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  • Why Is Baltic Dry Index Falling if World Is Recovering? [View article]
    Very nice breakdown. I've been looking the the shippers. Based on this, it makes sense to focus on those that have little to no Capesize vessels in their fleet. Rates for the smaller vessels look relatively strong and appear to reflect a recovery.
    Apr 14, 2010. 02:49 PM | 6 Likes Like |Link to Comment
  • Hey Apple, How About a Dividend? [View article]
    It's not that I'm demanding a dividend. I just have doubts that they can invest all that cash flow at acceptable returns.
    Mar 15, 2010. 10:28 PM | 4 Likes Like |Link to Comment
  • Yamana Gold: Finding Value [View article]
    Thanks, silverwood.

    Who knows what gold will do over the next couple of years. I know problems in the banking sector are only just beginning. With unemployment rising very rapidly, banks are now starting to deal with problems that usually occur in a down economy.

    One would think that continuing government intervention and an unstable banking environment would only cause the price of gold to rise further.

    On Feb 17 11:03 AM silverwood wrote:

    > Dan, good analysis and very conservative. There is a strong possibility
    > that gold can rise to $1200 and hold a floor of $1000 after that
    > this year. That would make AUY a $20+ stock. I'm also glad to see
    > someone who is commenting on a company that has some skin in the
    > game...Disclosure: I currently hold shares of Yamana Gold. I am also
    > long AUY.
    Feb 17, 2009. 02:31 PM | 3 Likes Like |Link to Comment
  • Lexington Realty Trust: High-Yield Opportunity, Ready for 2009 [View article]
    Mr. Rufus

    Thanks for your comments. I have to admit, my first reaction is that I'm wrong and you have found a flaw in my analysis. This is what is great about this forum. If people approach these articles with intellectual integrity, a great deal of learning can occur.

    So let's step through the numbers and see where we end up...

    I see where you get $376MM. You take reported gross rental revenue in the 3Q of $94,166M and multiply by 4. Fair enough. This represents gross revenue for the third quarter less vacancy. My cash flow analysis is equal to $442MM on this basis.

    I will point toward the annualized cash rent in their consolidated portfolio of $387,868M on page 23 of their supplemental report. I then added $48,256M from their strategic asset portfolio. This looks like a mistake, because Lexington only owns a portion of this entity. I couldn't find the exact ownership interest, but their claim after preferred returns is 35%.

    So gross revenue (assuming properties are fully leased) is as follows:

    $388MM + 16.8MM = $404.8MM in Gross Potential Rent
    Less Vacancy (6.4%) = ($25.9MM)
    EGI= $379MM

    So we're not too far off here. $376MM was based on annualized rental revenue, and $379MM is based on grossed up rents less vacancy. I want to do this so I have an accurate vacancy factor in my stressed cash flow.

    Keep in mind that we have both excluded tenant reimbursements to this point. This would be about $44 million annualized. I left it out initially to be conservative. They get about half of their operating expenses back in reimbursements. Add this back and you get:

    $451.6MM GPR
    ($28.9MM) Vacancy
    $422.7 EGI

    This looks pretty accurate. The expenses aren't really disputed. You did manage to apply vacancy to operating income, which already included vacancy. I assume you took 7% vacancy against $304MM, which already included vacancy, to get your $278MM in operating income. The rest of my income statement looks like this:

    Operating Costs: ($81 million)
    Management and Admin: ($34 million)

    Net Operating Income: $307 million
    Debt Service: ($149 million)
    Net Cash Flow After DS: $158 million, FFO/Shr = $1.44

    DSCR: 2.07x
    Implied value at 8.0% = $3,838MM. LTV~66%.

    Stressed:
    $452MM GPR
    ($90MM) Vacancy
    $362MM EGI
    ($115MM) op costs
    $247MM NOI
    ($149MM Debt)
    DSCR=1.66, FFO=$98MM, $0.90/shr

    I still feel pretty good about my analysis. No doubt the market looks difficult this year, but I do not believe that the numbers look as dire as you indicate.

    Thanks for your comments!

    Dan
    Jan 7, 2009. 04:38 PM | 3 Likes Like |Link to Comment
  • Panera Bread Undervalued At This Price [View article]
    They run a great business, have great food, and represent one of the few consistently performing companies in the market today that are on sale.
    Nov 21, 2014. 03:04 PM | 2 Likes Like |Link to Comment
  • 8 Core Portfolio Stocks [View article]
    Thanks for your feedback.

    In writing the article, I also thought it was interesting to see how the stocks compare on a relative basis. I think that one could argue that the required P/E could be higher (or cash flow yield lower) on ADP and Intel as they are both more cyclical. ADP could see benefits from improving employment, should that eventually occur, and Intel could be facing some nice upside from a delayed upgrade cycle. I have to admit that I added Pepsi above my target (around $60), but a purchase at these levels looks expensive on a relative basis.
    Mar 30, 2010. 04:19 PM | 2 Likes Like |Link to Comment
  • Winthrop Realty Trust: Well-Positioned in Commercial RE Downturn [View article]
    Thanks for the link.

    For a small REIT, Winthrop is fairly complicated. In valuing their real estate, I'd start with real estate revenue of $40,605M. Back out about 5% for management fees ($2,030M), then back out other real estate operating expenses of $9,585M to get a net operating income of $28,990M. At a 8.5% cap rate, their real estate would be worth about $340 million. This compares to the $218MM in net real estate held on their balance sheet. Make the adjustment and you get total equity of about $350 million, or around $20 per share.

    There is a lot of noise after that with their adjustments to investments. Still, FFO per share for 2009 was $2.62. That's quite a number for a stock now priced below 13 (5x FFO). With low leverage, an 8x FFO multiple gets you to $21.

    It will be interesting to see how they deploy their cash. I wouldn't want to attribute any value to investments they might make. I worry that with REITs, and decline in risk premium (cap rates) will be offset by a rise in interest rates. This will keep values from quickly rebounding. This one is certainly worth watching. With a 40% discount to estimated value, it's worth collecting a 5% dividend while the story clears up a bit. Thanks for your article.
    Mar 15, 2010. 12:53 PM | 2 Likes Like |Link to Comment
  • Why There Is Still Value in Lexington Realty Shares [View article]
    That's not what I did. I used an 8.5% cap rate applied to annualized EBITDA, less outstanding debt. The 8x FFO is more of a valuation check. It has nothing to do with the net asset value of the company.
    Jan 15, 2010. 10:56 AM | 1 Like Like |Link to Comment
  • How I'm Repositioning My Portfolio for 2010 [View article]
    Steve,

    FTR has been a tough one. Keep in mind, too, that their dividend will be going down once their purchase of SpinCo (currently owned by Verizon) is completed. However, it looks like the combined company will have a stronger balance sheet and better economies of scale. There is a good presentation on their website:

    phx.corporate-ir.net/E...
    Jan 14, 2010. 09:34 AM | 1 Like Like |Link to Comment
  • Middleby's Bad News Is Behind It [View article]
    Not quite sure I agree with the title of the article, as there are likely to still be some challenges ahead. Despite these challenges, however, Middleby may still prove to be a bargain in the long term.
    Sep 9, 2009. 10:32 AM | 1 Like Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    Writing about Capital Source is very much like assembling a puzzle. Management gives you the pieces but it seems like they make their best efforts to scatter them around really good to obscure what's going on. Maybe it's intentional, maybe not. It makes me a bit nervous, though.

    In 2-3 years there may be clarity, but investors will pay a higher price for that potentially cheery consensus.


    On Aug 18 06:16 PM H.J. Huneycutt wrote:

    > Great analysis, Dan.
    >
    > I've looked at CapitalSource a few times, but have never felt I understood
    > the banking aspect well enough to give it much of a write-up. I've
    > been kinda loosely following it in order to try to understand the
    > industry a bit better.
    Aug 18, 2009. 10:14 PM | 1 Like Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    It's good to be skeptical of bank assets. They could be much worse or much better than reported. When I wrote this analysis, Capital Source was about $2 per share. I ended up not investing more for the same reasons you stated, even though it may have made sense to put some money into it because at that price, you may just earn 5x your money in the next three years.


    On Aug 18 05:27 PM stink726 wrote:

    > After being burned by so many different types of financial stocks
    > in the past 2 years, I don't see how anyone can believe any financial
    > company's financials. Who knows what the next thing to blow up will
    > be?
    Aug 18, 2009. 10:11 PM | 1 Like Like |Link to Comment
  • Yamana Gold: Finding Value [View article]
    I haven't looked lately, but Yamana has typically hedged only copper prices. Management counts copper as a sort of by-product from their Chapada mine and uses revenue here to offset productions costs. Their strategy in the past has always been to remain unhedged on the price of gold, and I haven't seen anything to indicate a change in that strategy.


    On Feb 20 11:21 AM MateoJoe wrote:

    > Dan,
    > Good write up. I've owned since six and change and keep researching
    > so your work is appreciated.
    >
    > One question: Do you or any other posters know how much of AUY's
    > production is forward hedged?
    >
    > Thanks.
    Feb 20, 2009. 03:07 PM | 1 Like Like |Link to Comment
  • Yamana Gold: Finding Value [View article]
    The press release linked above from Yamana indicates that they are forecasting $800/ounce in 2009 and $825/ounce in 2010.


    On Feb 18 06:13 PM arlin wrote:

    > I believe AUY's estimates are based on $700 gold.As already stated
    > Energy is 25% of the cost of minning gold and its down from $147
    > bbl to $35bbl,Also Auy is a Money maker in the currency swaps between
    > their operations and selling gold in dollars, roughly 20%.
    Feb 19, 2009. 12:08 AM | 1 Like Like |Link to Comment
  • Are Investors Paying Too Much for Oyo Geospace's Potential? [View article]
    I have an article coming out tomorrow on Dawson. I agree with your assessment.
    Jan 20, 2010. 09:18 AM | Likes Like |Link to Comment
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