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  • Export-Import Bank to halt lending [View news story]
    I hope this helps people understand that the Republican party has become completely usurped by a fringe lunatic minority, and has now become the anti-business party. It is unthinkable how anyone can be against the Ex-Im bank. Sure, it can use some reforms, like any bank could, but to think that Ex-Im bank overall is somehow bad for business is sheer lunacy. Closing the Ex-Im bank will only hurt US business, and benefit international competitors, who are laughing at our stupidity of not funding a export-import bank.
    Jun 30, 2015. 06:53 AM | 7 Likes Like |Link to Comment
  • Integrated Electrical Services Corp: An Overnight Turnaround 4 Years In The Making [View article]
    Taking it private would certainly jeopardize the tax loss carryforwards, as it is considered a change of ownership under Internal Revenue Code Section 382. Of course, Tontine can hire an army of lawyers and accountants to figure out a way around this regulation, but it's really not worth their time to get involved in a legal mess trying to preserve the carryforwards with a go private transaction. They are better off just getting the public stock up, which they can do by making small acquisitions here and there.

    Overall, I see a near zero probability of a take private transaction here, and I don't consider that a risk here at all. The main risk is that Tontine simply sits around and does nothing with the company, taking no advantage of the carryforwards.
    Jun 28, 2015. 10:51 AM | Likes Like |Link to Comment
  • Integrated Electrical Services Corp: An Overnight Turnaround 4 Years In The Making [View article]
    BTW, my theory with Lindstrom is quite different. He's 42 and been working for Tontine for nearly a decade. I'm sure the future he saw with IESC was precisely in making a ton of acquisitions to take advantage of the $400 million in tax loss carryforwards and boost the stock tremendously. Unfortunately, Tontine has been moving at a snail's pace with regards to acquisitions, and I'm sure this frustrated Lindstrom, so he moved on. He certainly didn't own enough stock to really make it worth his while to stick around while Gendell gave a thumbs down on every acquisition he put forward.

    Honestly, I'm not quite sure why Gendell is moving so slowly with IESC, and I've been losing patience also. But, every time I want to sell, I think of the tax loss carryforward situation and keep hoping they will eventually make a huge acquisition that will make this into a 10-bagger.
    Jun 27, 2015. 09:57 PM | 1 Like Like |Link to Comment
  • Integrated Electrical Services Corp: An Overnight Turnaround 4 Years In The Making [View article]
    Wow, I can't believe anyone else is following this stock. I took advantage of the rights offering, and I'm sure a handful of others did too. It was an incredible deal. The most important part of the IESC story is the over $400 million in tax loss carryforwards. There is no way Tontine will take this private, as if they do, they will most likely lose all these carryforwards. I'm sure there is a way to do it, but it's quite a hassle and legally problematic. More likley is that Tontine keeps having IESC make small acquisitions, adding slowly to IESC's profits on a tax-free basis.
    Jun 27, 2015. 09:29 PM | 1 Like Like |Link to Comment
  • SCOTUS upholds Obamacare subsidies, healthcare stocks rally [View news story]
    Last thing ACA is socialist, unless by socialism you mean any program that increases profits for business. The ACA has been a boon to every for-profit insurer, hospital, pharmaceutical company, and biotech in the country.
    Jun 25, 2015. 11:46 AM | 13 Likes Like |Link to Comment
  • Is Biotech Finally In A Bubble? [View article]
    Every single breakthru product that you use, was originally developed by the government and merely improved upon or sometimes usurped by the private sector. Just one example should suffice: the Internet.

    As for biotechnology, every single major health advance was fueled by some sort of government subsidy or by some major government-funded research program, and then subsequently usurped and improved upon by a private entity. Again just one recent example should suffice: the Human Genome Project (I won't get into the role of Celera here as HGP dwarfs that effort, and ultimately Celera borrowed tons of stuff from the public effort).

    Modern day capitalism has always been about a collobaration between government and private business. They work together with government funding the massive basic research which private business will never undertake, and then private business molding the research into marketable products, i.e. making it practical.
    Jun 20, 2015. 01:04 AM | 3 Likes Like |Link to Comment
  • Is Biotech Finally In A Bubble? [View article]
    Biotech stocks are surely in bubble, even the large caps, because the business in entirely predicated on ever soaring drug prices, which if not dealt with, will consume the entire US economy within a decade. Prices for anything healthcare related is 10X+ higher in the US than anywhere else in the world, for no logical reason, other than that the companies can get away with predatory pricing here, while in other civilized countries there is a general consensus among even the capitalists that gouging consumers on healthcare is both immoral and unsustainable from a business perspective.
    Jun 19, 2015. 06:58 PM | 6 Likes Like |Link to Comment
  • Fairway Group: Consumer Conferences As An Upside Catalyst [View article]
    Of course, a PE firm may like it at this price (not that means anything, though), as they recapitalize the balance sheet and are only interested in cash flow to support debt. How much a PE firm will pay for the company depends on the financing costs, which is unknown. If the PE firm can get the cost of the debt down via refinance, then obviously there is value to be extracted. But this is sort of meaningless to a passive equity holder, especially since a smart PE firm will wait to acquire this when it gets to distressed level.
    Jun 12, 2015. 11:32 AM | Likes Like |Link to Comment
  • Fairway Group: Consumer Conferences As An Upside Catalyst [View article]
    What does pre-interest mean to an equity investor? They have costs of debt. Plus, if you don't grow you die, no matter what business you are in. FWM only have value to an equity holder for any cash flow over and above $40 million, as $40 million, is apparently the fcf breakeven here ($20 million in interest and $20 million cap-ex). What multiple you put on the FCF above $40 million is anyone's guess. But, I'd say 10X is fair.
    Jun 12, 2015. 11:28 AM | Likes Like |Link to Comment
  • Fairway Group: Consumer Conferences As An Upside Catalyst [View article]
    20mm run rate split evenly is bogus in my opinion for a store like FWM. I'd say they could never get beneath 20mm cap-ex, if they expected to survive and grow. Yes, they could claim anything for maintenance cap-ex, but the reality is obviously different, if this is going to be run as a continuing operation.

    Anyway, if you cut the cap-ex in half to 10mm, the multiple is at best fair on the equity, considering that with 10mm in cap-ex the company will never grow.
    Jun 11, 2015. 04:57 PM | Likes Like |Link to Comment
  • Fairway Group: Consumer Conferences As An Upside Catalyst [View article]
    I'm not quite sure how you reach your EBITDA calculations. But even in your optimistic scenario, EBITDA is around $50 million. The company has at least $20 million in maintenance cap-ex (obviously more if they plan on building out more aggressively), and $20 million a year in interest: $50 - $20 - $20 = $10 million in free cash flow in an optimistic scenario. With a market cap of around $170 million, FWM is trading at 17X free cash flow with very optimistic numbers. This is certainly not cheap by any means.
    Jun 11, 2015. 03:31 PM | Likes Like |Link to Comment
  • Credit Markets Pay Little Attention To YRC Worldwide's Stable Cash Flows [View article]
    Apparently, you are unware of the Multiemployer Pension Reform Act of 2014. The risk with multi-employer pension plans was greatly reduced via this new law, and more importantly the fact that it passed with support of both parties, shows precisely that the MEPP exposure is not relevant really from an investment perspective any more (not that I agree with the Act, but such is the nature of our government which is beholden to business interests).
    Jun 4, 2015. 07:28 PM | Likes Like |Link to Comment
  • Credit Markets Pay Little Attention To YRC Worldwide's Stable Cash Flows [View article]
    Yes, that's exactly right, and why I think the stock is so low right now. Wall Street doesn't like the fact that they will need to focus on replacement vs expansion/growth. However, I think that is a bit short sighted. In about 12 months, they will be able to focus on growth again and the cash flow will be very solid. At that time, the stock price will get re-rated upwards as Wall street focuses on expansion. We'll see.
    Jun 2, 2015. 02:20 PM | Likes Like |Link to Comment
  • Credit Markets Pay Little Attention To YRC Worldwide's Stable Cash Flows [View article]
    Who said it was easy? If it was, the stock wouldn't be so damn cheap and so risky. Anyway, nothing wrong with ARCB and nobody is trying to convince you otherwise. Nevertheless, I think YRCW has the most upside of any trucking company (and it is the most risky, of course), and the recent financials suggest the company has stabilized and cash flow is finally improving.
    Jun 2, 2015. 02:18 PM | Likes Like |Link to Comment
  • Credit Markets Pay Little Attention To YRC Worldwide's Stable Cash Flows [View article]
    Because the valuation gap is very large, so the upside in YRCW far exceeds that of ARCB at current prices. Taking the sure thing, means you minimize risk, but then you minimize reward. I don't think you need a miracle with YRCW, anyway. The business has stabilized as evidenced by the financials, now they just have to plow alot of money into cap-ex and new leases in the next 12 to 24 months to upgrade the fleet. Not too difficult.
    Jun 2, 2015. 09:51 AM | 1 Like Like |Link to Comment
COMMENTS STATS
499 Comments
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