Statoil: Shares To Remain Weak Short Term, May Interest Long-Term Buyers [View article]
Jan,
I should have just said European not EZ. Norway has strong currency/budget and yet often suffers alongside the EZ markets. Revenues and profits of STO should hardly be effected by European weakness which is why I thought the weakness was unfair.
Norway/Finland/Sweden are major owners in many commodity businesses:http://bit.ly/11w8ugO
Regardless of the higher tax rates, STO has recently been providing a profit margin of 8-11%, while XOM has returned around 9%. All else equal, the P/S multiples should be similar, maybe even slightly higher for STO with their new production coming on line. Yet, STO trades for 65%.
On P/S alone BP is the cheapest, but BP isn't as efficient AND they have a massive lawsuit overhang. I'd rather have the Norwegian government as my partner than the US government as my litigator.
STO represents approx. 65% of my oil, BP is the other 35%. I'm considering adding some RDS.B. Oil altogether is approx. 5% of my holdings.
Carl Icahn has bought 72M Dell (DELL +0.4%) shares from would-be buyout partner Southeastern Asset (half its stake), and is proposing a $14/share tender offer for 62% of Dell's outstanding shares (1.1B shares). The Southeastern deal makes Icahn Dell's largest outside shareholder. Dell, whose shareholder vote on Michael Dell/Silver Lake's LBO offer remains set for July 18, has edged higher to $13.45. (previous) [View news story]
Dell itself is fine, but the insider takeover was greedy. The battle is destroying their chances to pull ahead here...
Each month this goes on, the true value of DELL drops.
I thought it was worth maybe $20 back in January... now I wouldn't comfortably pay more than $15.
Good analysis-- DF has piqued my interest and I'm now going to do some DD and evaluate a purchase decision. Really want to see some Q2-13 results sans majority of Whitewave first.
However, your "peers" selection is very misleading.
Dean, especially sans Whitewave, is basically a milk distribution pure play. Unilever, General Mills, etc are much more diversified and are frankly horrible comparisons.
It's similar to comparing Safeway to Walmart or Bestbuy to Amazon. Yes, they have similar business components, but the overlap is very limited. It makes sense that Dean warrants a minimum of a 20-30% haircut just due to single commodity product exposure.
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
Thanks Rick.
I've found 4 reasons:
1) 15% tax on divvys 2) Majority gov't holdings 3) Slower production performance/rampup recently 4) Eurozone
---
Together these amount to around a 50% discount on metrics to CVX and XOM. Seems like a clear buy since #3 is the only real issue. It's silly how the whole EZ gets punished, including VLKAY, when the vast majority of their business is not EZ.
Good overview and points here. I sold mine around $14. Bought half at $19 and half around $11. It was a bust. Thankfully I also bought GPS for $18 and sold for $32.
Horrendous management and they halted the buyback when the stock was trading at its lowest. I'm riding BODY as a more likely high payout turn-around that also has growth potential.
Hellman & Friedman reportedly intends to carry out an IPO for home-building products company Associated Materials, which the private equity firm bought for $1.3B in 2010. The speculation comes amid a pick-up in the housing sector and as peer companies such as HD Supply Holdings push forward with plans to list. Associated Materials generated net sales of $1.1B in 2012 and EBITDA of $107M. [View news story]
They have to make money right? EBITDA ratio of over 12!? No thanks...
Worth noting: Short interest on Walter Energy (WLT) rose 13.8% to 17.05M shares through the end of May, to 27.47% of its current float and the largest number of shares sold short in the past year. Before today's move, shares were down nearly 14% and it might be reasonable to speculate that shorts increased positions somewhat over the last two weeks. Shares are still halted, with the stock down 17.4%. [View news story]
Did anyone see the crash on related coal companies? ACI dropped to a record low for a few minutes. Ridiculous. No debt due until 2016.
Safeway: In The Discount Aisle For A Reason [View article]
Dave,
Spot on. The 30% boost we saw after-hours was exuberance because it's likely that internal models at many trading firms had not valued the Canadian assets as highly as $5.7B.
One the markets had a full day to digest the data... and realized that the Canadian stores were HIGHLY PROFITABLE (40% of operating profits but only 14% of the total store count), they became much more lukewarm to the deal.
Along a deeper line of thinking-- assuming the 14% of store count with top performance is worth $5.7B // SWY could be worth $30B+ if they achieved an amazing efficiency turnaround in the US.
Reality is, however, that the US grocery business is much more competitive than Canada. At best, I see the remaining SWY as worth $10B-15B.
Safeway: In The Discount Aisle For A Reason [View article]
Dave, I understand what you're saying-- but you're only looking at the equity component. The total value of the company must include debt.
I'll give you a more drastic example so you can see what I'm demonstrating.
Say you have a holding company "HCO" with a market cap of $10M and net debt of $90M-- 90% cap ratio. Let's assume their assets are all equal in value and are worth $100M-- the company trades at a P/B of 1 for simplicity (Equity = Assets-Liabilities / Assets=$100M Liabilities=Net Debt of $90M) (P/B = Market Cap/Equity).
If HCO sells 1/2 of their $100M assets for $50M and says "we will use 1/2 the proceeds to pay down debt and 1/2 the proceeds to buy back stock," you temporarily have $40M of net debt. However, your total assets are now only worth $50M. If you keep the SAME P/B ratio, then HCO would still have the SAME market cap.
By your example to SWY above, with the same logic, you'd say "WOW!!! They raised $50M and their market cap is still $10M. The market MUST be valuing the remaining 50% of assets at NEGATIVE $40M."
Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
Thanks for bringing this to my attention. I had a Diana Shipping and Containerships update planned for the next week or 2, and will be sure to address this article as well.
I wanted to wait and see what DCIX does with their new capital, but they haven't moved yet... I expected at least 2 new vessels by the end of June.
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
Perhaps an annoying nitpick, but Master is technically correct. The US revenues as a whole 'might' have decreased as a result. Since it's our government/shared programs/resources/etc, technically (most) everyone was slightly affected. Of course we're talking billionths of percentage points...
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
Tim,
Have you looked at STO? It seems to me like a BP valued company without the potential for lawsuit troubles. I was going to load up on BP and maybe some RDS.B, but I decided to go small on BP and start loading up on STO instead. Any thoughts?
There's a 15% tax on the dividends, but it seems silly to discount the price (at what seems to be near 50% to comparables) for a 15% tax.
Statoil: Shares To Remain Weak Short Term, May Interest Long-Term Buyers [View article]
I should have just said European not EZ. Norway has strong currency/budget and yet often suffers alongside the EZ markets. Revenues and profits of STO should hardly be effected by European weakness which is why I thought the weakness was unfair.
Norway/Finland/Sweden are major owners in many commodity businesses:http://bit.ly/11w8ugO
Regardless of the higher tax rates, STO has recently been providing a profit margin of 8-11%, while XOM has returned around 9%. All else equal, the P/S multiples should be similar, maybe even slightly higher for STO with their new production coming on line. Yet, STO trades for 65%.
On P/S alone BP is the cheapest, but BP isn't as efficient AND they have a massive lawsuit overhang. I'd rather have the Norwegian government as my partner than the US government as my litigator.
STO represents approx. 65% of my oil, BP is the other 35%. I'm considering adding some RDS.B. Oil altogether is approx. 5% of my holdings.
Carl Icahn has bought 72M Dell (DELL +0.4%) shares from would-be buyout partner Southeastern Asset (half its stake), and is proposing a $14/share tender offer for 62% of Dell's outstanding shares (1.1B shares). The Southeastern deal makes Icahn Dell's largest outside shareholder. Dell, whose shareholder vote on Michael Dell/Silver Lake's LBO offer remains set for July 18, has edged higher to $13.45. (previous) [View news story]
Each month this goes on, the true value of DELL drops.
I thought it was worth maybe $20 back in January... now I wouldn't comfortably pay more than $15.
Why Dean Foods Is Poised To Pop [View article]
However, your "peers" selection is very misleading.
Dean, especially sans Whitewave, is basically a milk distribution pure play. Unilever, General Mills, etc are much more diversified and are frankly horrible comparisons.
It's similar to comparing Safeway to Walmart or Bestbuy to Amazon. Yes, they have similar business components, but the overlap is very limited. It makes sense that Dean warrants a minimum of a 20-30% haircut just due to single commodity product exposure.
Proof That Google Glass Uses A Himax LCOS Microdisplay [View article]
I see a massive market potential for vehicles.
It's way too early to speculate on GG. Come back in 2015.
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
I've found 4 reasons:
1) 15% tax on divvys
2) Majority gov't holdings
3) Slower production performance/rampup recently
4) Eurozone
---
Together these amount to around a 50% discount on metrics to CVX and XOM. Seems like a clear buy since #3 is the only real issue. It's silly how the whole EZ gets punished, including VLKAY, when the vast majority of their business is not EZ.
Statoil: Shares To Remain Weak Short Term, May Interest Long-Term Buyers [View article]
1) Higher euro taxes-- although not really true long run overall imo
2) Government is a majority owner-- but this is the norm for large Scandinavian corps
3) Tax of dividends of 15% even in an IRA
4) Slower production ramp-up in past few years and slightly less certainty about longevity/quality of assets
----
All these amount to over a 50% discount to XOM/CVX. Even a slight discount to the beleaguered BP...
I'm loading up on STO.
Why We Still Own Aeropostale [View article]
Good overview and points here.
I sold mine around $14. Bought half at $19 and half around $11. It was a bust. Thankfully I also bought GPS for $18 and sold for $32.
Horrendous management and they halted the buyback when the stock was trading at its lowest. I'm riding BODY as a more likely high payout turn-around that also has growth potential.
I suggest you take a look there.
Locking In Berkshire Hathaway Gains [View instapost]
Hellman & Friedman reportedly intends to carry out an IPO for home-building products company Associated Materials, which the private equity firm bought for $1.3B in 2010. The speculation comes amid a pick-up in the housing sector and as peer companies such as HD Supply Holdings push forward with plans to list. Associated Materials generated net sales of $1.1B in 2012 and EBITDA of $107M. [View news story]
Worth noting: Short interest on Walter Energy (WLT) rose 13.8% to 17.05M shares through the end of May, to 27.47% of its current float and the largest number of shares sold short in the past year. Before today's move, shares were down nearly 14% and it might be reasonable to speculate that shorts increased positions somewhat over the last two weeks. Shares are still halted, with the stock down 17.4%. [View news story]
Panic.
Safeway: In The Discount Aisle For A Reason [View article]
Spot on. The 30% boost we saw after-hours was exuberance because it's likely that internal models at many trading firms had not valued the Canadian assets as highly as $5.7B.
One the markets had a full day to digest the data... and realized that the Canadian stores were HIGHLY PROFITABLE (40% of operating profits but only 14% of the total store count), they became much more lukewarm to the deal.
Along a deeper line of thinking-- assuming the 14% of store count with top performance is worth $5.7B // SWY could be worth $30B+ if they achieved an amazing efficiency turnaround in the US.
Reality is, however, that the US grocery business is much more competitive than Canada. At best, I see the remaining SWY as worth $10B-15B.
Still 25-88% of potential turnaround upside.
Safeway: In The Discount Aisle For A Reason [View article]
I'll give you a more drastic example so you can see what I'm demonstrating.
Say you have a holding company "HCO" with a market cap of $10M and net debt of $90M-- 90% cap ratio. Let's assume their assets are all equal in value and are worth $100M-- the company trades at a P/B of 1 for simplicity (Equity = Assets-Liabilities / Assets=$100M Liabilities=Net Debt of $90M) (P/B = Market Cap/Equity).
If HCO sells 1/2 of their $100M assets for $50M and says "we will use 1/2 the proceeds to pay down debt and 1/2 the proceeds to buy back stock," you temporarily have $40M of net debt. However, your total assets are now only worth $50M. If you keep the SAME P/B ratio, then HCO would still have the SAME market cap.
By your example to SWY above, with the same logic, you'd say "WOW!!! They raised $50M and their market cap is still $10M. The market MUST be valuing the remaining 50% of assets at NEGATIVE $40M."
Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
I wanted to wait and see what DCIX does with their new capital, but they haven't moved yet... I expected at least 2 new vessels by the end of June.
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]
Have you looked at STO? It seems to me like a BP valued company without the potential for lawsuit troubles. I was going to load up on BP and maybe some RDS.B, but I decided to go small on BP and start loading up on STO instead. Any thoughts?
There's a 15% tax on the dividends, but it seems silly to discount the price (at what seems to be near 50% to comparables) for a 15% tax.