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  • RF Micro Devices: A Return To Growth Set To Reward Shareholders [View article]
    While we do see a pathway to a higher multiple, we did not wish to be overly optimistic in our assumptions; RF Micro still has to prove to the market that it has put its Nokia issues fully behind it, and that the customer base is diversifying away from Samsung. And when those points are met, we do believe that the multiple could expand further.
    Feb 5 07:45 PM | Likes Like |Link to Comment
  • Regions Financial: Double-Digit Upside As Southern Recovery Continues [View article]
    The largest risk is probably material deterioration in southern housing, especially Florida, given that Regions is still exposed to the state via its AmSouth loan portfolio, albeit at lesser levels than in years past
    Jan 6 12:17 AM | Likes Like |Link to Comment
  • TIM Participações: As The Chess Pieces Move In Europe, Double-Digit Upside In Brazil [View article]
    The Brazilian government is fully aware that the country is still in need of meaningful wireless infrastructure investment, so although it is certainly taking a "progressive" stance towards the industry (whether or not this is a good approach for the nation goes beyond the scope of this article), we doubt that it will be to the scale that is seen in the country's energy sector. The government knows that if it pushes too hard, capex will fall, and that runs counter to their goal of raising living standards and ensuring that growth flows through to all levels of society. Other than the other three major Brazilian carriers, we don't believe that there are other Brazilian entities that can move rapidly to acquire TIM, but we see such an outcome as unlikely. Sources close to the government have said that Telefonica has 18 months to resolve the TIM issue, and although Telefonica prefers to break TIM apart and sell off its assets, a firesale of the company would open Telefonica (and Telecom Italia) to shareholder lawsuits across at least two continents. And in any case, it is important to remember that forcing a firesale of TIM doesn't help Telefonica. For better or worse, the company has committed to boosting its stake in Telecom Italia, and one of the prime goals of selling TIM is to deleverage TI's balance sheet, which the market has made clear is an overhang on its stock, and selling TIM at below fair value would hurt TI, and by extension, Telefonica.
    Dec 30 01:59 AM | Likes Like |Link to Comment
  • TIM Participações: As The Chess Pieces Move In Europe, Double-Digit Upside In Brazil [View article]
    For this article, we only examined TI through the prism of how it might approach a sale of TIM, and what factors make such an outcome likely. We did not spend much time examining TI's equity, so we are not in a position to make much of an informed judgement on TI's savings shares.
    Dec 30 01:52 AM | Likes Like |Link to Comment
  • TIM Participações: As The Chess Pieces Move In Europe, Double-Digit Upside In Brazil [View article]
    We are indeed long shares of TIM, the company's ADR's trade under the ticker TSU
    Dec 29 02:25 AM | Likes Like |Link to Comment
  • TIM Participações: As The Chess Pieces Move In Europe, Double-Digit Upside In Brazil [View article]
    At this point it is difficult to say. Telefonica has made it clear that it wants to double down on its investment in TI (whether or not that move is a good idea or not is an issue for another day). But by doing so, it has brought down the attention of Brazilian regulators, and if it does not reduce its presence in the country, it runs the risk of seeing its licenses revoked. Therefore, if the status quo is preserved, the prime loser will be Telefonica. As for TI and TIM, the outcome largely depends on price; if TIM is sold for too little, TI's goal of deleveraging is impacted, and Telefonica will likely see lawsuits over undue influence over TI. And TIM will also be impacted, since it will be sold for less than it should. But, if they push for an absurd premium, then no deal will be done, and that runs counter to what TI needs to do.
    Dec 28 02:34 PM | Likes Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    Southwest/AirTran already fly to Cancun, Mexico City, and San Jose Cabo from a variety of destinations within the US, and to date, it does not appear that this has been an issue for Volaris. Volaris also has an employee profit sharing program, so they do get a chance to participate in the airline's upside
    Dec 13 01:56 PM | 1 Like Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    Book value is 4.08 pesos as of Q3 2013, so Volaris' P/B is around 4.67
    Dec 13 01:54 PM | Likes Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    From what we understand, the reason Aero California's operations were suspended for unpaid debts to the government.
    Dec 13 01:46 PM | Likes Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    Aero California ceased operations in 2008 as its operations were suspended by the Mexican government and employees went on strike
    Dec 12 08:08 AM | Likes Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    While a takeover is theoretically possible, we doubt that there will be one in the near to medium term. Consolidation between low-cost airlines has been a relatively rare occurrence, and for legacy carriers, a deal of this size would be unlikely to move the needle. In any case, Mexican law bars foreign companies from owning more than 25% of an airlines (http://1.usa.gov/1bwHyB3), so the only theoretically possible outcome for Volaris would be either a takeover by AeroMexico or a merger with Interjet, assuming that Mexico's restrictions on foreign ownership of airlines are maintained.
    Dec 11 06:31 PM | 2 Likes Like |Link to Comment
  • Pacific Sunwear: Finding Sunshine Amidst Teen Retail Gloom [View article]
    So far, it appears that the line has been fairly successful, but the Kendall & Kylie holiday line only launched in November, so we'll have to wait until Q4 results to see just how well it did over the whole of the holiday season. But given that PacSun's women's division posted 5% comparable sales growth in Q3, it stands to reason that the line has been successful since its launch earlier this year, and management has said that brands like Kendall & Kylie have helped drive the company's recovery.
    Dec 11 12:51 PM | Likes Like |Link to Comment
  • Volaris: The Spirit Airlines Of Mexico Is Poised To Soar [View article]
    Interjet is currently private (but has been trying to proceed with an IPO after shelving it in 2011), so there's not as much data on it as Volairs. Based on market share, Interjet has been a success, as it is just behind Volaris in terms of share within Mexico. And their decision to mix Sukhoi Superjets into their fleet has been an interesting one, given that very few other carriers have incorporated in into their fleets. If they decide to proceed with an IPO, we'll most likely see better data in their F-1 (assuming they list in the US as well), which would allow for a better analysis.
    Dec 11 12:45 PM | 1 Like Like |Link to Comment
  • Commtouch Software: A Return To Earnings Growth To Reward Investors [View article]
    Commtouch's receivables as of the end of Q3 were actually slightly below their end of 2012 level, so we hesitate to state that the company isn't collecting; virtually every company will have some level of receivables on their balance sheet. As for their credit line, the company's 20-F does not explicitly define the covenants the require. Commtouch is currently in an investment phase, and as a result, operating cash flow has declined year-over-year. To date, however, the company has managed to secure the capital needed to invest in its growth, and in 2014, cash flow should improve alongside profitability; Q4 results in January should feature commentary about the company's cash balances and capital forecasts.
    Nov 29 06:34 PM | Likes Like |Link to Comment
  • Spirit Airlines: A Solid Derivative Play On The US Airways-American Airlines Deal [View article]
    It depends on both the airline in question and their customer mix. For business-heavy airlines, such an arrangement may prove difficult to pass onto customers, while it may be easier to pass onto at a more consumer-focused airline such as Hawaiian. Spirit is able to add more seats to its Airbus aircraft thanks to a lack of first class seating, which is a large source of revenue for legacy airlines. Therefore, cramming extra seats onto existing aircraft may require airlines to rethink the delicate balance of first/business class to coach seats within their fleets, something that takes a great deal of time
    Nov 17 06:03 PM | Likes Like |Link to Comment
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