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Pat Stout  

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  • The Cost Of Holding Cash [View article]
    Uninen,

    Thanks for the comments. Data back to 2003. The preferred issue yield at January high price. From 2000 to March 2015 the 3-month T-bill has averaged 1.85%

    2003 4.97%
    2004 4.76%
    2005 4.71%
    2006 5.35%
    2007 5.11%
    2008 5.44%
    Mar 30, 2015. 02:57 PM | Likes Like |Link to Comment
  • Origin Agritech +24% on talk China could reignite bid [View news story]
    Think there is a typo. I doubt SEED rejected a $60 billion offer, given its market cap of under $100 million. And is SEED really larger than MON with a $55 billion market cap?
    Mar 23, 2015. 01:10 PM | 1 Like Like |Link to Comment
  • Don't Fall Off The Long Cliff: Algorithmic And Summative Analysis Is Bearish On Cliffs Natural Resources Inc. [View article]
    Might want to re-check the article details.

    FWIW, Cliffs did not sell $10 billion in assets.

    Pat
    Mar 19, 2015. 01:42 PM | 4 Likes Like |Link to Comment
  • Cliffs Bonds: Thoughts On Tender Decision [View article]
    Jeffy141,

    Took the proposed secured debt coupon of 7.75% and applied the early tender exchange rate. Does that help?

    Pat
    Mar 12, 2015. 09:04 AM | Likes Like |Link to Comment
  • Cliffs Bonds: Thoughts On Tender Decision [View article]
    Cory,

    The weakness in the 5.9% of 2020 in part might be a result of the secured notes exchange offer. Cliffs announced the results of the early tender and it looks like bondholders might be less nervous, early tenders totaled $635 million.

    See details -- http://bit.ly/18D5RDp

    Should be interesting to see how the bonds react to the news.

    Pat
    Mar 12, 2015. 07:47 AM | Likes Like |Link to Comment
  • Cliffs Bonds: Thoughts On Tender Decision [View article]
    MTN Investor,

    The shorts have been right. It is tough to expect a short squeeze without a more confident bondholder. I'd be looking for a turn in steel pricing / demand before a turn in iron ore.

    Beginning to wonder if the interested parties in Bloom Lake, might be interested in Cliffs, or having Cliffs be their iron ore pellet supplier. If they purchased Cliffs bonds they could use the coupon payments to help offset iron ore cost. A win-win. And having the iron ore production pre-sold under long-term contract might help ease bondholder concerns and permit the common stock to rally.

    Pat
    Mar 11, 2015. 06:19 PM | Likes Like |Link to Comment
  • Cliffs Bonds: Thoughts On Tender Decision [View article]
    Dan,

    The current covenants might be replaced or amended. Making use of secured debt is cheaper than where the outstanding bonds were trading. Bondholders appear to have become nervous after the new board announced a $200 million share repurchase plan. The falling bond prices then dragged down the stock price.

    The equity is riskier than the bonds, however if the iron ore market can stabilize and or management can contract out all the iron ore production. Then the common stock might have a chance to outperform the bonds. But the bondholders have to show more confidence before the stock can perform better.

    Pat
    Mar 11, 2015. 01:18 PM | Likes Like |Link to Comment
  • Cliffs Bonds: Thoughts On Tender Decision [View article]
    Dan,

    Cliffs increased the secured debt for exchange from $750 million to $1.250 billion. This either means EBITDA can support it, or the credit facility might be revised.

    The bulls may take the view that EBITDA can support it, while the bears may take the view that the credit facility might be revised. In the current environment it could go either way.

    What are your thoughts?

    Pat
    Mar 9, 2015. 05:02 PM | Likes Like |Link to Comment
  • Cliffs' New Bond Offer And Pilot Hedging Program [View article]
    Shorting Bill,

    The increase in the proposed secured debt exchange might be a positive sign.

    An amendment to the credit facility says secured debt to EBITDA not to exceed 3.5 times. The increase in the proposed secured debt might imply better financial performance and or another revision to the credit facility. Should find the answer soon.


    Pat
    Mar 9, 2015. 12:39 PM | Likes Like |Link to Comment
  • Cliffs' New Bond Offer And Pilot Hedging Program [View article]
    Cliffs bondholder,

    Well, Cliffs increased the exchange offer from $750 million to $1.25 billion. Did some quick calculations last night and if the $400 million 2040 revised cap and 100% of the 4.875 and 4.80 issues is accepted, then the 5.90 holders will not have many bonds accepted for exchange.

    It will boil down to an investors confidence in Cliffs management to stabilize the firm. Working on a more detailed reply (article).

    Hope this helps,
    Pat
    Mar 6, 2015. 11:07 AM | 1 Like Like |Link to Comment
  • Floating Rate Notes In A Negative LIBOR Environment: Might Lender Pay The Borrower? [View article]
    sadfacejack,

    I would be surprised if the ARM document does not have a floor, or minimum, interest rate. Best to check with the lender if there is no floor interest rate. Doubt lenders thought negative interest rates would (or could) be possible. Will you let us know what they say?
    Pat
    Mar 5, 2015. 06:39 PM | Likes Like |Link to Comment
  • Cliffs' New Bond Offer And Pilot Hedging Program [View article]
    Shorting Bill,

    The 2040 issue results in interest savings, but the other issues do not.

    New Secured bond coupon 7.75%

    Issue New Coupon Exchange rate effective new coupon old coupon
    2040 7.75 * .780 = 6.045 vs 6.20 coupon
    2021 7.75 * .81875 = 6.34 vs 4.875 coupon
    2020 7.75 * .821125 = 6.36 vs 4.80 coupon
    2020 7.75 * .860 = 6.665 vs 5.90 coupon.
    Mar 5, 2015. 01:20 PM | Likes Like |Link to Comment
  • IBM: Did The Smart Money Hold For $158 Billion Or Sell For $150 Billion? [View article]
    Stockinvestor81,

    If share repurchases add value, then explain why the cost of treasury stock is near the total market capitalization of the entire firm.
    Mar 4, 2015. 08:36 PM | Likes Like |Link to Comment
  • IBM: Did The Smart Money Hold For $158 Billion Or Sell For $150 Billion? [View article]
    CapVandel,

    I've enjoyed reading your comments. I would like to be long IBM as it could offer an extremely attractive dividend yield if they returned capital to owners, rather than to departing owners. In fact, I feel the stock could be materially higher if cash was provided to owners rather than departing owners. $12 discounted at 5% is $240, at 6% is it $200.

    The point of the article was that share repurchases do not add value.

    Mar 4, 2015. 07:29 PM | Likes Like |Link to Comment
  • Cliffs' New Bond Offer And Pilot Hedging Program [View article]
    Shorting Bill,

    There is an acceptance cap for the 2040 bonds. Might end up with 7.75% secured notes due 2020 and have some 6.20% 2040 bonds.

    I've run the exchange numbers and do not see interest savings. Somewhat surprising.

    Pat
    Mar 4, 2015. 07:17 PM | 1 Like Like |Link to Comment
COMMENTS STATS
102 Comments
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