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Matthew Dow

 
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  • Why Write On Seeking Alpha? [View article]
    The editorial staff has a journalism bent to it traditionally, so they are often very good at catching grammar and spelling kind of mistakes :) Sometimes if you are writing about a popular stock, they will challenge you to ensure you are providing something "new" to the conversation.
    Dec 22, 2014. 03:53 AM | Likes Like |Link to Comment
  • Why Write On Seeking Alpha? [View article]
    You can write regular articles and choose to designate any earnings to charity. They have this as an option in the payment details - you can select "donation" instead of bank transfer. I don't know too much about it, but if that is something holding you back, it shouldn't, I would send SA an email to get details on it.
    Dec 22, 2014. 03:50 AM | Likes Like |Link to Comment
  • Why Write On Seeking Alpha? [View article]
    In the spirit of "self policing", what could be interesting is if we could have in addition to the "like" button, a "thumbs down" or dislike feature. This could be added both to comment streams but also to the overall Article itself (to like or dislike the article from the Author). Similar to what you see on many message boards and forums. SA could then store this, and when contributors submit articles to publish if they notice that those authors have a big disproportion of dislikes/negative feedback on their comments and prior articles, they could use this as a method to help them decide where they need to be more critical. I mean lets face it - most of the editors are busy full time reviewing articles, but they do not have the time to do full fact checking or other in depth research on someones article. Readers however do this all the time and voice their opinions in the comments. If SA could capture this feedback more accurately via like/dislike buttons they could better screen out for the future articles.
    Dec 22, 2014. 03:42 AM | 6 Likes Like |Link to Comment
  • Long Immigration Reform With American Apparel [View instapost]
    So why an instablog? Too risque for SA editors? *chuckle* keep up the great work Chris, I love reading your combination of entertainment and good investing ideas
    Dec 21, 2014. 04:36 AM | Likes Like |Link to Comment
  • Russia, Gold, Oil, And Interest Rate Extremes [View article]
    An SCO Jan 16 put atm strike of $75 cost about $23.. Seems like a lot to put out, but the chances of this falling below $50 in the next year at some point is quite good. Although this requires a big outlay, you could be right its a much safer play.
    Dec 19, 2014. 06:11 AM | Likes Like |Link to Comment
  • Russia, Gold, Oil, And Interest Rate Extremes [View article]
    Thanks chris for the article, interesting idea. Seems like good odds, for example to write ATM calls that expire in say march, good premiums due to extreme volatility. My only hesitation, is what hapoens if oil goes to $40 or less? sCO traded over $200 in 2009!! Yikes. How do you get comfortable with that risk?
    Dec 19, 2014. 04:12 AM | 1 Like Like |Link to Comment
  • California Resources Corporation Is A Spin-Off With A Substantial Opportunity In The Golden State [View article]
    Insiders keep buying... Another $200k this week
    Dec 12, 2014. 10:16 PM | Likes Like |Link to Comment
  • Avoid Ubiquiti Networks For Now [View article]
    Yeah, i'm not a technical follower, but it does seem to be holding fairly steady. I see great long term upside, but not too sure on the timing. I've taken some stock off the table and invested in some LEAPs.
    Dec 10, 2014. 10:39 AM | 1 Like Like |Link to Comment
  • California Resources Corporation Is A Spin-Off With A Substantial Opportunity In The Golden State [View article]
    Yeah I agree, I think there is a perfect storm that caused excess selling. I mean for sure if Oil keeps falling or doesn't rebound much, the stock is unlikely to go up THAT much, but I feel quite comfortable with the margin of safety here.
    Dec 10, 2014. 03:07 AM | 1 Like Like |Link to Comment
  • California Resources Corporation Is A Spin-Off With A Substantial Opportunity In The Golden State [View article]
    Thanks for this article. I'm not an expert in this industry, but been looking to put some capital to work in a spin-off as well as something that has tremendous upside leverage attached to oil prices, in the event of a rebound. I decided today to buy some $5 May 2015 calls, which only cost about a net $0.65 at current prices, which to me seems to completely ignore the asymmetric potential of even a slight rebound in oil prices. I like this play because downside risk is capped, and if I invested in the stock instead and oil prices continue to fall another $20 bucks then I could lose more easily. Some additional points:
    1. I like how mgmt is highly incentivised on ROIC/ROA metrics, and in general outperforming peers and standard stock benchmarks. Top executives can earn about 4-5x their base salary roughly in stock compensation looking at their long term goals through 2016.
    2. While they loaded up on debt, leverage is now quite good, and as long as they can "survive" the storm in oil prices, and small rebound and the stock has asymmetric upside.
    3. Speaking of surviving the storm, I think they are positioned for this to be possible. As the author states there is about $1.5B in liquidity immediately available, which even with big drop in prices they could still maintain their current spending levels for a year without needing more financing. But more than likely they will trim back some exploration and capex spending, in which case they probably have a 2 year buffer to be able to survive until prices rebound. This I would say is a worst case scenario.
    4. I'm interested how the 3.5x EBITDAX multiple used for valuation compares to peers? If things get better, I could see this expanding.
    5. Insider activity looks initially encouraging. Some additional purchases besides the initial distributions.
    6. Back on valuation.... I read that back in May/June time frame some analysts predicted the company could be worth around $19B! With roughly 30% of production assets from OXY, and with OXY currently worth around $60B, that seems to make sense, without doing any fancy calculations. But now as the company has gone public at exactly the wrong time, and add to that the normal Index Fund selling and other bigger investors dumping the much smaller company after distribution on Dec 2nd - this depressed price of under $2B seems way off to me, as it is what 3% of OXY?
    7. As for the risks around the company in terms of California Legislation and other factors, for sure they exist, but as I think the author rightly points out the current value of this company is largely in existing production that is already producing and will continue to do so. It's not all speculative based on further exploration possibilities. That is all a bonus.

    Let me know what you think of my thoughts,
    Matt
    Dec 8, 2014. 03:01 PM | 3 Likes Like |Link to Comment
  • Update: Bazaarvoice Fiscal Q2 Earnings And A Sign Of Relief [View article]
    Thanks for the shout out Marshall :)

    I may get another update of my own in on BV this week, we'll see... but suffice it to say I agree that they are moving in the right direction and there remains significant upside potential ahead. I also feel they could be takeover bait with the DOJ overhang gone and operational metrics improving. I expect further waves of consolidation in the whole social enterprise space.
    Dec 8, 2014. 06:52 AM | Likes Like |Link to Comment
  • The Crash Of Oil Prices Could Be The Opportunity Of The Decade [View article]
    An entertaining and also well thought out article, Thanks Regarded. I am not an expert in the oil industry - but I have learned some insights. I've worked several years in IT for one of the majors. Once I had a presentation a few years ago from a geologist and expert who had been involved in the oil industry for about 30 years. She was telling us the whole idea of "peak oil" is way off base, because actually only 1/9th or so of the world's oil supply has been extracted - the trick is that most of it is in places very hard to get to and very expensive. Based on even the most aggressive projections of alternative energy growth, conventional sources will still make up 50% + of the pie for the next 30 years. And as many of the easy to get to mega oil fields continue to decline in production, it means that the growth would continue to be strong in unconventional sources (e.g. deep water, tar sands, fracking). After I saw this presentation and read a bit more myself, I took a long term position in Transocean, as I figured deep water was a good bet. Problem with alternatives is that it's hard to say which will "win" - investments in solar, certain bio fuels or others could be a flop if technology turns another way. But since the world is so dependent on oil now, even with "rapid" change it will still be a major source for many more decades. Article i wrote a few years ago summarized my position on this:
    http://seekingalpha.co...

    Anyways, so far my investment in the deep water space hasn't played out well, as they are all getting hammered this year and are currently in a down cycle. But for now I won't lose any sleep over it, I still like the long term prospects, and with normal supply/demand dynamics I cannot see oil staying under $100 for prolonged periods.
    Nov 30, 2014. 02:22 PM | 1 Like Like |Link to Comment
  • Rayonier Advanced Management Still Extremely Attractive [View article]
    Thanks for the article, you beat me to the punch. In fact there are several good articles recently on RYAM, and I can't find the time as of late so I think I'll pass on writing my own this time. But suffice it to say I am long RYAM.

    A few points I'd highlight from my analysis:

    1. As a spin-off, where you have a company with different operating metrics about 1/3 the size splitting off from a dividend REIT, obviously there will be some indescriminate selling. Playing in this part of the market puts you already at good odds. Now This coupled with a tough year on specialty cellulose pricing (remember how short term WAll Street loves to be....) and now the recent accounting issues at RYN, and the stock has sold off hard. This creates opportunity.

    2. The fact the CEO has left to go to the smaller company along with several key managers also is key. Also they are well compensated to be aligned with shareholders - their compensation is heavily tilted about 4:1 stock vs. salary, and I believe from my checks avg. option strike prices are in the low 30s. In addition the CEO can get a good bonus i think its 4 or 5m if he stays with the company to 2018.

    3. We have an interesting valuation comparison with Buckeye, which became private a little over a year ago. They had revenues not far below RYAM (I think $850m or so, dont have it infront of me), and EBITDA margins around 25%. Debt was minimal, and they sold for $1.5B, so roughly 6.5 - 7x EBITDA. Now interestingly, they also had a lot of debt several years earlier, similar to RYAM. They de-levered from close to $400m in debt to under $50m in only 5 years, and revenues did grow in this period but not spectacularly, but un-surprisingly the stock doubled. I think there is a fairly good leverage situation here. As RYAM shifts more towards 100% specialties in the next few years and the market growth absorbs capacity, they could see EBITDA closer to $400m, where as this year it will be under $300m. at a similar valuation to BKI (and arguably should be higher with higher margins), I think the stock has upside potential of about 100%, or closer to $50/share.

    4. They do have some debt covenants that they cannot have leverage at more than 3:1 and they need to also maintain an interest coverage ratio of at least 3:1. With the recent downturn in pricing and pressure on margins, interest coverage dipped close to 4:1, but it will be hard pressed to go a lot further down.

    5. I really like this market and RYAM's position. Yes it's true that more than half their busniess is indirectly related to the tobacco industry... although growth there is still projected to be positive 1-2%. With 100% focus on specialities, they will slowly increase their other businesses, especially Ethers. But what is telling here is that there has only been 1 major new player in this market in 20 YEARS, and the amount of CapEx needed and customer specialization is so high that the market is very stable. Just listen to how intimately the CEO talks about their customers in the recent investor conference presentation, and it's clear this is a niche market with only a few major players. With 85 years in the making, RYAM is not about to lose this position, which makes cash flow projections much easier and more predictable than most businesses.

    Ok enough for now! Happy investing everyone, and good luck, hope we do well with this one.
    Nov 27, 2014. 03:35 AM | 1 Like Like |Link to Comment
  • Avoid Ubiquiti Networks For Now [View article]
    Respect your work Chris, but on this one I agree with some others that it's a bit short sighted. I suppose it always depends on your time horizon, but I am still very excited about UBNT over the next few years. In fact I'm looking at buying some Jan 2017 LEAPS as an additional way to play this why the stock is down so much this year. I love how Pera is repeatedly frustrated with the short shortsightedness of Wall Street, and he was trying to deflect away every question focused on quarter over quarter numbers. Management is thinking big longer term, and there is no reason to doubt Pera looking at how the past years have gone. The company is still operating in some very big growth markets, and they continue to roll out new technologies which should broaden their reach (e.g. VOIP recently and switches, both of which have not yet contributed sales). Not every one of these products will work out big, but they don't need much to take hold for the next big rise. In the past 2 years, UniFi took off (where as other new products like edgeMax, MFi, the legacy Unifi Video did not), and they were able to grow that business and capture huge market share, and Enterprise is now about 30% of the business. The company now has a P/E of about 15, and a forward P/E of 12. They generated over $100m in FCF in the last 12 months, and margins remain exceptional. Metrics like ROIC, ROA remain ridiculously high. So for me the bottom line here is that you still have a fantastic business which is generating lots of cash, and will allow them to ample flexibility to keep the R&D machine growing, do so buybacks, etc....

    I'm hoping to put out my next detailed article on the company soon, been meaning to for a while but much too busy as of late. Stay tuned...
    Nov 19, 2014. 07:17 AM | 10 Likes Like |Link to Comment
  • Books-A-Million: Forgotten And Deeply Undervalued [View article]
    Tinbox - the non-compliance was because a board member stepped down earlier this year. NASDAQ requires at least 3 independent directors, especially for the audit committee and this left them with only 2.
    http://bit.ly/1yFA5NB

    However they had 1 year to fix this, and your post is timely - they just announced today they have a new director yesterday who will join the audit committee.
    Nov 14, 2014. 02:32 PM | Likes Like |Link to Comment
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