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  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    DRIV still sold for about 2.5x revenue despite negative sales growth and earnings. But DRIV really wasn't a pure play payment processor. They provided a list of services for e-commerce companies (from marketing to payments).

    Of the payment processors that are publicly traded, most are big and probably not conducive to being acquired. PYDS is really the only one that is small, growing, and profitable.
    Oct 27, 2014. 11:16 AM | Likes Like |Link to Comment
  • Arotech's Growth Is Massively Decelerating, Leading To Reduced Profits And A Likely Default On Its Credit Agreement [View article]
    Subtracting the $5.5m earn-out is a circular argument. The only way they have to pay that is if the division performs well financially, which means overall EBITDA will be higher and likely not in danger of breaching any covenants.

    2nd half of the year has historically been cash flow positive for them. Receivables went way up in Q2 and cash was drawn down by $5m as a result. Those receivables will be turned into cash in 2H.
    Oct 23, 2014. 12:51 AM | Likes Like |Link to Comment
  • Arotech's Growth Is Massively Decelerating, Leading To Reduced Profits And A Likely Default On Its Credit Agreement [View article]
    So I'm still questioning why they would need to do a dilutive equity raise if your thesis does play out. They have $12m in cash from the July raise. They would just use that to pay down debt and increase the ratio...assuming their lender wouldn't grant them a simple waiver, which seems highly unlikely. A central part of your short thesis is based on this, so I just wanted to get some more clarification.
    Oct 22, 2014. 10:48 PM | Likes Like |Link to Comment
  • Arotech's Growth Is Massively Decelerating, Leading To Reduced Profits And A Likely Default On Its Credit Agreement [View article]
    Again, you're basing your estimates pretty much entirely off Army spending numbers. That's a pretty lazy way to estimate anything.

    And even if your numbers come to fruition and there is a covenant breach, it will likely not end in default. They will merely get a waiver for the ratio violated.

    The company is already sitting on about $12m in cash from the secondary they did in July at $3.50 a share. Why wouldn't they just use that to reduce "combined indebtedness" if the ratio was close to getting breached?

    I find the alarmist theme of your article to be quite laughable for a company making record profits.
    Oct 22, 2014. 09:05 PM | Likes Like |Link to Comment
  • Arotech's Growth Is Massively Decelerating, Leading To Reduced Profits And A Likely Default On Its Credit Agreement [View article]
    Not sure there is enough meat left on the bone to be short at these levels. I've been in and out of this stock, successfully, many times in the past and I'm a buyer at these levels.

    And trying to use Army spending to predict revenues for this company is a dice roll. Even in the chart you posted, there appears to be little to no correlation, other than one quarter. Case in point, a number of large defense companies (Lockheed, Northrop, General Dynamics) who are directly affected by government defense spending reported results today that showed improved growth and profitability.

    They've already guided for record revenues/profitability in 2014 and backlog is still remaining strong. If the stock was $5, I might be worried an earnings miss could cause a steep selloff. At $2.75, not so much.
    Oct 22, 2014. 06:18 PM | Likes Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    Additionally, the dramatic increase in revenues started in the 4th quarter of 2013. This statement from their latest 10-Q may be of some value:

    "In the fourth quarter of 2013, we initiated Automatic Clearing House, or ACH, transaction processing for newly acquired customers that led to dramatic increases in ACH transaction volumes. ACH volumes reported for the fourth quarter of 2013 were the highest we had experienced at the time. This trend has continued into 2014. ACH processing transactions for the second quarter of 2014 increased 45% and returned check transactions processed increased 27% as compared to the first quarter of 2014. The increases in credit and debit processing combined with the increases in ACH Processing also led to record revenues compared to any previous quarter in our history. We believe these trends will continue for the foreseeable future. We also expect to see an increase in the number of our enrolled merchant customers, for whom we provide processing for credit and debit card transactions, and we expect to add new clients to our sales pipeline, which we believe will create increased transaction volumes."
    Oct 15, 2014. 05:14 PM | Likes Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    So payment processing in general is a highly fragmented industry, which is why you've seen massive consolidation over the last few years with smaller processors getting snatched up by larger players. In terms of competitive advantage, that's hard to define since everyone in the industry pretty much offers the same thing. I believe PYDS has been able to to grow due to offering lower prices than the competition. The discount rate PYDS charges merchants is roughly 0.50% lower than the industry average and transaction fees are about 50% lower. So PYDS has sacrificed gross margins to pick up customers, but due to strong operational efficiencies and low SG&A, they are able to produce strong net margins. And based on the fact they are starting to renegotiate sales contracts at higher gross margins, things are only going to improve.

    This is a link I found that shows some of their pricing.
    http://bit.ly/1yqlhWv
    Oct 12, 2014. 01:51 PM | 1 Like Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    Not sure what billserv has to do with anything. That was over 10 years ago and is not relevant to the current business. It was a casualty of the tech bubble, as were many companies.

    Looking back at my records, I started buying PYDS shares in March of this year. I did buy about 200k shares on June 10th, so some of that volume was me. I have since continued to add to my position over the last few months.

    The management team is not "shady" at all. They are very open and they want to increase shareholder value since they own the majority of the company. They are also not "highly compensated" as you claim and have actually taken pay cuts in recent years. The COO's 10b5-1 trading plan was discussed in the first article, and while I believe it is hurting sentiment, I was satisfied with his explanation of why he has it.
    Oct 12, 2014. 01:35 PM | 1 Like Like |Link to Comment
  • Aviat Networks Is A Value Trap With 50% Downside [View article]
    Care to re-evaluate? Big hedge funds are now buying.
    Oct 11, 2014. 01:49 PM | Likes Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    For starters, companies priced like PYDS typically have negative ROA and ROE. PYDS's numbers are still both positive and that's based on trailing twelve month results, so they will be going up over the next 2 quarters.
    Oct 11, 2014. 01:16 PM | 1 Like Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    Stock price doesn't mean a whole lot to me. Only thing that matters to me is what the company is truly worth and where the market is currently valuing it. In this particular case, I believe the company is worth significantly more than $17m.
    Oct 11, 2014. 01:09 PM | 1 Like Like |Link to Comment
  • Why I'm Buying Payment Data Systems Hand Over Fist [View article]
    Absolutely ridiculous and libelous accusations. I have not, nor have I ever been, compensated by any company to write about their stock.

    Derek Capo still angry about the last stock I was buying "hand over fist."

    http://seekingalpha.co...

    He wrote a rebuttal article saying it had 50% downside and was short the stock.

    http://seekingalpha.co...

    The stock is now significantly higher.
    Oct 11, 2014. 12:56 PM | 1 Like Like |Link to Comment
  • Why I'm Buying Aviat Networks Hand Over Fist [View article]
    It appears cyclical softness in the microwave backhaul industry is finally starting to shift and Aviat now appears to be in a great position to capitalize. The recent corporate restructuring has reduced the company's breakeven level considerably and bodes well for future cash generation and earnings. On the company's fiscal 2014 fourth quarter conference call, management indicated they remain bullish about the future. Some of the highlights included:
    -Expecting sequential revenue growth every quarter in fiscal 2015
    -Expecting margin improvements starting in Q1
    -Backlog is the strongest it has been in a long time
    -Cash breakeven in 1st half of fiscal 2015, then cash generation in second half

    Additionally, international markets that have been weak recently are starting to show signs of rebounding. In Africa, Aviat's largest customer in the region, MTN Group, is guiding for an increase in capex of 50% by the end of the year. In the US, carriers continue their 4G LTE buildout, which should provide stable business for the foreseeable future.

    The stock is still trading for just a $66m enterprise value with estimates for revenue of around $370m in fiscal 2015. The industry does remain competitive and I wouldn't rule out a merger or acquisition. Obviously, I was more bullish on the stock when it was cheaper, but I still think there is money to be made here. My 6 month target is $2.50.

    Disclosure: Long
    Sep 15, 2014. 07:31 PM | Likes Like |Link to Comment
  • This Week's Outstanding Performance Award Winners: Matthew Dow And Inefficient Market [View article]
    Thanks Mike. It's just what the old ego needed, haha.
    Aug 26, 2014. 10:42 AM | Likes Like |Link to Comment
  • This Week's Outstanding Performance Award Winners: Matthew Dow And Inefficient Market [View article]
    Thanks to SA for taking the time (and money) to present this award. Programs like this go above and beyond of what I expect as a contributor.
    Aug 25, 2014. 11:17 AM | 1 Like Like |Link to Comment
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