Why I'm Buying Multiband Hand Over Fist [View article]
Sold MEA for a gain...If I remember correctly, I sold it at about 2.60 from a 2.15 entry. Still holding ASTC, and although I'm down, I still continue to believe the stock is worth significantly more than the current price.
I had a massive position in LMLP and still have a massive position in MBND...so needless to say, I'm doing much better than the 20% you assigned me ;)
Why I'm Buying Multiband Hand Over Fist [View article]
I just looked at Capital IQ's numbers for EV. I was valuing the company further out based on analyst and management projections. $3.25 is probably fair given where they've been, but not where they're going. It seemed to me like the company was finally getting on the right track and was poised for strong returns.
Why I'm Buying Multiband Hand Over Fist [View article]
I've got a few companies I'm still doing research on that look to have strong potential. I'll try to post those when I feel comfortable with my due diligence. Other than that, I'm still holding Astrotech (ASTC) which I wrote about a few times last year, and although I'm down on the position, I continue to believe the assets are worth significantly more than the current enterprise value. The CEO (T Boone Pickens' son) bought close to 2 million shares last November and holds about 20% of the company. My gut feeling is he tries to take it private. Their satellite processing facilities cost over $100m to build (current market cap is $15m) and would probably be of interest to companies like SpaceX, Orbital Sciences, or Boeing. They also have a subsidiary that makes miniature mass spectrometers that looks very promising and if this division could just breakeven, the overall business would be profitable.
Why I'm Buying Multiband Hand Over Fist [View article]
Well, MBND's Board has already recommended it, so unless the shareholders reject it, which is pretty unlikely, it will go through (unless there's another offer.) Trying to speculate on other offers is a dice roll. $3.25 is too low, but that doesn't mean somebody else is going to step up and pay more.
Why I'm Buying Multiband Hand Over Fist [View article]
The Field Services (FS) segment is more valuable than the MDU segment. It's really the company's main source of revenue and stable income (although EE&C and MDU are quickly catching up).
The FS segment did $63m of the company's $73m in revenue last quarter. The revenue from this segment relies heavily on DIRECTV. Obviously, DIRECTV is not getting any smaller, but it's not growing at double digits either (at least in North America). FS reported income from operations of $1.9m in Q1. The CEO said he expects this segment will be flat in 2013 compared to 2012 (regarding revenue, but profitability will probably increase). In terms of a valuation basis, it's not going to get a high multiple just because it's not growing very fast, but it also does $250m+ a year in revenue. Even at 0.5x revenue, it's worth $125m.
EE&C is not yet profitable, but it's growing revenue at about 20% and its operating loss narrowed to $83,000 last quarter vs. a loss of $436,000 in the prior year period. Not really sure what I would value this at since it's not making money.
So with the MDU segment worth $80m (probably low) and FS worth $125m (probably low too) and EE&C worth $0. That would still be around $200m which would leave $7.75 for shareholders.
The company's largest shareholder, Carlo Cannell, wrote the Board a letter back in December saying it was worth $9.50 a share based on multiples from other acquired companies in the industry.
Why Exide Could Be A Compelling Speculative Buy [View article]
I'd guess they end up spending more money on capex at Vernon than they save from it being idle (if it's only shutdown a short period of time). If it's going to be a longer suspension (i.e. the DTSC doesn't approve their plan for fixes) they will probably save money on operational expenses, but could lose money if they don't get favorable prices on lead.
In regards to the sale, the CFO mentioned they took a write down from that in Q3 and the money was received in February. Since they already knew what the sale price was in December, I would assume that was already included in their estimates for $30m in cash flow.
Why Exide Could Be A Compelling Speculative Buy [View article]
I've been a shareholder for a very short period of time. I took a "speculative" position, as my title points out. By "speculative" I mean I don't know what's going to happen. I'm making a bet and letting the chips fall where they may. If there's a resolution to the Vernon suspension or a favorable outcome with the debt, I'll profit. If not, I'll lose.
Right now, there's nothing that has been made public other than; 1) Hired Lazard to explore financing alternatives 2) Announced fourth quarter free cash flow was $50m versus an estimate of $30m 3) Announced liquidity at March 31st of $230m 4) Announced the suspension of the Vernon facility 5) Filed a plan of proposed fixes with the DTSC that said the storm drain could have a solution in 9 days.
Based on this information, I believe the stock is oversold.
Why Exide Could Be A Compelling Speculative Buy [View article]
-An exceptionally warm winter is not an excuse, it's a fact. Car batteries are not discretionary items; you either need one or you don't. And when it's warmer in the winter, you typically don't need one.
-It wasn't Exide's consultant it was the city of Frisco's, and the link was provided by you.
-So you think operating expenses are going to be the same in FY14 despite the fact 3 plants were shut down voluntarily? I guarantee you they're not paying employees to sit in empty factories. Or spending money to fix machinery. Or paying utilities. I think you can see my point.
In regard to lead costs, they expected to source 75-80% after the closure of Frisco and Reading. That left 4 plants. So roughly 20% production from each. Vernon is now idle so say they're producing 55-60% (probably more than that since Vernon was one of the smallest of the 4.) Prices of lead are down now anyway so who cares if they have to buy it on the open market? I'm not sure what it costs them per pound to recycle and refine their own lead so I can't speak to the margin impact of having to buy it on the open market.
Why Exide Could Be A Compelling Speculative Buy [View article]
Nobody is arguing FY2012 (calender 2011/2012) was a good year. It was impacted by an unseasonably warm winter and further contraction in Europe. Perhaps you should listen to the Q&A on the Q3 call. All your questions can be answered there.
In regards to the Frisco payment, that money is already in escrow. Frisco's environmental consultant said, "there have been no real surprises."
Why Exide Could Be A Compelling Speculative Buy [View article]
Last year they went through a company wide restructuring of operations that resulted in 3 plant shutdowns. Frisco was sold to the city for $45m (they will probably receive that money sometime this year). Reading, Pennsylvania was idled as their highest cost plant. Bristol was also shut down. Those cost savings will start to show up in FY2014.
Trying to use last year as an example of their run rate of cash is not accurate. Debt expense will stay constant in FY2014 at about $70m. Capex and other expenses will be lower.
Q1 and Q2 are always net outflows because they build inventory. This year, they ended Q3 with higher levels of inventory which means they won't use as much cash in Q1 or Q2.
Why Exide Could Be A Compelling Speculative Buy [View article]
I was aware of the bond pricing. I just don't see bankruptcy in the cards given their press release where they stated they had liquidity of $230m and free cash flow of $50m in Q4. That doesn't sound like a company ready to file. The bond market can get it wrong just like the equity market. There's no money to be made if everyone knows what's going to happen. We don't know if Exide is buying back bonds at the moment or not. I'm not a bond trader, but I would guess there are regulations on companies repurchasing bonds just like there are on stock. I would expect more clarity on the Q4 earnings release in a few weeks.
Why Exide Could Be A Compelling Speculative Buy [View article]
Nice post. I know on the last conference call they mentioned they retired more than $4 million on the September note in Q3. That's what doesn't make sense to me right now. As of February, they were planning to pay the convertible with their cash and/or credit line and specifically mentioned they were not looking to refinance. Q4 cash flow came in at nearly double their estimates and capex is going down and now they hire Lazard? Unless things just fell off a cliff in March I don't know what has really changed with the business other than the issues at Vernon.
Why I'm Buying Multiband Hand Over Fist [View article]
I had a massive position in LMLP and still have a massive position in MBND...so needless to say, I'm doing much better than the 20% you assigned me ;)
Why I'm Buying Multiband Hand Over Fist [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
Still think they can do better than $3.25.
Why I'm Buying Multiband Hand Over Fist [View article]
Why I'm Buying Multiband Hand Over Fist [View article]
The FS segment did $63m of the company's $73m in revenue last quarter. The revenue from this segment relies heavily on DIRECTV. Obviously, DIRECTV is not getting any smaller, but it's not growing at double digits either (at least in North America). FS reported income from operations of $1.9m in Q1. The CEO said he expects this segment will be flat in 2013 compared to 2012 (regarding revenue, but profitability will probably increase). In terms of a valuation basis, it's not going to get a high multiple just because it's not growing very fast, but it also does $250m+ a year in revenue. Even at 0.5x revenue, it's worth $125m.
EE&C is not yet profitable, but it's growing revenue at about 20% and its operating loss narrowed to $83,000 last quarter vs. a loss of $436,000 in the prior year period. Not really sure what I would value this at since it's not making money.
So with the MDU segment worth $80m (probably low) and FS worth $125m (probably low too) and EE&C worth $0. That would still be around $200m which would leave $7.75 for shareholders.
The company's largest shareholder, Carlo Cannell, wrote the Board a letter back in December saying it was worth $9.50 a share based on multiples from other acquired companies in the industry.
Why Exide Could Be A Compelling Speculative Buy [View article]
In regards to the sale, the CFO mentioned they took a write down from that in Q3 and the money was received in February. Since they already knew what the sale price was in December, I would assume that was already included in their estimates for $30m in cash flow.
Why Exide Could Be A Compelling Speculative Buy [View article]
Right now, there's nothing that has been made public other than;
1) Hired Lazard to explore financing alternatives
2) Announced fourth quarter free cash flow was $50m versus an estimate of $30m
3) Announced liquidity at March 31st of $230m
4) Announced the suspension of the Vernon facility
5) Filed a plan of proposed fixes with the DTSC that said the storm drain could have a solution in 9 days.
Based on this information, I believe the stock is oversold.
Why Exide Could Be A Compelling Speculative Buy [View article]
-It wasn't Exide's consultant it was the city of Frisco's, and the link was provided by you.
-So you think operating expenses are going to be the same in FY14 despite the fact 3 plants were shut down voluntarily? I guarantee you they're not paying employees to sit in empty factories. Or spending money to fix machinery. Or paying utilities. I think you can see my point.
In regard to lead costs, they expected to source 75-80% after the closure of Frisco and Reading. That left 4 plants. So roughly 20% production from each. Vernon is now idle so say they're producing 55-60% (probably more than that since Vernon was one of the smallest of the 4.) Prices of lead are down now anyway so who cares if they have to buy it on the open market? I'm not sure what it costs them per pound to recycle and refine their own lead so I can't speak to the margin impact of having to buy it on the open market.
Why Exide Could Be A Compelling Speculative Buy [View article]
In regards to the Frisco payment, that money is already in escrow. Frisco's environmental consultant said, "there have been no real surprises."
Why Exide Could Be A Compelling Speculative Buy [View article]
Trying to use last year as an example of their run rate of cash is not accurate. Debt expense will stay constant in FY2014 at about $70m. Capex and other expenses will be lower.
Q1 and Q2 are always net outflows because they build inventory. This year, they ended Q3 with higher levels of inventory which means they won't use as much cash in Q1 or Q2.
Why Exide Could Be A Compelling Speculative Buy [View article]
Why Exide Could Be A Compelling Speculative Buy [View article]