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Connor Haley  

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  • Schuff International: Cheap, Ugly, And A Potential Multi-Bagger [View article]
    Emailed the CFO about the debt schedule question. His response:

    The $26.413 million reported as current portion of long-term debt is comprised of the following: $2.0 million is the required minimum payments due in 2012 which is made up of four quarterly payments of $500K under our long-term debt agreement which matures at the end of 2015. The balance of $24.413 is the outstanding amount owed under our revolving line of credit agreement that matures at the end of 2016. Because this balance will fluctuate from month to month due to our working capital demands etc., it is proper reporting treatment to show as current on our financial statements.

    We will plan to release our annual numbers after completion of our annual audit which will be in mid-March of 2013.
    Jan 2, 2013. 11:21 AM | Likes Like |Link to Comment
  • Schuff International: Cheap, Ugly, And A Potential Multi-Bagger [View article]
    @ Artie7,

    Thanks for the comment-- I think I have seen someone else in another venue say that as well. Can you explain how I am reading the latest annual report incorrectly as it seems pretty clear?

    Thanks

    Copied from latest annual:

    Aggregate debt maturities are as follows (in thousands):

    2012 26,413
    2013 4,000
    2014 5,000
    2015 19,000
    2016 1,410

    (Sum): $ 55,823
    Jan 1, 2013. 02:23 AM | Likes Like |Link to Comment
  • Noble Roman's Inc: Who Knew Pizza Could Be So Profitable [View article]
    Ian,

    Thanks for the helpful and prompt response.

    1) I was able to reach your $1,700 rev/grocery store figure, but have not found the eventual $2,500 target you are mentioning. Do you have a source for where management gave this estimate?

    2) You said you think signing 400 grocery stores/year is achievable. Do you have any sense how long they could keep this up.. or in other words, what their saturation point is?

    Obviously, this roll-out only works as long as the Noble Romans brand has customer recognition. Do you have any sense how far their brand extends? You mentioned Washington and obviously Indiana... but I am just trying to figure out how many grocery stores they could feasibly sign over the next ten years.. any thoughts?

    Thanks,
    Connor
    Oct 1, 2012. 04:06 PM | Likes Like |Link to Comment
  • Noble Roman's Inc: Who Knew Pizza Could Be So Profitable [View article]
    Ian,

    Great article. I just have a few questions on your model as I am just getting comfortable with this name:

    1) Where did you get the $2,000/ grocery store figure from? It looks to me like they did $1,024/store in 2009, $1,401 in 2010, and are looking at ~$1,524 in 2012 based on latest 10-Q numbers. This is clearly in the ballpark of $2,000 and is approaching it, but do you feel like that is too aggressive for current year figures?

    2) It seems like their non-traditional royalty business has been very stable, but not a growth area. Do you think 30 unit additions/year (in your most likely case) is too aggressive given revenue from this segment is down since 2010?

    3) Do you have any sense on when they will have an announcement regarding their legal claims, whether they will receive payment, and how much?

    4) Why did you only go out to 2014 in your model? Also, you mention PE multiples several times, but I feel like that is a bit deceiving since they are currently paying no taxes. While this should continue for the near future (I estimate 6 years in my model), it still makes a huge difference as the "E" in P/E is a bit inflated currently given the tax situation.

    5) Finally, do you have any sense on how many grocery stores they can get their take n bake into? It seems like their main area is Indiana, which I think has ~5,300 grocery stores. Is it conceivable that NROM gets in half of them? Wondering what realistic long term penetration rate is here (or should markets beyond Indiana also be considered)?

    I was a bit more conservative in my 10-year DCF. I put non traditional segment flat, take n bake ramping up to $2,000/store slowly while adding 100 stores/year, and had traditional locations continue its decline. With 35% operating margins and their tax shield, I have them worth $1.07 with 10% DR and 3% TV growth rate.

    I do agree it looks very cheap. Thanks again for article look forward to learning more about it.

    Connor
    Sep 30, 2012. 03:45 AM | Likes Like |Link to Comment
  • Looksmart To Be Taken Private? [View instapost]
    When does the new tender offer extension expire?
    Sep 11, 2012. 01:13 PM | Likes Like |Link to Comment
  • It's Time For Steinway Musical Instruments To Face The Music [View article]
    David,

    Your comments are very macro-focused, but is unclear whether you have even read the 10-K of Steinway.

    How can you offer an opinion on Steinway without discussing their Real Estate (much more valuable than their actual operations), the efforts of ValueAct, and the potential activity of Samick Instruments, a 30% stake owner?

    For some in depth analysis on LVB, their Real Estate, and potential catalysts: bit.ly/RXnhuU
    Sep 9, 2012. 03:05 PM | Likes Like |Link to Comment
  • $100MM Bid For Reading's NY City Crown Jewels Dominates 2012 Annual Meeting [View article]
    I might do an updated RDI post for either VIC or SZ. If so, I will definitely give you a shout-out/credit and link to some of your things. You have been all over this name.

    Do you have any other small-caps you follow closely that have RDI-like margin of safety?
    Jun 20, 2012. 12:48 PM | Likes Like |Link to Comment
  • $100MM Bid For Reading's NY City Crown Jewels Dominates 2012 Annual Meeting [View article]
    Andrew,

    Thanks for the thoughtful response.

    1) I originally read the idea while going through old VIC posts. Your many SA posts were also extremely helpful in getting comfortable with the name (especially since the RE takes awhile to understand) so many thanks there and also for the helpful comments. I definitely owe you one (on that note, if you are into the small-cap space, you might consider looking at TREE..).

    2) The presentation was in person to many of the bulge bracket banks and so there were a few things mentioned that were not specifically on a slide. I believe I mentioned the tax assets, but you're right-- they probably deserve at least half a slide to explain.

    3) I really like your comment in "b." In many ways, even after the recent run-up, I think it is more attractive given those reasons you mention.

    4) That being said, my last question is where do you see RDI going from here? I mean the value is clearly there and management could unlock it tomorrow if they really wanted to by taking the $100 mm bid, paying down debt, buying back stock, shopping the company, etc. How much risk is there that management continues to move so slowly and that it diminishes the IRR of current investors?
    Jun 20, 2012. 12:40 PM | Likes Like |Link to Comment
  • $100MM Bid For Reading's NY City Crown Jewels Dominates 2012 Annual Meeting [View article]
    And last point-- where do you see RDI going from here? I mean the value is clearly there and management could unlock it tomorrow if they really wanted to by taking the $100 mm bid, paying down debt, buying back stock, etc. How much risk is there that management continues to move so slowly and that it diminishes the IRR of current investors?
    Jun 20, 2012. 11:31 AM | Likes Like |Link to Comment
  • $100MM Bid For Reading's NY City Crown Jewels Dominates 2012 Annual Meeting [View article]
    Andrew,

    Thanks for the thoughtful response. That does clear up those questions. On your last valuation point, that was actually how I have been viewing it. Below is my RDI presentation that won 1st place in the Harvard Undergraduate Stock Pitch Competition in the Spring if you are at all interested. Slide 14 covers valuation methodology. Would love any thoughts if you have them since you are clearly an RDI expert:

    http://bit.ly/NOaxK9
    Jun 19, 2012. 10:36 PM | 1 Like Like |Link to Comment
  • $100MM Bid For Reading's NY City Crown Jewels Dominates 2012 Annual Meeting [View article]
    Andrew,

    Thanks for all of the great analysis on RDI.

    A couple of quick questions:

    1) What exactly do you mean when you say, "Assuming a $100MM combined value for just these two New York parcels would result in at least a $67.5MM (or almost $3/share) pre-tax book value gain and even more in net cash proceeds."

    I'm sure there are associated fees with the transaction and I understand that they have ~$22 mm in mortgage debt, but shouldn't that result in something closer to $78 mm in pre-tax profit? How are you getting to $67.5? Also, would their U.S. NOL's apply to this type of sale?

    2) You say, "If Burwood's unencumbered value (my range is $60MM-90MM) were combined with the net values for the New York City parcels, Reading's current $5.50/share stock price implies its remaining sizable real estate and what is the 11th largest cinema exhibition business in the United States, 4th largest in Australia and 3rd largest in New Zealand that, combined, generate around $35MM EBITDA/year are free"

    How exactly are you getting there? If we say $100 mm for Cinema 1,2,3 + Union Square, $60 mm for Burwood, and $12 mm for Minetta Lane + Orpheum, that comes out to $172 mm. However, they also have $217.6 mm in debt, so how is the cinema business free?

    With this calculation, I take a 6.5X EBITDA multiple to ~$35 mm run rate for movie business to get to $227 mm.

    $227 + $172 (from above calculation) - $217.6 = $181.4, or $7.88/share

    Taking an 8.5X Multiple on movie business gets you to $256.4 mm in equity value, or $11/share.

    Both still substantially undervalued, but movie business seems to be the kicker-- not for free. Am I missing something here? Thanks again.

    Connor
    Jun 13, 2012. 12:26 PM | Likes Like |Link to Comment
  • Gravity Has Game [View article]
    dgforvalue,

    The tax adjusted earnings figure is taken using ttm EBIT * (1-Normalized Tax Rate). Trailing twelve months, not last nine months.

    Best,
    Connor
    Mar 3, 2012. 09:47 PM | Likes Like |Link to Comment
  • Low-Risk Opportunity In Piedmont's Tender Offer For Crescent Financial [View article]
    Ivan,

    Your analysis is incomplete because it ignores the value of shares post-tender that are not accepted due to the pro-ration.

    In the table below, it is showing two different effects: the dilution effect and the cash infusion effect. For example purposes, assume you own 1 million shares. You originally owned 10.43% of a company that is worth $28.77 million (mkt cap). After dilution, you only own 3.53% of the company, but how much is it worth? Well, we can take the pre-tender offer price ($3) and multiply by the original number of shares to get the market cap, pre-tender offer-- which is 28 million. Then, we can add $75 million in cash to that figure to get 98.77 mm. Dividing by the new number of shares outstanding, the fair intrinsic value is $3.49.

    With this number, we can then estimate the expected value of the deal. For example purposes, assume you tender 3 shares. We have to assume it will be fully subscribed, and therefore subject to 2/3 pro-ration. Therefore, 2 of your shares are worth $4.75, but the non-tendered share is worth the $3.49 figure we just found. The expected value of this tender transaction, given the current price, is actually negative 29 cents.

    This deal is priced efficiently-- and at current prices, you will lose money in the tender.

    Post-Tender Value of 1 mm Shares Dilution Effect Mkt Cap Value to Shareholder (For 1 Share)

    Original # shares 9.59 10.43% 28.77 3.00 1
    New Total shares 28.34 3.53% 98.77 3.49 1.16
    Nov 15, 2011. 04:51 PM | Likes Like |Link to Comment
  • Low-Risk Opportunity In Piedmont's Tender Offer For Crescent Financial [View article]
    Ivan,

    This is an interesting idea-- good stuff. A couple of questions though:

    1) What do you think happens post-tender to the stock price? Since there is a pro-ration, if you make a 7% spread for example on tendered shares, but only 2/3 get tendered, and then the other third is subject to a 50% drop post-tender, that's a net loss. How do you think about this?

    2) Is the pro-ration almost a guarantee or is it possible fewer shares are tendered and the tender is not subject to the pro-ration?

    Best,
    Connor
    Nov 14, 2011. 02:26 PM | Likes Like |Link to Comment
  • Merger Arbitrage Mondays: October 3, 2011 [View article]
    Why is American Wagering (BETM.OB) not included?
    Oct 4, 2011. 12:56 PM | Likes Like |Link to Comment
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