Gino Verza

Value, long only, medium-term horizon, small-cap
Gino Verza
Value, long only, medium-term horizon, small-cap
Contributor since: 2009
Thank you, Henrik. I have reason to believe your argument since you have been right before.
Dana,
This is one of the very best articles .......
Thank you.
Henrik,
Thank you for the article. I see you do not recommend that investors avoid a long position. Instead the recommendation is to short the stock. Meanwhile, you are not short and do not plan to take a short position. Could you please explain, why?
Henrik, Thank you for the article. I see you do not recommend that investors avoid a long position on the stock. Instead you recommend investors to go short on the stock. Meanwhile, you are not planning to go short. Could you explain why?
I agree with George Melas. I'd hoped for this puppy to turn the corner many times before. The sad song (for the shareholders) remains essentially unchanged. What is it going to take?
I just do not see consumers get a fair view of service providers in Angi's reviews given the conflict of interest inherent in the model. Furthermore charging consumers for a service available for free elsewhere is a serious question mark. ANGI's shareholders should be happy for the take out offer.
Always enlightening. Thank you.
The issue is not the knowledge or ability to do the right thing; Pearson has an army of management associates, lawyers, advisors, and consultants. At issue is the presence of a moral compass that leads with the truth. So far, they have guardedly responded to accusations as they continue to peel the onion. Perhaps the plot is too ugly and too deep for redemption.
There is some noise (and articles) regarding the company's problems with the government. Further, the CEO recently said: "We recently reached an agreement in principle to settle and resolve all claims asserted in civil qui tam litigation lodged against the company and eight other defendants. The settlement is subject to final approvals, as well as negotiation and execution of settlement documents. Based upon the agreement in principle, the Company has accrued the expected expenses for the settlement, and a reasonable estimate of these expenses is $600,000, which includes the amount payable to the government, as well as the Company’s share of the relators’ counsel fees and expenses. The agreement is still subject to final approval and may change. This matter has consumed considerable time and resources and we are pleased that a resolution in principal has been achieved."
Any concerns in this regard? Do believe the management team conducts business in an ethical fashion?
"unfounded accusations from a certain short seller". Really? If CITRON is wrong why is the stock on a free fall? If accusations are unfounded then the SEC will surely prosecute CITRON, right?
I have no skin in this game. Wapner's CNBC interview of Andrew Left today reminded me of the deplorable performance of the CNBC moderators in the republican presidential debate, last week. In my opinion Wapner was biased, aggressive, and confrontational. He focused on the fringes of Citron's allegations rather than on substantive matters. It sure looks like CNBC has an agenda; CNBC is heading the wrong way.
It is very difficult to believe that Pearson's commentary is credible --Too deep into the VRX/Philidor's "unusual" relationship history to be now surprised by Philidor's improper practices. Pearson keeps reacting to fend-off bad news as it comes up instead of leading with the truth. Too little and too late to come clean. The second shoe has not dropped yet. The uncomfortable truth has a way of finding daylight.
Great article. KKR, like all Private Equity use financial engineering as a tool to enrich themselves at the expense of employees and other stakeholders. Typically businesses are acquired by issuing the company's own debt. They are striped of valuable assets and are loaded with debt to pay Private Equity dividends and fees. Competitiveness is downgraded by starving CAPEX, and employees suffer from diminished benefits. Finally the business is re-cycled into IPOs so that the new shareholders acquire equity of a weakened company and Private Equity reaps gains. Private Equity strategic contribution to the competitiveness of the business is zilch. Private Equity value contribution to society is zilch. God Bless America.
Thank you for the article. Well balanced. I like the business and the industry. In this case, too bad about governance. History shows that management and their families are on a race to the till --compensation, related-party transactions, etc., at the detriment of other stakeholders. It is difficult to change their culture when it means giving up benefits they believe they are entitled to receive.
Good point Stephen. Zeine and Hurwitz's lifestyle and profiles, as portrayed in the article, epitomize the standing of the industry.
Good, well balanced, article. Thank you. I can not get over the first hurdle; businesses (lenders) ought to provide a service that enables customers (borrowers) to create value. In the case of pay day / merchants cash advance lenders, the lenders are only looking to make a buck, or two, at outrageous rates regardless of the borrowers' fate. How can anyone rationalize that a 46% APR is good for any borrower? There is no (borrower) business that can produce a profit with such a high cost of capital. No surprise many borrowers go under.
Elegant financial talk and sophisticated discussion of business models and technology among the big shots in Wall Street belie the real truth. The call for government regulation is urgent.
Disagree with the recommendation. I am very long in AMSWA, long term. My estimated FV is $11.30/share.
As an example, below are some of unreasonable/arguable assumptions in the article:
(1) NOWC change in 2016P (minus $5.2 million) is too high
(2) $7.4 million in FCF for 2016P is too low
(3) "the (author's) personal discount rate (15%)" has nothing to do with the firm's cost of capital.
Sorry if my comment was not clear. The point is that all cash is not "all funded from their cash flow"; a significant portion was funded by a secondary stock issue.
In 2011 Operating income was $5.6 million. The same year SPNS acquired FIS for $49.6 million. These figures would suggest negative Free Cash Flow. Could you share you FCF computations? Thank you.
The articles says: "SPNS has no debt and about $90 million in cash and cash equivalents after completing several recent acquisitions, all funded from their cash flow."
The 12/31/14 Annual Report says: "Our financing activities also had an impact on our cash resources in the year ended December 31, 2013, as we issued and sold shares in a public offering, which raised $37.8 million of cash."
It seems that (1) does not reconcile with (2), and (2) contradicts (3).
(1) "HRG is trying to be a mini-Berkshire Hathaway"
(2) "HRG's energy segment has been negatively affected by the declines in commodity pricing. In HRG's Q3 2015 quarterly report they stated that the average sales price of oil was down 45% and gas liquids were down 57% from 3Q14. Their energy holdings are now showing a negative asset value. Also, Salus has performed poorly and in April 2015 had its largest debt holding, RadioShack Corp. go bankrupt. It also lent money to Delia's which went bankrupt in December 2014 and to Frederick's of Hollywood and American Apparel which are both bankrupt now as well."
(3) "If they use the capital wisely, which is what they are known for, this could add value in the eyes of investors as well."
J Fishman,
Implicit in your belief of prospective company performance is your trust in management. Henrik Alex (comment above) takes the opposite view. Could you share your research into the background and track record of management that supports your belief?
Thank you
I see Professor Damodaran is getting a lot of "Monday Morning Quarterbacking", free advice, and surprisingly even criticism. Instead, I join many of those who admire not only the Professor's knowledge, but also his humility. He voluntarily places himself level with the rest of us when in fact he does not need to; for his love of teaching. Thank you Professor Damodaran.
Great article. I like the payment business. However, I can not get over the cloud over management. Could you disclose your rationale for dealing with the management issues (including related party transactions, lawsuits, etc.) raised in the comments section in the previous Seeking Alpha article?
"Attacking the carried interest loophole is good rhetoric but bad public policy." Really?
"At most, a change in the law could generate $1-2 billion of annual revenue."
Should we forego fairness because it would only "pay for about one soundbite's worth of new spending plans"?
The issue of turnaround and management quality is a different matter. The extent of turnaround in comparison with others, etc, etc, is arguable. The issue here is good governance and balance of power. A bank as large as BofA should have sufficient bench strength to replace the current CEO without disruption. If it does not it means that governance and the board are deficient.
I vote for separate roles. The stated logic for keeping the CEO and Chairman of the Board separate is a fundamental principle at the foundation of good governance. A board which does not uphold this principle is suspect. I am not surprised that Buffett supports management. He generally does, regardless.
Pricing can be paid through various means such as fees, and credit for float, which in turn is subject to the actual speed in collection, etc, etc. The size (processing volume) and creditworthiness of the customer are among the factors that establish the contractual capacity of customers who negotiate pricing with PYDS. In other words, not all the customers get the same price for the service or get the same credit for float. This contractual capacity issue is different from the issue regarding the legality to the float. I doubt that the company's customers will let PYDS reap all the benefit from the higher value of float (due to higher interest rates).
An after thought. I doubt that the company's customers will let PYDS reap all the benefit from the higher value of float (due to higher interest rates).
A quick review of the notes to the financial statements disclose various related party transactions and a law suit from shareholders for breach of fiduciary duties and unjust enrichment by the Company’s Board of Directors and certain executive officers. It does not smell good.