According to Dow Jones, it is 8.9% FCF yield for LTM period. The next twelve will not be the same. Cash flow is highly variable for these companies quarter to quarter. Fourth quarter will probably be strong due to wide cracks in CA although they have normalized in the last 2 weeks.
There was zero chance you were going to get equal bang for buck from a global luxury car manufacturer with 10s of billions of invested capital and Tesla. That's just not a balanced fight.
My guess is current Tesla investors will have it rough, but in 15-20 years an electric luxury car will be de facto. Tesla will pay to develop the market and BMW et al will reap the benefits.
It isn't that Tesla will make a car that is not good enough, or even "the best" all things considered, but rather that the capital costs will always be too great for the company to internally fund its development at a fast enough pace.
There Is Still Time For A 27% Return On The Nexen Deal [View article]
If you read the comment sections of your newspapers about 95% of people are fervently against this.
Nexen's assets are so international that I don't see why anyone should really care. However, it would set some precedent.
I have followed this company closely as a subordinated bond holder, and I think Canada should allow it to be sold. It is not really a first class player. The money coming into Canadian investors (at a significant premium mind you) could be better put to use by reinvesting in new oil & gas projects.
Refineries have large swings in profitability from year to year. Nothing about tapping a new resource is going to change that. The story changes every five to ten years. The last story was heavy oils and the industry paid billions on hydrocrackers and cokers. Doesn't matter though, the crack spread is volatile as history has proven.
1) Cyclical business, use cycle-adjusted normalized cash flow not peak nor trough figures.
2) CA refiners will be spending huge sums to meet new environmental standards taking effect through this decade which is the reason BP sold and Valero is selling CA. TSO will milk the cash flow for a couple years then come back to shareholders with huge increases in capex.
CA Technologies: A Business In Transition [View article]
Thanks! BMC is facing exactly the same issue highlighted here. As companies, I am not saying either are bad investments, just trying to highlight the challenge.
BHP Billiton (BHP) is considering shipping some of its U.S. shale gas reserves to Asia, spurred by interest from Japanese power utilities seeking shale gas, which sells for about a quarter of the price of LNG imports. It is becoming more attractive for BHP to export gas from the U.S. rather than from western Australia, where LNG ventures are struggling with escalating costs. [View news story]
THQ Is In Technical Default On Credit Facility [View article]
Be careful in your assumptions about what liabilities are real or not. Everyone that views THQs liabilities as an asset on their own balance sheet certainly are expecting to be paid, one way or another. And those claims are senior to your equity.
THQ Is In Technical Default On Credit Facility [View article]
You're going to have to go deeper than that to get value as a buyer. You need to think about SR 2, 3, 4 games out. You need to assume the Relic studio with everything they have can be a good earner after getting out of the shackles that was THQ under old management. You also need the deep portfolio of IP to have some gems in the rough that can be re-imagined (admittedly there isn't a whole lot there).
All the license stuff isn't going to have much value to a buyer because the license holder is going to end up getting the upside, although you have to go license by license. Fact is, any studio such as EA could have bought those licenses already -- they didn't because the returns are small to the developer. Again, they might have a license or two that is outperforming, but it won't be much. License holders are pretty sophisticated these days.
So basically what you have is the 1) SR franchise, 2) a bunch a secondary titles like Metro, Company of Heroes, etc, 3) the license stuff, 4) the deep portfolio (things like Homeworld that can be re-imagined); 5) the loss carryforwards... and that is basically it.
1) 125 million 2) 50 million 3) 30 million 4) 25 million 5) 25 million
That is just one way to get to $255 million which is your hurdle (in my view), that is somewhat realistic. You could also assume the deep portfolio is worth more, as I did in my article and forget the NOLs, but I was probably wrong in article to assume so much the secondary and tertiary titles and you need the NOLs to get across the hurdle.
The biggest unknown is what is ascribed to SR, it would be more than $125mm. Not many titles have that kind of brand and a bigger play will probably assume, rightly or wrongly, that they can use their marketing muscle to increase that.
EDIT: You also have the cash, some of that will get chewed up in the next couple months, but assume $15-20 million makes it easier to get over the hurdle if the value on 2 though 4 isn't as much as estimated.
THQ Is In Technical Default On Credit Facility [View article]
It says in the NT 10Q they have $36 million of cash, up from 20.9 million in the previous Q. It is very likely that they made a strategic revolver draw. This is like doing an onside kick with 45 seconds left in the game when you are losing: by which I mean, this is just what you do in their situation, without debate. You always draw down the revolver before you absolutely have to. The covenant is there to protect Wells from this situation to some extent (otherwise they would have drawn more). This also allows Wells to interject itself into the situation.
THQ Is In Technical Default On Credit Facility [View article]
One thing you aren't considering is that there is far more debt than the $100 million of converts. Accounts payable, accrued expenses, the revolver, other obligations, that stuff MUST be covered by the value of the IP because there is little in the way of current assets such as accounts receivable and cash. Therefore, the value of the IP NEEDS to be over $250 million (or more given trends since the last 10Q) for the equity to have value. This is NOT debatable, trust me. Sure you can debate $10-20 million this way or that, but basically you need to get around that figure.
THQ Is In Technical Default On Credit Facility [View article]
They did publish a stub 10-Q and cash from operations was negative 50 million -- yes, they spent some money, but a good potion of it was on some pre-existing obligations. I don't know how much they spent on marketing, but some if not a majority of the revolver draw was likely spent. Good chance they will generate some cash in 4Q though due to the holiday.
Evaluating THQ's Financial Position And Enterprise Value [View article]
NOLs can only be used to the extent of the purchase price * a percentage determined by the IRS which is about 3% per year. So if THQ had $600 million of NOLs (a guess based on their accumulated deficit), then the purchaser could use $18 million per year. Sheltering $18 million of pretax income in this industry is probably worth $5 million a year (at most). If a buyer paid 5x for that, you have $25 million. In theory, 5x is a pretty low multiple but it would depend on who the bidder is, both in terms of what rate they pay, and how confident they were they could use the NOLs many years into the future.
EDIT: I see that the company has about $600 million in NOLs on a Federal level and over $300 million at the state level (CA likely) which could have some value for companies that pay significant CA state taxes.
Evaluating THQ's Financial Position And Enterprise Value [View article]
The way I did this was make a reasonable estimate of how you can get to $255 million of value which the level you need for the equity to start making a return, in my view. If you think DS II has value above what I put in the Misc. category, then that is upside. Still, you should do a gut check on value for some of these secondary and tertiary assets. I even question my estimate on Homefront...
Tesoro: Undervalued [View article]
Will Tesla Disrupt? [View article]
My guess is current Tesla investors will have it rough, but in 15-20 years an electric luxury car will be de facto. Tesla will pay to develop the market and BMW et al will reap the benefits.
It isn't that Tesla will make a car that is not good enough, or even "the best" all things considered, but rather that the capital costs will always be too great for the company to internally fund its development at a fast enough pace.
There Is Still Time For A 27% Return On The Nexen Deal [View article]
Nexen's assets are so international that I don't see why anyone should really care. However, it would set some precedent.
I have followed this company closely as a subordinated bond holder, and I think Canada should allow it to be sold. It is not really a first class player. The money coming into Canadian investors (at a significant premium mind you) could be better put to use by reinvesting in new oil & gas projects.
Tesoro: Undervalued [View article]
http://bit.ly/UdEgOZ
Tesoro: Undervalued [View article]
2) CA refiners will be spending huge sums to meet new environmental standards taking effect through this decade which is the reason BP sold and Valero is selling CA. TSO will milk the cash flow for a couple years then come back to shareholders with huge increases in capex.
CA Technologies: A Business In Transition [View article]
BHP Billiton (BHP) is considering shipping some of its U.S. shale gas reserves to Asia, spurred by interest from Japanese power utilities seeking shale gas, which sells for about a quarter of the price of LNG imports. It is becoming more attractive for BHP to export gas from the U.S. rather than from western Australia, where LNG ventures are struggling with escalating costs. [View news story]
THQ Is In Technical Default On Credit Facility [View article]
THQ Is In Technical Default On Credit Facility [View article]
All the license stuff isn't going to have much value to a buyer because the license holder is going to end up getting the upside, although you have to go license by license. Fact is, any studio such as EA could have bought those licenses already -- they didn't because the returns are small to the developer. Again, they might have a license or two that is outperforming, but it won't be much. License holders are pretty sophisticated these days.
So basically what you have is the 1) SR franchise, 2) a bunch a secondary titles like Metro, Company of Heroes, etc, 3) the license stuff, 4) the deep portfolio (things like Homeworld that can be re-imagined); 5) the loss carryforwards... and that is basically it.
1) 125 million
2) 50 million
3) 30 million
4) 25 million
5) 25 million
That is just one way to get to $255 million which is your hurdle (in my view), that is somewhat realistic. You could also assume the deep portfolio is worth more, as I did in my article and forget the NOLs, but I was probably wrong in article to assume so much the secondary and tertiary titles and you need the NOLs to get across the hurdle.
The biggest unknown is what is ascribed to SR, it would be more than $125mm. Not many titles have that kind of brand and a bigger play will probably assume, rightly or wrongly, that they can use their marketing muscle to increase that.
EDIT: You also have the cash, some of that will get chewed up in the next couple months, but assume $15-20 million makes it easier to get over the hurdle if the value on 2 though 4 isn't as much as estimated.
THQ Is In Technical Default On Credit Facility [View article]
THQ Is In Technical Default On Credit Facility [View article]
THQ Is In Technical Default On Credit Facility [View article]
NT-10 Q, lots of information in here, just not a real financial statement.
My guess is you will see a corporate action within 45 days.
THQ Is In Technical Default On Credit Facility [View article]
Evaluating THQ's Financial Position And Enterprise Value [View article]
EDIT: I see that the company has about $600 million in NOLs on a Federal level and over $300 million at the state level (CA likely) which could have some value for companies that pay significant CA state taxes.
Evaluating THQ's Financial Position And Enterprise Value [View article]