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Howie Man

 
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  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    I think it is more than obvious who the losers are going to be here.
    Oct 17 10:53 AM | 2 Likes Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    HAST has $170M in total future lease obligations. If you capitalize these commitments back at 10%, the present value is $125M. This should be thought of as debt (in addition to the existing balance sheet debt of $46M) if you are valuing the enterprise on EBITDAR.

    Assuming yesterday's closing price of $2.05, the current EV/ LTM EBITDAR-capex multiple is 7.0x - very high for a company in this position. Given the trajectory of margins and sales, this multiple will likely expand to 9x for CY2011.
    Oct 11 09:14 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    You accuse of me of lying, yet you are unable to refute the facts presented. All the numbers provided are coming directly from SEC filings. I have provided links to the various From 4s and Proxy statements on the other page, you still blindly ignore them.
    Oct 10 09:34 AM | 1 Like Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    Some other disturbing facts:
    -5 consecutive years of SSS decline
    -operating margins from 8.7% in 2006 to 3.1% LTM
    -movie rental business accounts for 27% of gross profit, contributing disproportionately to earnings, comps in this line have been declining for the last eight quarters (-15% in Q2)
    -all insiders have sold 307,062 shares YTD and only purchased 27,972 shares. Since 2008, Mamaduke has reduced his ownership from 40.7% (4.2M shares) to 29.6% (2.5M shares). Have you addressed this with management?
    Oct 9 11:08 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    Arbitrarily looking at tangible book/ liquidation value without making adjustments is completely flawed.

    On the basis of salvage value, the equity gets wiped out when inventory and fixtures are discounted 40% (a modest level in liquidation). This even assumes no future contractual lease obligations or cash burn ($7M NWC + $32M PP&E - $39M net debt = $0 equity).
    Oct 9 10:57 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    "Solid business model with a bright long term future"??

    This is comical. ROIC was negative on an LTM basis and 1.6% in 2010. Margins are getting crushed. There is no way they can sustain themselves in this market.

    Take a look at the Forrester estimates for e-reader growth in light of the advent of the AMZN discount tablet and you will see that the traditional book channel is getting hit harder than ever on price and volumes as the shift to electronic media accelerates (+20% CAGR in spending for e-books estimated through 2015).

    This recent Bloomberg Businessweek story outlines the industry dynamics well. (See page 1 and 5 in particular)
    http://buswk.co/oj6LVd

    Didn't all this get explained to you on the post the other day?

    http://seekingalpha.co...
    Oct 9 10:50 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
    Looking at 2010 numbers for a declining business that operates in a deteriorating economic environment is flawed. Regardless, both levered and unlevered FCF was negative for the LTM period ended July 31 and will almost certainly be negative for CY2011 as well.

    LTM EBITDA: $15.6M
    less cash taxes: $2.9M
    less capex: $14.7M
    less chg. WC: $2.8M
    LTM FCF = -$4.8M

    or

    LTM CFO: $16.2M
    less cash taxes: $2.9M
    less capex: $14.7M
    less cash interest: $1.0M
    LTM levered FCF: -$2.4M

    FCF is not simply cash flow from ops. How are you missing this?
    Oct 9 10:37 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    Take a look at the Forrester estimates for e-reader growth in light of the advent of the AMZN discount tablet and you will see that the traditional book channel is getting hit harder than ever on price and volumes as the shift to electronic media accelerates (+20% CAGR in spending for e-books estimated through 2015).

    This recent Bloomberg Businessweek story outlines the industry dynamics well. (See page 1 and 5 in particular)
    http://buswk.co/oj6LVd
    Oct 7 04:41 PM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    Take a look at the Forrester estimates for e-reader growth in light of the advent of the AMZN discount tablet and you will see that the traditional book channel is getting hit harder than ever on price and volumes as the shift to electronic media accelerates (+20% CAGR in spending for e-books estimated through 2015).

    This recent Bloomberg Businessweek story outlines the industry dynamics well. (See page 1 and 5 in particular)
    http://buswk.co/oj6LVd
    Oct 7 04:40 PM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    To assert that my analysis is incorrect without supporting yourself is baseless.

    You need only look at the liquidation of Borders, the challenges at BKS and the transition away from low margin books, CDs and DVDs at WMT and TGT to see that decline is accelerating. If that's not enough, simply review the trends in HASTs margins and ROIC.
    Oct 7 03:30 PM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    I don't think anyone is contending that books and DVDs (44% of HAST sales) are going to disappear tomorrow, but you cannot argue that these products are in a state of secular decline. This rate of decline has been accelerated by the recent release of less expensive e-readers. You need only look at HASTs declining ROIC as evidence.

    You also need to think about these numbers more carefully. While only ~12% of the US population has an e-reader, that group also accounted for a disproportionate amount of total book sales. So what you have is the most appealing customers migrating to e-readers. The same is true of households with internet access (ie. those without internet access have much more modest spending capacity).

    You mention intrinsic value of the business, upon what basis are you arriving at your estimate? Note LTM levered FCF was -$6M.
    Oct 6 04:22 PM | 1 Like Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    I agree. Looking at 2010 numbers for a declining business that operates in a deteriorating economic environment is flawed. Regardless, unlevered FCF was negative for the LTM period ended July 31 and will likely be negative for CY2011 as well.

    LTM EBITDA: $15.6M
    less cash taxes: $2.9M
    less capex: $14.7M
    less chg. WC: $2.8M
    LTM FCF = -$4.8M
    Oct 6 01:13 PM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    He may be older at 63, but whenever the CEO is selling that is not a positive signal. Since 2008, Mamaduke has reduced his ownership from 40.7% (4.2M shares) to 29.6% (2.5M shares).

    More broadly, all insiders have sold 307,062 shares YTD and only purchased 27,972 shares.
    Oct 6 10:12 AM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    226k shares sold YTD by the CEO seems pretty substantial to me
    Oct 5 03:46 PM | Likes Like |Link to Comment
  • Hastings Entertainment: Obsolete Business In Secular Decline [View article]
    Mamaduke % ownership of shares outstanding
    Aug-30-2011: 29.6
    Jun-30-2011: 30.3
    Mar-31-2011: 30.2
    Dec-31-2010: 31.5
    Oct 4 05:25 PM | Likes Like |Link to Comment
COMMENTS STATS
51 Comments
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