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Jeremy Johnson, CFA  

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  • Declining Propane Demand Will Eventually Threaten AmeriGas' Dividend [View article]
    Working capital was a $90 million use in 2013. If you look at the accounts the moves are not large are confined to a modest rise in A/R and a decline in customer deposits. The company should not manage the distribution around changes in working in capital. The company produces all the cash it needs and more from operations to fund the distribution. No one should have an issue with them drawing a bank loan or using excess cash to fund small changes in working capital -- some of which may be due to the prior year's acquisition.
    Jul 9, 2014. 12:11 PM | Likes Like |Link to Comment
  • Rocket Fuel's Fall From Grace May Be Temporary [View article]
    Well I took my short-term gain a few dollars higher than the stock is today, but I still think it is an attractive valuation at the low-20s if you believe in the market they operate in. The fact they make no money is not relevant.
    Jul 8, 2014. 01:00 PM | Likes Like |Link to Comment
  • Declining Propane Demand Will Eventually Threaten AmeriGas' Dividend [View article]
    First off, the company does not need to raise equity or borrow to pay the distribution. It is fully covered by cash from operations. The EPS is low because of intangible amortization. Also, the company has a large credit facility if it needs money in the short-term. And really this is not a company that need access to capital markets continuously.

    For the TTM period Net Income + Depr. & Amort - Capex / Distribution was 1.15x.

    APU is really in two businesses, one is retail propane to homeowners, the other is cylinder exchange. The first does have long-term challenges, but the second I believe continues to grow. It is not worth installing natural gas just have a BBQ. Cylinder exchange also occurs to industrial users, if I remember correctly. It is really the cylinder exchange business that gives APU the margins it has.

    There is one other company people can look at which is Suburban Propane (SPH). It is not involved in the cylinder exchange market, but is quite large.

    Ferrellgas and AmeriGas are currently fighting the FTC over a collusion charge involving Wal-Mart -- this probably is a bigger near term risk than anything else.
    Jul 8, 2014. 12:50 PM | 3 Likes Like |Link to Comment
  • Rocket Fuel's Fall From Grace May Be Temporary [View article]
    I think this is the beginning of a good entry point if you like this market space. About 1.5x next quarter revenue annualized sales when adding back the cash.

    The company's cash burn is quite low and probably 100% discretionary.

    Wouldn't want the company to make money at this stage, they would just end up getting run over by competitors that were willing to fund growth at a faster rate.

    If you don't like the space, obviously there is really no good entry point.
    May 9, 2014. 01:45 PM | 1 Like Like |Link to Comment
  • U.S. LNG Export Terminals: A Big Potential Investment Blunder [View article]
    Doesn't matter how expensive it is, the 50 mtpa from AUS will come to market regardless. I think the returns on those projects may be a bit subpar, but the gas will flow one way or another. The variable costs of production are tiny. This is a lot of supply for the LNG market to absorb and could impact the market for years with lower prices on the spot market.

    This is not an argument against holding Cheniere by the way. It is only to say the market some future projects expect may not be there.

    Also the transportation benefit is not negligible. The additional cost of shipping from the US as opposed to Australia is not much more than the all in wholesale gas price in the US currently. If spot Asia normalizes to spot Europe when Australia comes online, the transport fee will mean 25% extra cost when trying to sew up a new LNG project based in the US.
    Jan 14, 2014. 12:05 AM | Likes Like |Link to Comment
  • U.S. LNG Export Terminals: A Big Potential Investment Blunder [View article]
    Production declines are due to cheap gas, the production increase was producers living off the capital they raised when prices were higher and also capital raised from dumb and strategic money.

    You would see a huge linear supply response as you moved from 4 to 5 to 6 dollar gas. The gas comes out of the ground so fast in these fracked wells, the projects are practically self financing.

    Everyone worries about the decline rates so much and in the long term it may be problem, but in the short term the high decline rates are a major positive. Your project payouts are measured in years instead of decades as with for example an oil sands project.

    But the easy money has been made on the drilling side (which is largely a land game). Now it is finding ways to arb $5-6 gas against more expensive energy, either gas on the international market (spot LNG is $19 -- might be able to make some money there?) or against crude by converting heavy vehicles to natgas, for example.

    Australia will start bringing on a massive amount of LNG in 2014-17 from many discrete projects (BG, Cheveron, Inpex, Santos, Origin). Up to 55 mtpa will come out of these projects while the global market was 240 mtpa in 2012. Australian production is much more of a threat to the viability of U.S. gas on international markets that the sustainability of shale fields. There is also another 50 mtpa of projects outside of Australia...
    Jan 7, 2014. 12:57 AM | Likes Like |Link to Comment
  • Why Stan Druckenmiller Is Wrong On IBM [View article]
    Would Brando buy IBM or Amazon?
    Nov 24, 2013. 06:30 PM | Likes Like |Link to Comment
  • Evaluating Store Overlap Between Walgreen And Rite Aid [View instapost]
    You're right, I missed about 150 Rite-Aid stores.
    Oct 24, 2013. 10:38 PM | Likes Like |Link to Comment
  • The Battle For Mondelez: Coke Vs. Pepsi? [View article]
    Mondelez is worth far more than $35. Keep your hands off my global chocolate and biscuit business while trying to divest your burning soda platform Pepsi.
    Oct 2, 2013. 12:52 AM | Likes Like |Link to Comment
  • Yen Bid Ahead Of Bank Of Japan [View article]
    I think they could refresh their REIT bucket soon (along with other measures).
    Aug 7, 2013. 11:11 PM | Likes Like |Link to Comment
  • A Tale Of 2 Giant Telecoms With Giant Yields [View article]
    It is something like 5% or 10% withholding. You get a credit toward US taxes.
    Jul 16, 2013. 09:30 PM | Likes Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    Changes in accounts receivable is not material for REITs.
    Jul 16, 2013. 09:28 PM | Likes Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    A REIT does not have to report FFO which seems to be what you are suggesting and it has no bearing on its tax status. REITs are only required to distribute 90% of cash net income. FFO is not even a GAAP measure. The only substansive difference between FFO and EPS is the inclusion of depreciation in the former. Because buildings have long asset lives FFO has some value to look at.
    Jun 19, 2013. 10:32 PM | Likes Like |Link to Comment
  • A Tale Of 2 Giant Telecoms With Giant Yields [View article]
    I don't think an investor has a reasonable claim to all of CHL's cash flow. For example, during the downturn the company was tapped on the shoulder to recapitalize a regional lender Shangai Pudong Development Bank (USD 6 bn), although it was done under the supposed auspices of a mobile payment partnership, I suspect this is political investment and not a financial one.

    Another poster brought up the obtuse structure of the SOE called CMCC which holds spectrum assets; in relation to the holding company. The SOE has a number of rather awkward agreements with the holding company that give it favorable economics.

    On the bright side, I think the dividend is extremely safe and it will grow at a nominal rate in the future, but the benefit to an investor is not like buying a 10x PE stock or in reality with all the cash CHL has (USD 65 bn equivalent), a 7x PE stock. CHL is not going to launch a $20 billion buyback like Verizon would in a similar situation.

    I own some CHL, but I don't expect much out of it.
    Jun 18, 2013. 02:19 AM | Likes Like |Link to Comment
  • J.C. Penney (JCP) confirms Ron Johnson is "stepping down and leaving the company." Mike Ullman, who was J.C. Penney's CEO until Nov. 2011, is replacing Johnson as CEO, and has also been elected to the company's board. Investors don't seem crazy about the choice, JCP now just +0.5% AH. (previous) Update (5:33): Shares are now down 4.4% AH. [View news story]
    42k an hour is way too high. That's not even a sensible estimate.
    Apr 8, 2013. 11:10 PM | 1 Like Like |Link to Comment