Harlan Kessler

Long only, deep value, special situations
Harlan Kessler
Long only, deep value, special situations
Contributor since: 2013
FreeMkts - Are you long the equity of this name? What are your thoughts now after the dilution and emergency financing? It seems all that can be negative, is right now, and this may be a good place to enter.
The remaining risks being; increased costs for expansion which seem unlikely at this point, increased debt or dilution which also seems unlikely, and unplanned outages. The last one being a true risk.
or a pop in response to the one-time distribution?
Chris,
Do you invest in REIT conversions at all? I am looking specifically @ LADR as an example moving into 2015. Where does the value come from? In 2015 they will pay quarterly dividends as a REIT and then a special dividend in Q4 2015 of earnings and profit.
With stock prices adjusted for dividends paid, again, where would the value come from? Strictly capital appreciation from adding a new investor base or new institutions that will hold it?
Thanks in advance,
Harlan
Kerry,
Good article, thanks.
One question. Current P/E is 9.8 with TTM EPS of 10.47. The company expects EPS growth next year but it has a forward PE of 16.3? Analysts estimates are at $6.34 for FY 2015 per Yahoo Finance. What is missing here that is inflating FY 2014 earnings? A one time gain on an asset sale or something of that nature?
I'm curious because it looks like this one time gain is ~$5 per share making true 2014 EPS closer to $5 and the current PE ~20.
Essentially this stock may not be as "cheap" as it first seems.
Thanks
Lumberfrog - Healthy food trends are undeniable in the US but MCD bulls likely didnt buy for growth in the US. Plus the US only accounts for ~30% of MCD's revenue at this point and is only going to continually get smaller. Growth in Europe and emerging markets is what will drive MCD's higher going forward. If US revenue stays fairly consistent going forward I would consider that a win.
TowneBank agrees to but FRNK: http://seekingalpha.co...
This price seems low at ~1.13 times TBV. Based on the markets reaction investors arent too happy. How do you see this playing out? I am long FRNK and not happy about this price.
Thanks!
I have a question on the net sales payments for CELGZ:
"Net Sales Payment: Payment to CVR holders based on Abraxane’s net sales for the year (this extends by default through December 31, 2025, renewable each year until 2030 "
So you get a payout for every year sales are greater than $1bn? Essentially you could get a decent payout, starting likely in 2015, for every year that net annual sales are greater than $1bn for Abraxane?
Hi Gargamel - Thanks for reading and the kind words glad you enjoyed the article.
You bring up good, valid points. Essentially it is free funding. They are paying no dividends and the divy's are not accumulating. A reason they may want to retire the preferred is to increase their capital ratios by reducing the debt outstanding. So again we have two sides to this point. Is the ~$350mm outstanding on the preferred too little to make a large difference or is it small enough that the company could wipe out the so-called low hanging fruit.
I think the company's main concern right now is the preferred outstanding with the Greek government. That said, I think we have two possibilities on the US based preferred. Either they try to take it out again at a discount say between $21-$23 this year or they wait and redeem it at a future date for the full redeemable value. If they try to redeem in June 2015 for full redeemable your return would be over 30% in ~13 months or 15% a year if they redeem in 2016 from current value. Based on the current uncertainty in the markets and NBG specifically, I'll take a 15% return for the next two years or 30% over 13 months, but maybe someone can do better elsewhere.
What are your thoughts?
I pulled the quote from google finance. Mcx:mtlrp - $54.44
What are your thoughts on the Mechel preferred shares? MTLRP trades on the Micex at 54.44 rubles = $1.52. MTL-P, the shares traded on the NYSE, = 1/2 a preferred share so they should be valued at $0.76 however they trade at $0.315. Seems to be the exact opposite as you discuss above, the US shares are trading below fair value. Any thoughts?
Hi ErnestJack - The preferred shares are nonconvertible.
Regards
Hi Loerke - You do not need to invest in both options. You can buy the common, preferred or both. They have different features.
I'm not sure exactly what you mean by Greek system. If you mean Greek economy there is also a Greece ETF, GREK.
Regards
Rose Colored Glasses - I have not now that you mention it. Is it possible they are the same person?
All kidding aside, I am sure Don Thompson flips burgers for fun, photo ops, TV, etc... It is likely Don Johnson does to supplement his pension from Nash Bridges.
Acejd - The CEO's name is Don Thompson.....Don Johnson is the actor from Miami Vice
Based on the tender offer last year 12,360,169 ADSs were tendered or 49.4% of the outstanding ADSs leaving 12,639,831 outstanding.
Here is a link to the press release for the results of the tender offer.
http://bit.ly/1qRoyI4
User - Thank you for the clarification on both points. Both are additional items that need to be considered.
stocknerd - I have bought and sold NBG twice in the last 5 years. Both times for losses. I will very likely own it again sometime in the near future. I will the preferred stock now though.
Thanks Chris.
In your opinion which comes first LORL or OSHC? Certainly seemed like LORL, but the trial will likely slow down the sale. Is there an estimate of how long the trial will go or how long these type of trials usually last?
Here is a report published today by Citron Research. They put PLUG's fair value at $0.50.
http://bit.ly/1i9jJGP
Slapshot99 - I agree. When i started the article the price was ~$16.50. a few days later right before the article was published it was $19.00. A month later it was as high as $25.50. JMP Securities just upped their price target to $31, Barclays to $29. While I like the company and product's long-term potential, the stock certainly has gotten ahead of itself
Rene - I think, and hope, you are correct. This could be a huge deal
dawgpac68 - I'm glad you enjoyed the article. The brain surgery app will definitely be a huge boost.
Madhastings - They are definitely having a good quarter and after the equity offering well capitalized to fuel growth.
Thanks for the comment and link.
Hi Francis, Thank you for the kind words, I'm glad you enjoyed the article.
Hi Jackmaster - I am considering going long Yen as a safe haven asset which is negatively correlated with the US stock markets. YCS is short Yen and DXJ is an equity fund. I am looking at FXY as a hedge for a global selloff.
Thanks
One issue with your current price of COP, it spun off PSX which you did not take into account. So including the shares of PSX he now holds, the position has been profitable for BRK.
Dean - Good article. How has Japan's QE impacted its "safe haven" status?
I think the US market will correct and would like to protect some money in FXY. What wins out Japans monetary policy or the safe haven status?
Tom - Another good article. I appreciate that you follow the timber sector as I have as well for many years. There is real value there that many are unaware of. The NCREIF index has returned ~13% since its inception in 1987, higher than all other asset classes with much less risk.
I initiated a position after the drop. One item to note: management knew this was coming for months and they raised the September dividend by over 11%. I think that shows confidence in their business even in a challenging environment. A yield over 4% offers a good safety margin and allows investors to accumulate more shares if the share price drops further.
In a reverse morris trust WY would spin off the HB unit which will then merge with TPH.
http://bit.ly/1ajrXEl
TPH has a market cap of <$500mm with <$80mm cash on hand. WY may get some cash but the majority of the transaction will be financed with stock.
Tom - Good article and I am also eagerly awaiting the sale of its homebuilding business. I think the use of a Reverse Morris Trust is a great move and will return value to shareholders. It is largely a tax-free transaction and allows WY's shareholders to continue holding its home building unit (then Tri-Pointe).
Am I correct in looking at this as a fancy way to say a spinoff? The difference being we give up a certain % ownership in WY's home building unit but also acquire a % ownership in Tri-Points's business?