed for adequate working cap.

    To answer your question, if they can execute as per this projection, shareholders should be pretty happy about owning a debt free company generating $83 mil of EBITDA with just over 13 mil shares out (before warrants dilution).... in 2017. My point is that the other factors I discuss put some appreciable level of risk into a successful execution. Those factors, IMHO, make execution far from given, and price should reflect that risk. Another Q3 would wipe out all of their equity. Q3 was an outlier, as I wrote, but that kind of risk skew usually asks for a lower multiple. The other side of big risk is, of course big reward. If they do execute, it is likely a multi-bagger: 4x 2017 EBITDA = $320 mil + expected cash on bal sht of $40 mil = $360 mil, divide by 13.4 mil shares = nearly $27 per share. If that is in the cards, you can afford to over pay now!
    Nov 26, 2013. 08:19 PM | 1 Like Like |Link to Comment
  • SAExploration: Buy At A Discount To Crescendo Partners And Joel Greenblatt - 110% Upside [View article]
    Clint: I think your EV/EBITDA calc is closer than his, without adding in dilution. Yahoo finance calculates it at 9.9, based upon TTM.
    Nov 26, 2013. 01:54 PM | Likes Like |Link to Comment
  • SAExploration: Buy At A Discount To Crescendo Partners And Joel Greenblatt - 110% Upside [View article]
    I found the info you were going off in the Q3 press release and I concur with your calcs....sort of.

    The challenge is the assumption of the 28% gross margin. Q2 provided their high water mark for gross margin of 24.2%. 28% seems a stretch to me.

    Also, EBITDA becomes a bit misleading when your interest costs are as high as theirs; it is fine to kick out interest when it is at 4 or 5%, but 13.5% is a huge amount of money ($11 mil annually). I am worried about total cash flow, after interest, after maintenance capex. It seems like it is dangerously close to zero. So how does that $80 mil ever get repaid?
    Nov 25, 2013. 01:28 PM | Likes Like |Link to Comment
  • SAExploration: Buy At A Discount To Crescendo Partners And Joel Greenblatt - 110% Upside [View article]
    And now let me apologize too; I could not find any guidance in the Canaccord presentation. Which slide showed the Q4 EBITDA estimate? Thx, Chris
    Nov 25, 2013. 12:03 PM | Likes Like |Link to Comment
  • SAExploration: Buy At A Discount To Crescendo Partners And Joel Greenblatt - 110% Upside [View article]
    Wouldn't buying versus renting increase capex, not significantly reduce it?

    And does debt of ~ 90 mil to 7 mil of equity raise any concerns?
    Nov 24, 2013. 09:08 PM | 1 Like Like |Link to Comment
  • Allied Nevada Is Not A Walking Dead [View article]
    The market is avoiding anything with leverage or potential liquidity issues. ANV, unfortunately has both. ANV has tremendous upside leverage to the price of gold. Unfortunately, the knife cuts both ways and it is equally impacted by price declines. Silver's performance is not helping either. Best to wait in watch until they have financed. Any equity issue at these prices will be extremely dilutive.
    Nov 21, 2013. 06:44 PM | Likes Like |Link to Comment
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