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  • FreightCar America: Massive Cash Position, New Revenue Streams Mean Shares Could Double By 2015 [View article]
    RAIL’s backlog as of Q4 ’14 was 14.8 thousand, 77% of which is comprised of non-coal cars. Less than two years ago, more than 80% of the company’s revenue was derived from coal cars, so management has been quite successful in its diversification efforts.

    On analyst estimates of $890 million in 2016 revenue, the company should do $35-50 million in EBITDA ($890 - $810 in COGS - $45 million in SG&A on the high end), assuming 10% gross margins. Management has guided for “low double-digit” gross margins as they reach full capacity at Shoals, and that would also be in-line with 2012 gms. There’s some upside to these estimates; 2014 SG&A included a few million in start-up costs for Shoals and restart costs at Danville, plus some pension activity and provisions that probably won’t recur. If the company can get to 12-14,000 deliveries, it can probably do $1.2-1.4 billion in revenue assuming historical ASPs. At 10% gross margins, RAIL can generate $80 million in EBITDA at 13,000 deliveries.

    At $50 million, and $257 pro-forma EV (cash balance is actually $115 million, not $160 million since $45mm is a customer deposit that will be used for production purposes), RAIL trades at 5.17x ’16 EBITDA. If RAIL can do 13k deliveries and $80mm in EBITDA, RAIL would be worth $50/share assuming a 6x multiple of EBITDA and $115 million in cash (67% upside).

    At 13k deliveries, RAIL would probably be generating peak earnings. There’s only ~8,000 of capacity at non-coal car Shoals and it’s questionable as to whether the company can maintain a fully-booked Roanoke and still have meaningful work left for Danville, especially as demand for coal continues to dry up.

    Overall, RAIL still looks somewhat cheap, but much less so than it did in mid-2013. There are over $110 million in unfunded pension obligations, and future coal car bookings probably present more downside risk than upside. That said, the backlog provides good earnings visibility into 2016 and the company could be an acquisition target for TRN and GBX who might want to diversify away from tank cars as deliveries slow.
    Apr 16, 2015. 12:24 PM | 4 Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    Mario Gabelli is in the stock as well
    Aug 25, 2013. 09:19 PM | Likes Like |Link to Comment
  • Janus: Abnormally High Returns On Invested Capital At A Low Multiple Of Free Cash Flow [View article]
    Janus' troubles are well documented at this point. This is a perfect example of a "cigar-butt" that has one last profitable puff in it.
    Aug 25, 2013. 12:01 PM | Likes Like |Link to Comment
  • Janus: Abnormally High Returns On Invested Capital At A Low Multiple Of Free Cash Flow [View article]
    This is excellent analysis. With asset managers being taken out at 8-10x EV/EBITDA multiples (compared to 5.7x for JNS) and the company only priced at ~8x FCF, downside is quite limited.

    As you state, continued underperformance and subsequent outflows could eat into the upside, but the stock looks cheap even in that context.
    Aug 24, 2013. 12:08 AM | Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    Nope, the company is already in fiscal 2014.
    Aug 22, 2013. 07:20 AM | Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    Awesome, best of luck.
    Aug 21, 2013. 03:08 PM | Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    Thank you
    Aug 21, 2013. 03:06 PM | Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    SR,

    Good point, though I think that the major theme of investors being tempted by higher yields is more important than relative flows. In other words, I think meaningful yields on fixed income assets will attract cash into all funds; I don't have insights as to who will benefit the most.

    Thanks for the comment.
    Aug 21, 2013. 03:06 PM | Likes Like |Link to Comment
  • Legg Mason: Enormous Share Buyback And Normalizing Rates Fuel 65% Upside [View article]
    They'll likely see higher flows into fixed income as yields become more competitive, plus they'll be able to charge higher fees.
    Aug 21, 2013. 11:09 AM | 1 Like Like |Link to Comment
  • Bitauto Holdings: After Tripling, Shares Still Look 55% Undervalued [View article]
    Appreciate it.

    BITA is quite cheap based on the Chinese auto market that exists today, though a "bursting" of economic sorts would make the intermediate term prospects of the business much less attractive. Of course, I don't foresee the calamity that so many are calling for in China.

    It could also be that people don't want to get involved with a Chinese small-cap. There's lots of perceived risk with that kind of an investment.

    As to how I found it, it just popped up on a screen of Chinese small-caps. I've been trying to dig for some values in that market - the Shanghai is trading at something like 10.7x earnings.
    Aug 1, 2013. 04:14 PM | Likes Like |Link to Comment
  • Bitauto Holdings: After Tripling, Shares Still Look 55% Undervalued [View article]
    Just because it's a Chinese company? I approached my initial research with some skepticism, but there aren't any irregularities that I can see. Autotrader's 22% stake speaks to the company's legitimacy as well.
    Aug 1, 2013. 04:13 PM | Likes Like |Link to Comment
  • FreightCar America: Massive Cash Position, New Revenue Streams Mean Shares Could Double By 2015 [View article]
    Great questions/comments.

    We definitely can't say with absolute certainty that RAIL will succeed in their diversification efforts, but management has been upbeat about interest in their intermodal and gondola cars. Additionally, they seem to be moving very quickly to get things up and running in Shoals and have already booked some orders. They've been making these non-coal cars for a while, they just haven't really had the productive capacity to manufacture them in size.

    You're right that the business is volatile and thus the cash balances will fluctuate, though I expect 2013 will prove to be only modestly cash flow negative (if at all) and 2014 to be nearly as good as 2012. The current $118 mil or so in net-cash would take 2-3 pretty rough years to burn through - fixed costs are low and RAIL can scale back production quickly.

    Thanks for the comment.
    Jul 25, 2013. 02:32 PM | Likes Like |Link to Comment
  • FreightCar America: Massive Cash Position, New Revenue Streams Mean Shares Could Double By 2015 [View article]
    You got it, thanks man
    Jul 25, 2013. 02:24 PM | 1 Like Like |Link to Comment
  • FreightCar America: Massive Cash Position, New Revenue Streams Mean Shares Could Double By 2015 [View article]
    Greenbriar is the major player for tank cars. I'm currently doing some work on them - definitely like what I see.
    Jul 25, 2013. 02:23 PM | Likes Like |Link to Comment
  • FreightCar America: Massive Cash Position, New Revenue Streams Mean Shares Could Double By 2015 [View article]
    I think that's definitely plausible, but I think any potential suitors are waiting to see how the new facility in Shoals does.
    Jul 24, 2013. 01:31 PM | Likes Like |Link to Comment
COMMENTS STATS
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