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Donald Marchiony, Westpark Capital  

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  • USA Technologies: Undervalued, Under-Followed And At An Inflection Point [View article]
    USAT provided an update today, as well as announcing a new CFO (the current CFO is moving to a newly created role of CSO, Chief Services Officer). Total net connections in 4Q15 were 31,000, 3% higher than my projection of 30,000 net connections. Since this is the company's fiscal year end, the company has 75 days to report, therefore I'm not expecting results until early September. Given the relatively in-line net-connections added in the quarter, I'm keeping my estimates unchanged.
    Aug 4, 2015. 08:52 AM | Likes Like |Link to Comment
  • Skyworks up 3.8% on FQ3 beat, strong guidance; Qorvo also up [View news story]
    SWKS is TSEM's largest customer, bodes well for demand at Tower
    Jul 23, 2015. 08:43 PM | 1 Like Like |Link to Comment
  • Cirrus Logic beats by $0.11, beats on revenue [View news story]
    Big guide, too $290-$310M rev vs $274M est, should support apple suppliers
    Jul 22, 2015. 04:15 PM | Likes Like |Link to Comment
  • BHP iron ore output beats expectations, plans another increase for this year [View news story]
    Is beating production expectations in a flooded market a good thing?
    Jul 21, 2015. 09:25 PM | 2 Likes Like |Link to Comment
  • IDI: Strong Sell On Fraud Lawsuits, Bankruptcy And Technology Failure, -92.4% Downside [View article]
    Jul 21, 2015. 04:12 PM | Likes Like |Link to Comment
  • USA Technologies: Undervalued, Under-Followed And At An Inflection Point [View article]
    Some of our most successful investments have been the product of investing in companies that have been over-investing in cap-ex and therefore a) show a lack of free cash flow and b) screen poorly due to the associated D&A in the income statement. The shift from JumpStart to QuickStart, the three new relationships with 3rd party financiers and the sale of prior JumpStart leases to these third parties will expedite the production of GAAP profitability and free cash flow. We've often found that buying these stories after the process is apparent eliminates most of the alpha-generation potential, as the market finally is able to see the results of the process once it's complete. Thanks for the input, though, what you've said isn't false, but that doesn't mean it will be the case going forward. Best of luck.
    Jul 12, 2015. 12:07 PM | 1 Like Like |Link to Comment
  • USA Technologies: Undervalued, Under-Followed And At An Inflection Point [View article]
    Good thought on CATM. Two other potential synergistic acquirers I could see having an interest would be Verifone (PAY) or Euronet Worldwide (EEFT). Both handle payment terminals, transaction processing, etc.
    Jul 10, 2015. 11:51 AM | 4 Likes Like |Link to Comment
  • United Continental still seems shaky five years after merger [View news story]
    AAL management increases operating margins by 2500bps in 18 months, now having superior margins to UAL, yet still trades at a multiple discount, incredible. AAL management has done more in 18 months than UAL has in 5 years, Rodney Dangerfield line 1.
    Jul 8, 2015. 11:36 PM | 1 Like Like |Link to Comment
  • Airline stocks fall; DOJ probing price collusion [View news story]
    Chicago is literally a freaking war-zone and the DOJ is worried because airlines are finally making money and staying out of bankruptcy. Again, what the hell is going on in this country. Can anyone make sense of this?
    Jul 1, 2015. 04:55 PM | 2 Likes Like |Link to Comment
  • Amerco: EXR/SSSS Deal Sheds Light On Hidden Asset Valuation, 55% Upside [View article]
    I'm calculating company-wide FCF by subtracting (purchases of PP&E - proceeds from the sale of PP&E) from Cash From Operations.

    2015: $808M - ($1112M - $412M) = $108M
    2014: $710M - ($999M - $270M) = -$19M
    2013: $661M - ($656M - $221M) = $226M

    Total is $315M (rounding) over the past three years. The calculations for the prior years were conducted the same way.

    Regarding growth, they are growing by increasing the size of the fleet and increasing the number of locations, as well as taking share as Avis had retrenched. Going forward, while I agree it seems like they're already everywhere, they're still growing the moving and storage segment at a healthy clip. On a two year stacked basis the prior four quarters have seen growth in the moving and storage segment of 16.6% (8.3% annualized), 22.3% (11.15% annualized), 22.6% (11.3% annualized) and 24.6% (12.3% annualized). While it has slowed a bit, I'd also point out that the weather was atrocious in the last quarter, but I guess weather isn't a good excuse overall, so take the 8.3% as last quarter's annualized growth rate for face value. I'd also point out that the incremental operating margin in the moving and storage segment continues to be strong. The last eight quarters have seen incremental operating margins of 26.4%, 44.6%, 53.8%, 14.8%, 13.1%, 21.7%, 34.8% and 61.3%.

    Assuming no incremental leverage, and a growth rate of 8%-10%, cash from operations would grow by roughly ~$70M per year, and using your multiple of 15x and 19.6M shares outstanding, the value of the business would increase by roughly $52 per year, or about 16%. I'm not saying that's how I think it should be valued, but more or less that's what you're implying, yes?
    Jul 1, 2015. 04:47 PM | 1 Like Like |Link to Comment
  • Airline stocks fall; DOJ probing price collusion [View news story]
    Since the price of raw materials has come down so much over the past few years, shouldn't Apple lower the price of the iPhone?! This is lunacy! Every person should be able to have an iPhone, this isn't right! What about equality!?

    God forbid airlines make money for a few consecutive years, what the hell is going on in this country?
    Jul 1, 2015. 03:14 PM | 8 Likes Like |Link to Comment
  • Amerco: EXR/SSSS Deal Sheds Light On Hidden Asset Valuation, 55% Upside [View article]
    Agree with your sentiment regarding generational investing, as many family owned companies are willing to sacrifice short-term gains for long-term investments that vastly improve the company. But how would splitting the stock affect inheritance issues? Do a 5-1 split, results in 98M shares at $65 per share, done. There are no tax issues, no ownership change issues, etc.

    Here are some results of recent stock splits:
    Starbucks: Split in 4/2015, up 13.5% since the split
    Centene: Split in 2/2015, up 32% since the split
    Apple: Split in 6/2014, up 38% since split
    Mastercard: Split in 1/2014, up 15% since split

    To be fair, a bad one:
    DDD: Split 2/2013, down 37% since split

    I think overall a split by a strong company is just an indication that it has performed exceedingly well, but it's not a guarantee of future results. In this case it could improve the liquidity by making the stock more affordable for someone looking to buy a certain amount of shares, e.g. a block of 100. A side affect possibly would be that an increased volume of shares traded could lead to incremental sell-side coverage as trade commissions would be higher if based on a per-share trading basis.

    To me the stock split would just be a show of good faith to long-term investors, it's not a radical change like a REIT conversion or changing the name of the company to U-Haul (which some have suggested), it's merely throwing us a bone.
    Jun 24, 2015. 10:10 AM | 1 Like Like |Link to Comment
  • Amerco: EXR/SSSS Deal Sheds Light On Hidden Asset Valuation, 55% Upside [View article]
    Are you implying that using EBITDA isn't valid because the depreciation and associated capital expenditures erode at cash flows? U-Haul generates significant amounts of free cash flow after accounting for net-capital expenditures. They have been in a period of higher capital expenditures over the past two years, which has masked some of the free cash flow generation, but if you look at the last 5-6 years, on a net basis, they've generated $316M in FCF over the past three years in the high cap ex cycle, $243M in F12, $272M in F11, and $285M in F10. This is far better than the average company out there, half of which have zero or negative FCF and trade on multiples of revenue, etc. There is very real and significant cash flows thrown off by this business.

    Regarding the real-estate value, it sounds like you're taking issue with the overall valuation the market is willing to place on real estate? That's a much different discussion than trying to value U-Haul's assets based on public comps and a large deal that took place this week that is highly comparable. I would argue that if you don't agree with the public valuation of self-storage assets, and you also don't think an actual transaction that is highly comparable are appropriate to value U-Haul's self-storage assets, then what is? Also, how would being a pure-play, without the rental trucking business, be an advantage over the synergistic qualities of having both? The two business lines are highly compatible.
    Jun 19, 2015. 11:04 AM | 2 Likes Like |Link to Comment
  • Amerco: EXR/SSSS Deal Sheds Light On Hidden Asset Valuation, 55% Upside [View article]
    Thanks for the compliment. Short answer to your question is no. If you take any time investigating the story, one of the first things you'll notice is management's lack of shareholder communication. It's been incrementally better over the past couple of years (dividends, for example), but to date the idea of a REIT conversion, stock split etc. have been shot down by management. Typically they don't give a reason, and simply say "well, we've looked into it and will continue to consider all options. Thank you."

    I classify this investment as a "compounder". The business is increasing in value every year by their ROE, even absent multiple re-rating. In addition the value of the business increasing every year as they increase their competitive moat by adding new trucks/locations while their competitors retrench. The goal of this article is merely to highlight the value of the underlying real estate. If you buy into the analysis I've presented, you're effectively buying the U-Haul truck rental business at 5.0x EBITDA, a nearly 50% discount to the overall market. A 50% discount on a business that I believe is much higher quality than the majority of publicly traded companies, with incredible cash flow characteristics and a wide & increasing moat. While there's no specific catalyst I can point to, my belief is this company is massively undervalued based on the inherent underlying value of its assets. Thanks again.
    Jun 18, 2015. 12:13 PM | 2 Likes Like |Link to Comment
  • Callaway Golf: A Possible Turnaround Play Without Long-Term Potential [View article]
    Two words: Top Golf
    May 24, 2015. 02:50 PM | 4 Likes Like |Link to Comment