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Nick Clayton

 
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  • Rayonier Advanced Materials: It Should Not Take A Genius To Run This Business
    Tue, Dec. 16 RYAM 13 Comments

    Summary

    • Rayonier AM’s is the world's top producer of acetate tow which is used in the production of cigarette filters and which consumers have a strong preference for.
    • Rayonier AM believes there was only one new entrant into the specialty cellulose industry in the last 10 years.
    • Rayonier AM has incredibly low customer turnover as evidenced by the fact that it has been doing business with its top 10 customers for an average of 38 years.
    • The main end uses of Rayonier AM’s products are recession proof.
    • The switching costs of Rayonier AM’s products are very high, the demand is predictable , and as a result Rayonier AM can also raise prices as inflation increases.
  • Global Water Resources: Regulation Creates Compelling Opportunity
    Thu, Dec. 11 GWGWF 5 Comments

    Summary

    • The Phoenix market is a major U.S. metropolitan area with stable population growth, good weather, prominent universities and a recovering real estate market.
    • Global Water Resources offers a compelling opportunity and regulation actually decreases risks associated with this investment because the recent regulatory order mandates a 9.5% ROE.
    • Global Water investors have a margin of safety because of the wide gap between DCF projections and current price.
  • Alaska Communications Surprising Sale Of Wireless Business Creates Two Important Catalysts
    Tue, Dec. 9 ALSK 6 Comments

    Summary

    • Changes the Alaskan based telecom company from one of the highest levered companies in its industry to one of the lowest, substantially reducing risk for a potential acquirer.
    • ALSK is now free to focus on its more lucrative broadband and managed IT solutions business which have historically generated industry leading returns of about 11.5%.
    • An acquisition or dividend now seem much more likely over the next 12-18 months - two key catalysts that could unlock the full value of Alaska Communications.
  • California Resources Corporation Is A Spin-Off With A Substantial Opportunity In The Golden State
     • Fri, Dec. 5 CRC 38 Comments

    Summary

    • CRC has at least 200% upside if the price of oil can return to the $90-$100 level.
    • Commodity price volatility is lessened because of management’s tremendous track record of capital allocation and improved operational efficiencies in the newly formed CRC.
    • Monterey Shale reserves offer a lucrative opportunity - at worst likely to double shale reserves, at best access to 2/3 of all recoverable shale reserves in the lower 48.
    • Projected oil volume growth of 15% compounded annually through 2016.
    • Management thinks California has one of the lowest risk growth profiles in the industry.
  • Halliburton - Baker Hughes Merger: Likely 13-20% Returns In 2015 And 51% Long Term Upside
    Mon, Dec. 1 BHI, HAL, XLE 2 Comments

    Summary

    • The $2 billion in cost synergies plus $800 million expansion opportunity in North American operations will create sustainable 20%+ margins for the combined company.
    • Despite the recent sell-off, arbitrageurs will still ultimately realize 13-20% returns while they wait for closing.
    • Ultimate price target is $63-$64 if the merger is consummated, a 51% upside from current levels.
  • Box Ships Part II: Well Positioned To Withstand The Stormy Seas
    Sat, Nov. 22 TEU 27 Comments

    Summary

    • The market has overreacted to the news that the company’s negotiations with a lender are taking longer than expected.
    • Investors are not even willing to pay 30 cents on the dollar for the equity left over in Box Ships. (18.2 million market cap/$64.28 million adjusted equity value).
    • If charter rates can recover to something like $5-5.50 per TEU/Day, this company can become very profitable very quickly.
  • Alaska Communications Is A Pre-Packaged LBO With Attractive IRR Scenarios
    Wed, Sep. 24 ALSK 11 Comments

    Summary

    • ALSK’s capitalization structure has created a pre-packaged LBO opportunity for a potential acquirer.
    • Excluding 2013 and expense deductions associated with AWN transaction, ALSK has averaged EBITDA of $110.75 million over the last five years.
    • ALSK is an optimal acquisition target because of its consistent earnings power.
    • The company will receive a $190 million preferred distribution over the next four years from its interest in AWN which will allow for further accelerated debt reduction.
    • 40-84% IRR projections based on a 3-5 year investment horizon.
  • Box Ships Inc.: Net Asset Value Represents 111% Upside
    Fri, Sep. 19 TEU 35 Comments

    Summary

    • The container shipping industry is showing signs of improvement.
    • The company's main focus is maintaining liquidity for as long as possible.
    • A net asset value of $2.95 represents 111% upside from current levels.
  • Alaska Communications Systems Group: A Hidden Gem In The Last Frontier
    Editors' Pick • Wed, Aug. 6 ALSK 15 Comments

    Summary

    • ALSK has 20% market share in a $1B industry growing at 5% annually.
    • ALSK has one-third Interest in a Joint Venture that owns 46% of all cell sites in Alaska.
    • 80% discount to earnings power offsets risks associated with debt.
  • A Purse Or Wallet For Your Portfolio - Try Coach, Inc.
    Wed, Mar. 19 COH 10 Comments

    Summary

    • Coach has created its brand image by a constant consumer-centric focus that creates value and emotional attachment in the consumer’s mind.
    • Coach has averaged 74.55% gross margins over the last ten years.
    • Coach has been able to average 33.54% operating margins and 45.96% Return on Invested Capital since 2004.
    • Coach has generated an average of 23.4 cents of free cash flow for every dollar it generates in revenue over the last ten years.
    • Expect increased dividends to continue because Coach's emotional appeal to customers has created a distinctive brand that has consistently produced high returns on capital and excess free cash flow.
  • Lear Corp: Driven To Pay It Back
    May. 10, 2013 LEA Comment!
  • Cal-Maine Foods: A Morning Delight For Your Portfolio
    May. 9, 2013 CALM 8 Comments
  • SkyWest Inc.: Airline's Value On The Horizon
    May. 8, 2013 SKYW 1 Comment
  • Confessions Of A Value Addict: My Next Fix? Universal Corp.
    May. 6, 2013 UVV 5 Comments