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  • Manitex: A Solid And Expanding Foundation For Accelerated Growth [View article]
    Thanks for the article. I also have a few questions / comments on your valuation / methodology. #1 TEX appears to be the best comp given MTW's high multiple food service biz and is trading at 10x their '15 EPS and 6.5x '15 EBITDA. This equates to a $10.20 valuation for MNTX at your $1.02 2015 EPS estimate. #2 You appear to give full credit for 100% of the EBITDA and revenue from ASV even though they own only 51%, and at the same time appear to ignore the liabilities associated with the recent acquisitions in your EV. For example, your 6.5x EV / EBITDA target multiple to arrive at your $18.91 price target implies an EV of $320mm ($49.2mm EBITDA * 6.5x multiple) = market cap of $320 (16.9mm shares * your $18.91 target), so you are ignoring the roughly $200mm of consolidated debt after the acquisitions. If I reduce your EBITDA estimate by $6.3mm (49% of your ASV EBITDA) and add their pro forma corporate debt and 51% of ASV's debt I calculate ~$375-$390mm EV, so currently trading at 9x EV / 2015 EBITDA, or a 40% premium to TEX. If those numbers are correct, it seems like investors have not only factored into the acquisitions, but may have overshot. I would love your thoughts on this approach.
    Dec 30, 2014. 05:57 PM | 2 Likes Like |Link to Comment
  • Geospace Technologies: Is The Shakedown Over Yet? [View article]
    Run-rate estimates are likely far lower than your $3.90-$4.50 "'14 estimate." Most of the 1H '14 earnings were driven by Statoil project, which is now over (thus, unlikely anyone pays a multiple on those earnings). Rev this quarter ex Statoil was $44 million. They may be pressed to make more to 40c-50c per quarter on that type of run-rate. They need multiple large GSX and OBX orders to stem the pain. They now have a whopping 133k channels in their rental fleet (why buy when you can rent on the cheap) and there is an overcapacity of channels in North America. If SGS doesn't close (who knows?), then OBX inventory will be a disaster. Lots of risk here still. Good luck.
    May 7, 2014. 10:01 PM | Likes Like |Link to Comment
  • Geospace Technologies: Is The Shakedown Over Yet? [View article]
    I think estimates assume the delivery has been pushed out (although they have come down a bit since that announcement). Why a possible value trap? Because possible not really trading at "10x 2015" estimates. Things could change, but 2015 estimates may be materially lower than current expectations. Good luck.
    Apr 30, 2014. 09:54 AM | Likes Like |Link to Comment
  • Geospace Technologies: Is The Shakedown Over Yet? [View article]
    Stated in other articles that this is likely a value trap. The market is figuring out that forward estimates look tough to achieve.
    Apr 29, 2014. 04:03 PM | Likes Like |Link to Comment
  • Monitoring The Cheap Oil Services Company, Geospace Technologies [View article]
    HV, it is a value trap (potentially) in that they have been overearning, given the benefits of multi-year $170 million project (that provided them visibility / stability that never had before) and a handful of tiny companies buying $135 million plus of equipment from them (and don't appear to be in a position to spend that much going forward). Estimates appear to assume they fill these holes and then some. Mgt has been very optimistic that some large OBX orders are in the pipe, so maybe it happens. Good luck.
    Apr 9, 2014. 11:23 AM | Likes Like |Link to Comment
  • Monitoring The Cheap Oil Services Company, Geospace Technologies [View article]
    Thanks for the article, but this GEOS has all the makings of a value trap. GEOS benefited from a flood of orders that appear to have slowed down dramatically. The bridge to 2015 estimates looks extremely difficult. They have beat estimates on Statoil and a bunch of microcap companies spending large capex $ on their GSX wireless system. TGE, DWSN, MIND, SAEX look pregrant after their big spend on GEOS equipment. GEOS' customers are struggling, and looks like it is starting to impact GEOS. They need large GSX and OBX orders to start flowing to have a shot at bridging estimates. Good luck.
    Apr 9, 2014. 08:49 AM | 1 Like Like |Link to Comment
  • America's Car-Mart: 45% Upside Over 12-24 Months [View article]
    >40% frequency and 70% severity from last quarterly cc, although framed it as recovery rate I believe (so 30% recovery down from 32%).
    Mar 8, 2014. 03:13 PM | Likes Like |Link to Comment
  • America's Car-Mart: 45% Upside Over 12-24 Months [View article]
    Thanks again for spending the time. Sorry to follow-up again.
    1) I think it would only be similar to DE or F if CRMT was a manufacturer. I think mortgage gain on sale is pretty shady too, but at least with mortgage gain on sale, a portion of that gain on sale is allocated to an asset with a relatively liquid market (the MSR). The company's disclosures does imply there is a large gain on sale component (FV the portfolio results in a $154mm estimated hit / $63mm net reserve). from q:
    "The Company estimated the fair value of its receivables at what a third party purchaser might be willing to pay. The Company has had discussions with third parties and has bought and sold portfolios, and had a third party appraisal in November 2012 that indicates a range of 35% to 40% discount to face would be a reasonable fair value in a negotiated third party transaction. The sale of finance receivables from Car-Mart of Arkansas to Colonial has been at a 37.5% discount; however, due to the increased credit losses the discount will be 38.5% effective February 1, 2014."
    2) Where do you get 35% gm and average mark-up of "$3,000"? I calculate ~42.5% gross margin on car sales and 49% overall. A quick glance at GPI, AN, PAG suggests a used car gross margins around 7.5%-8.5% vs 42.5% for CRMT.

    At $9,750 "retail price" w/ 6.6% down (at least the average in fiscal '13) = ~$9,100 financed. and they recognize $4,150 upfront at 42.5% and are currently running at 70% severity of loss (another indicator of the aggressive mark-up) and now "greater than 40%" frequency of loss. It sure seems like there is significant economics recognized upfront and the imbedded costs to finance a book w/ 40% freq and 70% severity is multiples of what you implied above.
    Mar 7, 2014. 03:27 PM | Likes Like |Link to Comment
  • America's Car-Mart: 45% Upside Over 12-24 Months [View article]
    Thanks for the reply FT. I would also like to state that I like mgt, but think they are in a pickle and their aggressive response to the competitive environment still may bite them in the arse further (in the form of significantly worse credit performance). One thing has always bothered me though: they often bring up their fixed interest rate (as a reason they might avoid regulatory or CFPB scrutiny). As stated above, the monthly payment is likely the #1 driver of a sale. The sticker price of the vehicle is often an afterthought. they sell an old car w/ 100k miles for "$10k" that cost them $6k wholesale. There would likely never be a cash buyer at $10k w/ that massive mark-up. The mark-up inbeds a dramatically higher financing costs relative to the 15% stated interest rate. Bc they recognize 100% of that gross margin day one, ever though they may only collect $600-$1k down, all the economics are front loaded. it is basically GAIN ON SALE accounting. The accounting works as long as credit is ok. It could unravel (further at least) if the more aggressive term, downpay and mods continues to result in deteriorating credit.
    Mar 6, 2014. 09:51 AM | Likes Like |Link to Comment
  • America's Car-Mart: 45% Upside Over 12-24 Months [View article]
    Thanks for the article and 909's thoughtful response. not sure why you think you risk only a "20% draw-down." The aggressive competition likely ends as a result of some dramatic change in financing market or more likely, elevated credit losses. CRMT's response to competition has been more aggressive underwriting: extension of term and lower down payments. We are very still early in the more aggressive credits flowing through peak charge off periods. If credit frequency increases across subprime it would likely drive severity higher also (for everyone). That could be very painful for CRMT's results and stock price. good luck.
    Mar 5, 2014. 09:11 AM | Likes Like |Link to Comment
  • Buying Opportunity In Walter Investment Management: Sooner Or Later The Limbo Will Stop [View article]
    Basel III capital requirements has induced only a few banks to sell MRS (Flagstar and Wells come to mind). The high cost to service is the more likely reason. However, WAC appears to still be a high cost servicer.
    WAC's leverage would make Lehman and Bear blush. They have issued $350 million of equity over since they de-REITed and have grown from a $1-$2B balance sheet to a $17B balance sheet. and it appears most of the gains in book value have been driven off paper mark-ups of their highly delinquent MSR portfolio. it's just my humble opinion, but WAC appears to be, by a wide margin, the riskiest of the three non-bank servicers (due to cf profile, leverage, and high cost to service, plus a highly questionable definition of operating earnings).
    Feb 20, 2014. 11:32 PM | 1 Like Like |Link to Comment
  • Buying Opportunity In Walter Investment Management: Sooner Or Later The Limbo Will Stop [View article]
    Did some work also. Their "adjustments" to their earnings look highly suspect (just a word of caution when looking at the Adjusted EBITDA or earnings). Also, their cash flow statement is worth digging into, bc there are some red flags. CFO through 9M is negative $2B (mortgage biz which is capital intensive). The previous 12m they issued >$5B debt (although a lot mb and repo) and only $276mm of equity issuance. This is worth paying attention to as capital requirements for servicers has been mentioned a lot recently (equity ex MSR and MSR mark-ups), and WAC's is very low if not negative. good luck
    Feb 19, 2014. 02:43 PM | 1 Like Like |Link to Comment
  • Harbinger Group's Sum-of-Parts Does Not Add Up [View article]
    Y, that valuation relative to AEL in November 2012 was asbsurd. The clear mistake was not buying AEL. It is up 125% since.
    Dec 16, 2013. 05:19 PM | Likes Like |Link to Comment
  • Access National Is Still A Buy [View article]
    UncleLongHair, that statement in incorrect. Gain on sale margins of agency mortgages are on function of the mortgage rate, the par yield of agency MBS (aka the primary / secondary spread), guarantee fees and expected duration. the primary secondary spread widened to all time highs in the 2H'12 as QE artificially depressed MBS yields. That has begun to reverse
    Aug 14, 2013. 03:32 PM | Likes Like |Link to Comment
  • Access National Is Still A Buy [View article]
    UncleLongHair, thanks from the background but not sure what your opinion is. Originating and selling conforming mortgages has indeed been a very profitable business for ANCX, but that business has been "over earning" because of historically wide spreads and very high volumes. That favorable backdrop changed dramatically in June w risking mortgage rates. Volumes are likely decline and margins have normalized, which will likely create pressure on ANCX's earnings. It seems like that "secret sauce" could cause some pain as conditions normalize.
    Aug 9, 2013. 01:00 PM | Likes Like |Link to Comment
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