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  • Troubled Competitor Makes World Fuel Services Corp. An Interesting Play [View article]
    Update: between writing this article, and publication, the news hit that indeed OW Bunker has filed for bankruptcy, and that the total owed to banks may be as much as 750 million. Few details out there so far concerning the nature of the fraud.
    Nov 7, 2014. 03:42 PM | Likes Like |Link to Comment
  • L.B. Foster: Above Average Growth In Rail Services At A Below Average Price [View article]
    No terms announced yet, but we have our first acquisition since their comments:
    Oct 29, 2014. 09:31 AM | Likes Like |Link to Comment
  • Darling International: Several Near And Long-Term Catalysts To Reward Shareholders [View article]
    I'm interested in this name as a long investment, but I agree with the comments above concerning valuation. At best it appears somewhere in the middle of its historical valuation range.

    One thing which the author didn't address, however, which is why I'm primarily still on the sidelines, is the effect that the lower Biodiesel mandate will also have on DAR's other businesses. Specifically, lower feedstock usage for biodiesel should translate into lower pricing for rendered fats overall, and their value added products. I believe that was also the primary issue with the analyst downgrade from Wedbush. I'd be interested to read the author's take on that issue.

    Finally, any view as to magnitude and timing regarding a secondary offering to pay for Vion would be appreciated. Thanks.
    Dec 4, 2013. 08:48 AM | Likes Like |Link to Comment
  • Northwest Pipe: A Value Stock With Significant Return Potential [View article]
    Another quarter, another large beat. We'll learn more on the call tomorrow, but both segments beat on a margin basis. I take that as further evidence of the improvements the new management has made in the operating processes. The street by Yahoo's account is at $1.59 for FY 2013. They did $1.00 in Q1 and just did $.59 in Q2. Something north of $2 seems fairly likely, and tangible book value has now appreciated just under $27. We may begin to see some benefit from the recently filed trade case in OCTG pipe by Q3. This stock is still a low downside risk with significant upside potential despite being up 20% this year.
    Aug 5, 2013. 09:19 PM | Likes Like |Link to Comment
  • It's Not Too Late To Sell Refiners Tied To Brent/WTI Oil Spread [View article]
    It's a capacity based valuation metric using enterprise value per ton of capacity. Refiners measure their capacity in barrels, but I ported this valuation method from looking at Steel manufacturers in the past. I explain the method in more detail in my first article. There's a link to it at the beginning of this article. If it makes it easier, then you can think of this as EV/Capacity or EV/BPSD for refiners etc.
    Jul 5, 2013. 10:41 AM | Likes Like |Link to Comment
  • Northwest Pipe: A Value Stock With Significant Return Potential [View article]
    Q1 beat my highest expectation by a lot, and lapped the street's estimate over 3 times, (1.00 eps vs. .33c estimate), but the stock barely budged. The water segment produced the highest margin of any single quarter in the company's history. They were finishing up their emergency contract work in Texas, but I take that as further confirmation that the new management team has massively changed the return profile of this company. It might be time to do a follow up piece. So far no action yet from the tubular pipe industry on Korea. So the end demand for both markets isn't great, but the management is still guiding to double the company's 2011 ebitda by 2015. That would equate to about $5 in eps. Tangible book value is also now just below the current price at $26.19. One thing to be aware of though, is that it isn't a very liquid stock. If this market finally deteriorates in here, then look for an opportunity to buy it at a discount to TBV.
    Jun 11, 2013. 08:31 AM | Likes Like |Link to Comment
  • American Railcar: A Little Understood Opportunity [View article]
    This would have been a great article about 3-2 years ago. Lots of problems with this thesis: 1.) The boom in rail transport of oil has been driven by the Brent/WTI spread. As that expanded the last few years, the tank car deals were established to generate returns in a very short time frame as they expected the spread to eventually contract. The spread has in fact done that peaking in the mid-20's and is now down around $8. Why $8? Because that's about how much it costs on average to transport oil via rail vs. pipelines. With no extra spread there is not going to be an economic incentive to add new tank cars to the rail fleet. 2.) Rail car manufacturing stocks do not follow eps. They follow orders and backlog. They are a classic cyclical stock that peaks with a low p/e, and bottoms with a high p/e or negative earnings. Go look at previous cycles. 3.) ARII did not decline due to an eps miss from stock options. It declined because it had no new orders in Q1, and management said they passed on the big order TRN won due to industry pricing competition that did not provide sufficiently acceptable margins. So lack of new orders and backlog growth coupled with aggressive industry pricing is what took the stock down on the Q1 report. Not stock option compensation effect on SG&A. 4.) The risk going forward is that there aren't going to be new orders for tank cars and backlog growth, because the Brent/WTI spread has compressed to a level that has eliminated the economic incentive to do so. 5.) Finally, the article didn't even mention the bullish points looking forward to be invested in ARII. The industry is focused on plastic pellet hopper cars as the next wave of future orders, not tank cars. ARII is also trying to develop a JV in India that can manufacture rail cars for that market which could be an extremely large market. Those are the reasons at this point to be involved in ARII. However, both of those are more in 2014 at the earliest. Do not buy ARII though because you think it's cheap or for a play on Tank cars. Subsequently, anyone interested in ARII should do more work.
    Jun 9, 2013. 06:22 PM | 9 Likes Like |Link to Comment
  • Primero Mining: A Bet On Gold Returning To Bullish [View article]
    Can you give any comments as to why GG has this relationship with PPP, versus just owning and operating these mines themselves?
    May 30, 2013. 01:55 PM | Likes Like |Link to Comment
  • Northwest Pipe (NWPX): Q1 EPS of $1.00 beats by $0.67. Revenue of $140.6M (-1.1% Y/Y) beats by $13.7M. (PR[View news story]
    This is far superior to even their guidance from their last report, but one has to wonder what the analysts on the street were thinking putting estimates in below their Q4 report based on the outlook. Still, this is a manifestation of the transformation of this company's return profile. Thanks to new management, NWPX has a a new outlook on its future returns, and the discount to its peers is unwarranted. I'm willing to bet that JEF analyst upgrades the stock someday well north of here, and long after the ship had sailed. TBV at $26.19 now.
    May 6, 2013. 05:36 PM | 1 Like Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    See my comment above about recent IPO's in mature industries. Overall I find it similar to PBF in that its margins are in the traditional VLO camp but not quite as consistently good in the dips like Q4 '11. I believe it's capacity multiple is about 8.5x currently. So it trades at a discount to VLO group, but I don't have any history to make a case for what kind of a discount is appropriate. Good luck in your investing.
    Apr 10, 2013. 12:09 PM | Likes Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    Just a few points to add to my previous comment. It's margin profile is slightly better than the VLO camp, but pretty much falls in line with them versus the Brent/WTI group. It also trade to a slight premium to VLO camp, but probably justified due to its consistent margin profile. Your concern that it is tied to the refiners is probably valid. So if the group losses favor, then I would be conscious about hedging exposure. However, the stock doesn't show any radical signs of greater risk relative to potential reward than the group as a whole. Good luck in your investing.
    Apr 10, 2013. 12:06 PM | Likes Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    It appears to me that NTI has been a pretty good beneficiary of the Brent/WTI spreads looking at its Ebitda margins despite its refinery location. It's limited trading history and MLP status makes it difficult to fully gauge the risk/reward. In general I am wary of any industry that suddenly has a rash of IPO's. Particularly so when it deals with a mature cyclical industry like refining. By my calculation NTI is trading at 31x its capacity currently which is well higher than any of the other stocks mentioned in this article. That is probably a function of its MLP status, but again without a historical basis to gauge the trading behavior it is hard to measure of much risk in priced into the stock. Good luck with your investing.
    Apr 10, 2013. 12:02 PM | Likes Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    I got a slightly higher number of 7x, but I saw a lower capacity number of 540k from the 10-k. You know it better. So if something has recently changed, then that's the difference. Either way, looking over its limited history that is available, my reaction is that it more squarely falls into the traditional VLO refiner camp as Ebitda margins of 6.3% in Q4'12 an neg (2.5%) in Q4 '11 fall in with that peer group. It certainly is trading a lot cheaper than VLO which is currently about 11.5x vs. PBF's 6-7x. The question purely comes to what sort of a discount should it have relative to VLO. I'm primarily interested in the Brent/WTI spread, so I don't have a good answer for that question. Good luck in your investing.
    Apr 10, 2013. 11:55 AM | Likes Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    I've preferred to stay away from the MLP's, but I'l take a look and see if there's anything interesting there.
    Apr 8, 2013. 08:18 AM | Likes Like |Link to Comment
  • What The Street Might Be Missing On Refiners; Why The Brent/WTI Spread Might Continue To Contract [View article]
    I agree that refiners that can process sour have historically been better positioned as more oil comes from Canada versus offshore from sweet sources. The spread here is what I really wanted to focus on. VLO is the base case in this study.
    Apr 8, 2013. 08:16 AM | Likes Like |Link to Comment