Pargesa and GBL: A Tale of Two Discounts [View article]
Both Pargesa and GBL trade at about 30% discount to their NAV. I must say I'm a bit perplexed that GBL disposed of their GDF Suez stake at such a low price after having held the stock for decades. They managed to sell the huge block at a discount <10% to the market so in some way this proves that the 30% discount to NAV is somewhat excessive. But I don't think they did it just to prove a point. GBL has now I think 3-4bn EUR in firepower to deploy on one (or several) new investments. No one knows what they are up to, and there is certainly "reinvestment risk" in the name. For the moment they are just buying back shares, which is not the worst use of cash at the current valuation. I personally would have preferred them to hold on to GDF, but maybe they can find something better - let's wait and see.
"From an exposure point of view, the only exposure we have is we would agree to sell some of that product as -- if they produce them in the future -- as a client."
And you believe that? Why would MFC be in the creditor committee if they have no exposure? I suggest you read Oltchim's annual report which is available here: http://bit.ly/18NWltx On page 49 of the document you will find the terms and amount of MFC's financing. The total remaining exposure is 35.4 million EUR, which is exactly as the newspaper reports were - which Smith is denying. So who's right? Oltchim, which (being in bankruptcy) has no reason to exaggerate its debts, or Smith, who has every reason to hide this $45m hole in his balance sheet? It may be that these are only contracted volumes and MFC has not yet paid the goods. But the language in the documents implies that of the EUR 68m total contract, EUR 35.4m remain outstanding - and that the EUR 68m were advances that were PAID ("avansuri incasate de la MFC Commoditiea") to Oltchim.
2 Little Known, High Growth Companies Trading At Compelling Valuations [View article]
I wouldn't want to own shares of a company that has Peter G as chairman and major shareholder. Genmar has now been bankrupt for some time, and GNK is all but a walking dead (but still had to pay Peter G a million-dollar "bonus" http://bit.ly/10lEqGT). That would make me very uncomfortable if I were to consider an investment in ANW.
Cliffs Natural Resources Preferred: A 10% Return [View article]
You really could provide more details... What is your profit/loss analysis based on? The current price of the convertible or the price at issue? What are the parameters of the "complicated formula" ? (and why not provide it?) What happens if CLF trades between 29 and 35.5 ? How are dividends and/or distributions of the preferred taken into account? Is it more interesting to own CLV than CLF? What is the position of CLV holders in case of bankruptcy? This few-paragraph "article" (more of a "short note") leaves more questions than it answers.
Contrarian M&A: A Deal That Falls Apart For The Right Reasons Is A Good Deal To Buy [View instapost]
Thanks for the long reply. However I still don't get it: you say "there is actually a free float rule in force in malaysia that requires any listed company to at least maintain a 25% free float" So what? They take all the stock that was offered to them, get over 75%, and then the company is in violation of that rule and LOSES ITS PUBLIC COMPANY STATUS. Thus the remaining shareholders are stuck with untradeable shares, leaving the acquirer in the strong position and basically able to offer whatever price he may like (the alternative for the shareholder being that he is stuck forever with an untradeable share). The fact that the acquiree can issue "poison pill" shares to ensure a free float of 25% is nice, but it must have the authorisation to increase its capital in this way, and I don't know if that is always the case. Due to some experiences I've had I am strongly opposed to stock exchange rules requiring a certain amount of float to remain listed. What's wrong with having a 1% of 2% float? The shameful Brisa takeover is just the latest example of how these rules can be used to take advantage of minority shareholders.
Ternium S.A.: Get In Now Before Earnings And Upcoming 3.8% Dividend Payment [View article]
"the ex-dividend for this year's payment is expected to be in either May or June. The precise date should be announced during the upcoming earnings announcement"
No sir, the payment date is May 10 and has been announced already in March: http://bit.ly/11Priqt The AGM is next week (May 2) in Luxembourg.
Contrarian M&A: A Deal That Falls Apart For The Right Reasons Is A Good Deal To Buy [View instapost]
why wouldn't Petronas take up the 23% tendered and force MISC to become an unlisted entity? Tagus (de Mello group) is using this tactic to crush the minorities in Brisa SA in Portugal currently. Loss of public company status and an insulting lowball offer, much lower than even their previous bid which did not get full acceptance. Oh, and of course they used their votes at the AGM to block the 10% dividend that was proposed to make sure that the remaining insolent shareholders really get nothing at all.
Ryan, I've been holding this stock for more than two years now and I think I know the company rather well. So far the management has been long on promises but very short on delivering results and I am not impressed at all. What really bugs me is that they seem to be in either a state of denial regarding their failures or they want to sweep them under the rug deliberately. Just look at the website. Do you find any of the past shareholder presentations there? No, they are obviously ashamed. Respectable companies have an IR archive of past presentations - I have them archived on my computer. According to their 2011 presentation, we should by now (2013) be at $20-$30m annual cash flow from the coal properties alone. A later presentation (after Terrex, Donner and Thunderbird and initial problems with the coal streams) also promised about $25m after-tax cash flow in 2013. Their latest estimate (january 2013 presentation) now has >$20m projected for 2015. Meanwhile, they have sunk $15m into Royal Coal with nothing to show for it but tax losses, have sunk $40m+ into NovaDX with a highly uncertain outcome (written down to insignificant amounts), and have sunk $15m into Terrex and will recoup $10m (best case!). Maybe the other deals will work out, but maybe not. So far the track record is about $60m of vanished shareholder money ($0.19 per share) in a very short period. Forgive me if I am not cheering the company's executives and singing their praise. When NovaDX and Royal Coal ran into problems, the first thing they did was also "stretch and amend" their deals. The "cashflow guarantees" (lol!) also quickly proved rather worthless although they always emphasized them in their presentations. I would not characterize it as incompetence but not managerial savy either. It's just pure necessity to extend&pretend because their partners are barely viable (market caps in the single to double-digit million USD) and always short of cash. It's good that they now also have a somewhat bigger player (Colossus), but Thunderbird's market value is currently below $8m so I'm inclined to think bankruptcy is a very real possibility there too if they don't get a cash injection or their wells perform to perfection and gas prices rise. Donner seems to hang in there for now and even if they don't make it SND can remedy a default and become Xstrata's partner directly. So currently the company rides on the Pd and Cu streams imo. I have not listened to their CC yet, maybe they had something to say that can lighten my mood somewhat. I'm not giving up on them yet but I'm definitely sceptical regarding their projections and promises.
these are more recent deals, so they have not (yet) ended in disaster. I hope they won't, but so far the deals have gone sour in the order they were entered into. Next in line would be Thunderbird... already they have "stretched" and "amended" the payment schedule.
Pargesa and GBL: A Tale of Two Discounts [View article]
I must say I'm a bit perplexed that GBL disposed of their GDF Suez stake at such a low price after having held the stock for decades.
They managed to sell the huge block at a discount <10% to the market so in some way this proves that the 30% discount to NAV is somewhat excessive. But I don't think they did it just to prove a point.
GBL has now I think 3-4bn EUR in firepower to deploy on one (or several) new investments. No one knows what they are up to, and there is certainly "reinvestment risk" in the name.
For the moment they are just buying back shares, which is not the worst use of cash at the current valuation.
I personally would have preferred them to hold on to GDF, but maybe they can find something better - let's wait and see.
2 Little Known, High Growth Companies Trading At Compelling Valuations [View article]
MFC Industrial Ltd Management Discusses Q1 2013 Results - Earnings Call Transcript [View article]
And you believe that?
Why would MFC be in the creditor committee if they have no exposure?
I suggest you read Oltchim's annual report which is available here:
http://bit.ly/18NWltx
On page 49 of the document you will find the terms and amount of MFC's financing.
The total remaining exposure is 35.4 million EUR, which is exactly as the newspaper reports were - which Smith is denying.
So who's right? Oltchim, which (being in bankruptcy) has no reason to exaggerate its debts, or Smith, who has every reason to hide this $45m hole in his balance sheet?
It may be that these are only contracted volumes and MFC has not yet paid the goods. But the language in the documents implies that of the EUR 68m total contract, EUR 35.4m remain outstanding - and that the EUR 68m were advances that were PAID ("avansuri incasate de la MFC Commoditiea") to Oltchim.
2 Little Known, High Growth Companies Trading At Compelling Valuations [View article]
Genmar has now been bankrupt for some time, and GNK is all but a walking dead (but still had to pay Peter G a million-dollar "bonus" http://bit.ly/10lEqGT).
That would make me very uncomfortable if I were to consider an investment in ANW.
Gazprom And Lukoil - 2 Russian Jewels [View article]
I think we'll never know what really happened there...
Cliffs Natural Resources Preferred: A 10% Return [View article]
Cliffs Natural Resources Preferred: A 10% Return [View article]
What is your profit/loss analysis based on? The current price of the convertible or the price at issue? What are the parameters of the "complicated formula" ? (and why not provide it?)
What happens if CLF trades between 29 and 35.5 ? How are dividends and/or distributions of the preferred taken into account?
Is it more interesting to own CLV than CLF? What is the position of CLV holders in case of bankruptcy?
This few-paragraph "article" (more of a "short note") leaves more questions than it answers.
Contrarian M&A: A Deal That Falls Apart For The Right Reasons Is A Good Deal To Buy [View instapost]
However I still don't get it:
you say "there is actually a free float rule in force in malaysia that requires any listed company to at least maintain a 25% free float"
So what? They take all the stock that was offered to them, get over 75%, and then the company is in violation of that rule and LOSES ITS PUBLIC COMPANY STATUS. Thus the remaining shareholders are stuck with untradeable shares, leaving the acquirer in the strong position and basically able to offer whatever price he may like (the alternative for the shareholder being that he is stuck forever with an untradeable share).
The fact that the acquiree can issue "poison pill" shares to ensure a free float of 25% is nice, but it must have the authorisation to increase its capital in this way, and I don't know if that is always the case.
Due to some experiences I've had I am strongly opposed to stock exchange rules requiring a certain amount of float to remain listed. What's wrong with having a 1% of 2% float? The shameful Brisa takeover is just the latest example of how these rules can be used to take advantage of minority shareholders.
Ternium S.A.: Get In Now Before Earnings And Upcoming 3.8% Dividend Payment [View article]
No sir, the payment date is May 10 and has been announced already in March: http://bit.ly/11Priqt
The AGM is next week (May 2) in Luxembourg.
Contrarian M&A: A Deal That Falls Apart For The Right Reasons Is A Good Deal To Buy [View instapost]
Tagus (de Mello group) is using this tactic to crush the minorities in Brisa SA in Portugal currently. Loss of public company status and an insulting lowball offer, much lower than even their previous bid which did not get full acceptance. Oh, and of course they used their votes at the AGM to block the 10% dividend that was proposed to make sure that the remaining insolent shareholders really get nothing at all.
Is Japanese Wealth Heading To Australia? [View article]
Vivendi Group: Ugly But Undervalued [View article]
http://bit.ly/XxULqY
You have to take out 20% of C+ France owned by Lagardere and 51.5% of C+ SA owned by other shareholders to value Vivendi's stake.
Is Japanese Wealth Heading To Australia? [View article]
Sandstorm: Another One Is Coming [View article]
I've been holding this stock for more than two years now and I think I know the company rather well. So far the management has been long on promises but very short on delivering results and I am not impressed at all.
What really bugs me is that they seem to be in either a state of denial regarding their failures or they want to sweep them under the rug deliberately. Just look at the website. Do you find any of the past shareholder presentations there? No, they are obviously ashamed. Respectable companies have an IR archive of past presentations - I have them archived on my computer. According to their 2011 presentation, we should by now (2013) be at $20-$30m annual cash flow from the coal properties alone. A later presentation (after Terrex, Donner and Thunderbird and initial problems with the coal streams) also promised about $25m after-tax cash flow in 2013. Their latest estimate (january 2013 presentation) now has >$20m projected for 2015.
Meanwhile, they have sunk $15m into Royal Coal with nothing to show for it but tax losses, have sunk $40m+ into NovaDX with a highly uncertain outcome (written down to insignificant amounts), and have sunk $15m into Terrex and will recoup $10m (best case!).
Maybe the other deals will work out, but maybe not. So far the track record is about $60m of vanished shareholder money ($0.19 per share) in a very short period. Forgive me if I am not cheering the company's executives and singing their praise.
When NovaDX and Royal Coal ran into problems, the first thing they did was also "stretch and amend" their deals. The "cashflow guarantees" (lol!) also quickly proved rather worthless although they always emphasized them in their presentations. I would not characterize it as incompetence but not managerial savy either. It's just pure necessity to extend&pretend because their partners are barely viable (market caps in the single to double-digit million USD) and always short of cash.
It's good that they now also have a somewhat bigger player (Colossus), but Thunderbird's market value is currently below $8m so I'm inclined to think bankruptcy is a very real possibility there too if they don't get a cash injection or their wells perform to perfection and gas prices rise. Donner seems to hang in there for now and even if they don't make it SND can remedy a default and become Xstrata's partner directly. So currently the company rides on the Pd and Cu streams imo.
I have not listened to their CC yet, maybe they had something to say that can lighten my mood somewhat. I'm not giving up on them yet but I'm definitely sceptical regarding their projections and promises.
Sandstorm: Another One Is Coming [View article]