Filipe Alves da Silva

Filipe Alves da Silva
Contributor since: 2012
PSTX to be acquired By Stryker for $ 2.22 / share. Shares are currently trading @ $2.20, up 44% from when I wrote this article, though still lower than my target price of $2.68
9:01 am Patient Safety Tech: Stryker (SYK) announced definitive agreement to acquire PSTX for $2.22 per share (OTCQB:PSTX) :
Stryker to acquire Patient Safety Technologies (OTCQB:PSTX) for $2.22/share, with aggregate purchase price of $120 mln. 2013 actual revenue through nine months are $14.9 mln.
The transaction is subject to customary closing conditions including approval by the stockholders of Patient Safety Technologies and the expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period. The transaction is expected to close in the first quarter of 2014.
Hi Mike,
Great article on SECP.
I guess you had the same problem as me going through the annual reports in French! hehehe but it was worth it.
At its current price SECP still presents quite an attractive risk/reward in my opinion, as an offer from Vivendi seems likely in the short-term, and the company is only followed by 1 or 2 analysts (from not that well known IBs)
Since I have written the article shares of Canal+ have moven to the upside considerably (and paid a hefty dividend), but I still think there is more to come from this one:
Vivendi Is in Talks With Lagardere Over TV Unit’s Ownership
full story here:
You can find them at their website:
The quarterly reports are all in English, but the annuals are in French! Hope your French is up to date, because Google Translate is not that helpful on this one. Not very (international) shareholder friendly...
The annual accounts for 2012 are coming out today.
Hi Mike, thank you for your comment.
You have +45% upside to my price target which is still attractive.
From the bits and pieces that I have been able to gather, Lagardere not only wants to monetize its stake in C+ but also in EADS. I think Lagardere wants cash for its stake, not Vivendi shares.
On the Earnings Call Lagardere mentioned the Canal+ Divestment:
"...this is one of our top priority to divest from the stake that we have in Canal. "
From what I read they say they prefer an IPO because they don't want to be bullied by Vivendi. Vivendi in turn said it does not want to buy the stake ( In my view this is all part of the negotiating process, as none of the parts would show their hand at this stage
As to when will Lagardere monetize its stake, there is no fixed timeframe. It all depends on how stubborn they are on getting the "right" valuation for their stake
I get your point, but I am not certain what would happen in a Vivendi default event, maybe they would renegotiate the contract (since Vivendi and Lagardere control almost 50%), maybe they would sell the stake and the deal would go with the current terms. That being said, this is an extreme tail event, and I don't see Vivendi filling for bankruptcy anytime soon.
In my opinion you can't just discount it at the 'risk-free' rate. I use the Vivendi spread as a proxy, to show that C+ is clearly undervalued. Either way, I think that the value realization here will come from Vivendi first buying Lagardere's stake and then going for full ownership.
Out of curiosity, if you were to drive the discount rate to the level of the 30yr Swap the PV would be €1.67bn or €13.22 / share, an upside of roughly 177%. This is just too optimistic.
Hi anacondafinances. Thank you for pointing this out to me. I forgot to mention and explain the discount rate, as it is crucial for the valuation of C+.
The weighted maturity of the cash flows is 26 yrs. Vivendi's longest maturity Euro denominated bond (2021) has a 2.7% yield, while the 10 yr CDS is trading at 200 bps. I took the 30yr Swap and added the 10 yr CDS, reaching a rate of 4.3%. To play it safe I used 5% as a discount rate.
If I had used the 4.3% discount rate the PT would be € 8.59.
I'm treating this as a bond, and assuming that the risk that the company has of not receiving its cash-flows is ultimately the risk of Vivendi defaulting on its debt.
Would you suggest a different way to value C+? Or different assumptions?
Again, thanks for pointing out the discount rate, I have already submitted a correction for the article. So it should show up soon.
Hi ChipperG, you can get the #shares from the annual reports or a rough indication by multiplying the %ownership by the # of shares outstanding in each company
I am not 100% sure where I got the numbers from, but I checked across the annual report, Thompson Ownership (part of Thompson One) and a couple of research reports from IBs (just to be sure that I had the right number).
Maybe the ownership changed slightly since I last researched Renault. Can you let me know what numbers you're getting and where are you getting them from?
I valued the stakes at market prices. You can go a step further and look at Nissan, Daimler, Volvo and Avto separately, which would get you to a more complete analysis.
Nissan, which is the most important stake, is trading at 11x TTM Earnings. Nissan has posted positive net income since 2001, except for 2008. It also has positive CFO since at least 2000 and FCF turned positive in 2007.
The message is that Renault is trading considerably below the SOTP valuation.
Even if you do a DCF analysis on the stakes, I doubt it that their estimated valuation would be 20% lower than current market prices. If you input this 20% discount on the SOTP model, you get a target price around €52, which is still a 45% upside. And remember, I'm not assigning any value to Renault, Dacia or the JV with Samsung.
German Brands such as VW, BMW or Mercedes are targeting a customer with a higher income than Renault, so I don't think they're the direct competition.
I'm not a big fan of auto companies, they're usually over leveraged, with high fixed costs and very cyclical revenues. As I stated in the article: " Renault has no real moat, the cars are good but there is nothing that differentiates them from other similar brands (i.e. Citroen, Peugeot, Seat, ...)". Even though at such a large discount it is hard to ignore.
Its Capitulation ... sometimes you just can't bare to see your portfolio get beaten down again.
Better to remain invested through it all than try and time or watch your portfolio every 15 mins, at least that's my way of seeing things
I see your point Larry, but:
1. As you said ticket sales are down YoY. Companies such as Netflix and so on take part of the blame, with the other part coming from a not so robust economy. The fact that you can now rent a movie weeks after it is released in Cinemas really makes you think twice about going to see a movie. But this is where IMAX can deliver. It only shows the kind of films that you want to see in the cinema, the big blockbusters. Will some of them fail? Of course, but this has been true with Hollywood for ages.
2. Of course IMAX doesn't solve a problem. It is a superfluous luxury that you can live without! But that's the kind of society that we live in, people pay more for better quality and bigger screens.
As to my negative argument on copycats. I was referring more to Emerging markets such as China, India etc.
Hey... we can agree to disagree, and let time decide which one is right. But with the momentum behind IMAX, 3D coming back and room to grow, I don't see the company facing headwinds anytime soon
I think you are getting a lot of heat from your article because the stock is down 10% since you posted it. In my opinion your article has nothing to do with the recent slump in price.
I am long IMAX. I'm more of a value investor so it was hard to get in my head that I would be paying 30 times earnings four a company... The reason why in the end I decided to take a position was because in my opinion IMAX has taken the right steps in the last few years in selling to customers the idea that IMAX is more than going to the cinema to see a film, that it is an experience. The proof that they were successful in selling this idea is that in the last years the number of films being released in IMAX exploded, as did their theater backlog for the next years. Additionally they are shifting to a JV business where they take in more of the innitial cost but reap more of the long term gains as more % of the ticket sales is paid to IMAX
In my personal opinion some of your arguments are not valid:
- poor ticket sales growth from Hollywood. If you notice the majority of movies that are released in IMAX format are blockbusters. As the majority of cinemas only has one IMAX theater, that movie will be showing on that IMAX theater for 3 to 4 weeks tops. This means that the attendance will be close to max.
- Limited number if theaters that can be converted. This is a valid concern, but it is years ago, it will nit impact short/medium term business. This happens with every product, sales are always limited. There is always so much of a product consumer can take in!. Once IMAX reaches its limit, which is years away, they will have a huge installed based, giving them a steady stream of cash flows. I'm happy with that.
- audiences will not keep paying for a premium ticket. This one is discussable. In my opinion they will. If you go to see a regular movie (when I say regular I mean no speial Fx, etc) of course you will not pay a premium. But for something like transformers, Harry potter etc, why not pay 20 to 30% more. The proof is that IMAX attendance is off the charts
What I think is the greatest obstacle to IMAX is other brands copying their product. Especially in china. And then selling it for a lower price. This in my opinion is the greatest danger that can keep IMAX from reaching it's true potential.
Larry tell me what you think.
almost every time there was a big decrease in either POT or MOS there was a following correction on the next day.
Nevertheless the volatility of these stocks is just scarry. POT is a 55-60 bn company... it shouldn't be that volatile.