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Matthew Lewis  

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  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    You're choosing a multi-year natural gas low due to a unseasonably warm winter as reasoning not to buy coal? PRB is still competitive even at $2.50 gas.

    The company will not raise capital anytime soon as the balance sheet is strong. Debts aren't due until 2019 and there will be significant free cash flow 2015 and 2016.

    What country are you competitively worried about on the export front? China is a net importer of coal and Australia has a comparable shipping distance into the South Korean markets to which CLD sells. CLD should be competitive with Australian firms.
    Feb 6, 2015. 06:11 PM | Likes Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Just a note. Obviously been a good few days for CLD stock. The risk/reward dynamics change as the price increases. I still think below $9 a buyback has a good risk/reward of adding value.
    Feb 5, 2015. 12:34 PM | Likes Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Thanks for the comment. While I agree that profits will be minimal the next couple years, free cash flow will not. The final LBA payment of $60+ million is this year and even under breakeven earnings the company will be cash flow positive in 2015 and cash flow close to $100 million in 2016.

    On top of the free cash flow they generate they also have $120 million in cash. Keep in mind with a market cap of $400 million, you can buy back 10% of your shares with just a $40 million investment. This obviously increases net debt (debt - cash), but I don't feel like a $40-$80 million investment in your shares at the bottom of the cycle puts CLD in a precarious situation debt wise. Especially with $120 million on the balance sheet and free cash flow going forward.
    Feb 3, 2015. 02:08 PM | Likes Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Maybe I'm being foolish but I trust management on this one. They made it very clear they knew they were taking a risk buying export capacity at a time when margins were negative. Yes it will be painful if Newcastle seaborne doesn't recover by 2016 when hedges start rolling off.
    Feb 3, 2015. 11:04 AM | Likes Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Ditto on owning a lot of shares. I'm averaged in just under $10 and am sitting on a large unrealized loss. Hopefully better days ahead.
    Feb 2, 2015. 08:30 PM | 1 Like Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Hi Denis. Thanks for the comments.

    1. Although I think it's likely ACI and ANR go bankrupt, it is by no means a sure thing. Even in bankruptcy, the assets may not be sold (reorg). And finally, bankruptcy prices are typically auction based, and CLD would be bidding up against perhaps dozens of other parties. In my opinion it is unlikely the bankrupt assets could be bought at a better deal then they could buy their current assets (shares) in the market today.

    2. The increase I was speaking of was the deal done with Westmoreland in late 2014 for their export space out of the active Westshore terminals. I agree with you that the new facilities will not be approved for some time (if ever).

    3. You seem to have a better grasp on the export market than myself. I will say that CLD ships their coal almost exclusively to South Korea, which is greatly increasing coal usage.

    4. 100% agree on the natural gas front.
    Feb 2, 2015. 08:29 PM | 1 Like Like |Link to Comment
  • Buybacks, Buffett, And Cloud Peak Energy [View article]
    Thanks Expat.

    CLD has probable and proved reserves of 1.2 billion tons at its three active mines. At current production (85 million a year) it gives those a reserve life of about 14 years. Actual operational life is probably a few years less.

    They also have another 450 million tons of reserves at locations that have not undergone a final cost study (thus not categorized at "proved" by SEC standards). And another potential 1.4 billion tons option of estimated reserves with the Crow Indian tribe that goes through 2035.
    Feb 2, 2015. 07:20 PM | Likes Like |Link to Comment
  • Apple: Winning The Profit Battle, Losing The Smartphone War [View article]
    i don't understand why having "only" 20% of the market share is a "problem".

    Would you rather have 80% market share and make no money or 20% market share and make lots of money?
    Jan 28, 2015. 09:51 AM | 25 Likes Like |Link to Comment
  • Apple: Winning The Profit Battle, Losing The Smartphone War [View article]
    Isn't*
    Jan 28, 2015. 09:46 AM | 3 Likes Like |Link to Comment
  • Apple: Winning The Profit Battle, Losing The Smartphone War [View article]
    Apple is fighting the smartphone war. That's the difference you're failing to see.
    Jan 28, 2015. 09:42 AM | 11 Likes Like |Link to Comment
  • Arch Coal Takes Another Beating [View article]
    Tough for M&A when all these guys are loaded up with debt. Maybe somebody makes a run at CLD at some point? At least they were prudent and didn't buy a Met producer at the top of the cycle.

    ACI and ANR are untouchable for M&A due to their debt levels. BTU could be bought, but only by a big player due to their debt load/enterprise value.
    Jan 28, 2015. 04:01 AM | 1 Like Like |Link to Comment
  • Diamond Offshore: Net Asset Value [View article]
    Are you serious? They've spent many billions of dollars since 2009 on their new build program. Additionally many of their older rigs have victory class hulls that can be modernized at a fraction of the price of a new build should they choose to do so.

    The company is in a fine position with 9 6G/5G rigs and several others that can be upgraded at low cost.
    Jan 12, 2015. 05:35 PM | 2 Likes Like |Link to Comment
  • Vantage Drilling: What Is The Significance Of This Recent Collapsing Share Price? [View article]
    This stock is getting obliterated today.....
    Jan 9, 2015. 04:02 PM | Likes Like |Link to Comment
  • Cloud Peak Energy: Falling Oil Prices Are A Boon To Production Costs And Railway Availability [View article]
    Lower oil saves CLD significant money on diesel (a large portion of their variable cost structure).

    Explain fundamentally how lower oil prices hurts them. Very few power plants (around 3%) run on oil, so it doesn't directly compete with thermal coal.
    Dec 12, 2014. 11:59 AM | Likes Like |Link to Comment
  • Cloud Peak Energy: Falling Oil Prices Are A Boon To Production Costs And Railway Availability [View article]
    I like how you know the future prices of Newcastle coal. You must have an awesome crystal ball.
    Dec 11, 2014. 01:58 PM | Likes Like |Link to Comment
COMMENTS STATS
383 Comments
482 Likes