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Slim Shady  

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  • Park City Group: Strong Sell On Acquisition Of Suspicious Customer [View article]
    Not to mention that the cash that was advanced to Repositrak that was recorded in revenues and excluded from expenses - a total of $6.035 million was simply "eliminated in consolidation" - i.e. they will never see any of that cash. Lambda got the fundamentals of this exactly right. This is simply fraud in plain sight. Meanwhile, the SEC is nowhere to be found.
    Sep 18, 2015. 12:52 PM | Likes Like |Link to Comment
  • Shorting Volatility Has Never Looked This Good [View article]
    "Please understand that despite how good the setup looks a short VXX can still go wrong in a hurry - as we've seen since I recommended it on Friday - but the odds of a favorable result are exponentially higher now than they were on Friday."

    Josh, you do understand this trade can go against you by 100%, 200% or more before you get the favorable result, right? Is the current situation any different than what was experienced in 2011?

    In August 2011, VXX went from (pre reverse split) 22.41 to 43.86 in 3 weeks and peaked at 56.84 two months later. You are correct that if there is contango and if volatility subsides, you will eventually get it back, but it would've taken until March 2012 just to get back to break-even, assuming you had the fortitude to continue holding while it went 150% against you. Not to mention the potential damage that can be done if we get a full blown meltdown, where the increase could be many more multiples of that and take years to get it back.

    To say that the odds of a favorable result are exponentially higher is merely a guess or a gut feeling.
    Aug 25, 2015. 11:00 AM | 4 Likes Like |Link to Comment
  • Security Valuation: What Can Microsoft And Wal-Mart Teach Us About Amazon? [View article]
    Cash Flow from Operating Activities less Capital Expenditures was $1.9 billion. This hardly represents free cash flow generated from operating the business.

    Of the Cash Flow from Operating Activities, $1.5 billion was generated by issuing stock to pay employees rather paying them directly in cash. $750 million was from collecting money from customers before providing them any service.

    The $1.9 billion of alleged FCF , as mentioned in the previous comment above, also excludes $1.3 billion of payments on capital leases. They spent close to $5 billion in 2014 acquiring new assets under capital leases that have an average life of 3 years.
    Aug 20, 2015. 02:20 AM | 9 Likes Like |Link to Comment
  • Pipelines much safer than shipping oil by rail, new study says [View news story]
    Diana -

    Thanks to fossil fuels, you are able to post your drivel on this thread. Try reading Alex Esptein's book The Moral Case for Fossil Fuels. Compare your living condition now with those of people pre-fossil fuels and then decide if you would be happier. If you are still unhappy, take yourself to a remote place without the use of fossil fuels and have a better life for yourself.
    Aug 15, 2015. 09:56 AM | 1 Like Like |Link to Comment
  • Pipelines much safer than shipping oil by rail, new study says [View news story]
    New study says Obama supporter Warren Buffett owns rail company, not pipelines, so we must continue to ship oil by rail.
    Aug 14, 2015. 11:46 AM | 42 Likes Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    It seems as if DO had the choice between 1) taking an extended rate for an existing contract that would cover its operating costs and at least earn a small profit for a 7 month contract hole or 2) not extending that contract, and having a 7 month contract hole with approximately $80k of warm stack costs per day. Seems like a fairly obvious choice and doesn't seem like the type of contract that would set the market for all contracts going forward.
    Aug 4, 2015. 01:13 PM | 2 Likes Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    Based on the current backlog for 2016, which is roughly equivalent to 2015, the prediction of a steep decline in cash flows for 2016 seems misguided. The company should generate significant excess cash in both 2015 and 2016. A prudent use of that cash flow would be to repurchase the bonds that mature in 2017 in the open market for $0.80 on the dollar. They could likely save $80-$100 million off the $800 million due, which the savings would be additive to the equity by $0.58-$.72. With the existing cash balance of $700 million and cash generation for the rest of 2015 and 2016, they should have sufficient cash to repay the entire amount of the $800 million debt due in 2017 without having to go to the capital markets. With the current backlog in 2017, they should be able to cover all debt service costs with cash flows. Assuming they get no additional contracts between now and the end of 2017, ORIG still has a 2 1/2 year runway before they would begin to run into financial difficulties.
    Jul 31, 2015. 08:17 PM | 2 Likes Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    Also Ultima, adding in the new revenues from the Skyros at 518k per day based on your methodology would add $189 million of cash flow.

    Another way to look at it is total contracted book is $1.565 billion in 2015, $1.526 billion in 2016, and $1.011 in 2017. With about $900 million in EBITDA expected this year, even if none of the rigs rolling off are contracted for 2017 and they incur the same expenses operating vs warm stacked, that would leave approximately $350 million.

    "But actually the costs for a warm stacked rig are not substantially below a rig in full operation."

    According to Pacific Drilling, whose daily operating costs were $178k per day, they indicated historical savings of $103k per day for conventional stacking savings and an additional $35k per day for "smart stacking". This would be only $40k per day for rigs that can be mobilized in 90 days, thus creating significant cash flow savings relative the cash flow decline you projected.
    Jul 31, 2015. 03:02 PM | 1 Like Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    Ultima - do you (or anyone else here) know what the costs are for a warm stacked rig vs full operation?
    Jul 31, 2015. 01:14 PM | Likes Like |Link to Comment
  • GCVRZ Forum [View instapost]
    VJRAO -

    How would you factor this provision into your model?

    Can Sanofi-Aventis redeem the CVR prior to the termination date?

    Sanofi-Aventis can redeem the CVR only after 3 years have passed since Lemtrada launch {note, this occurred on 4/1/14, so beginning 4/1/17}, provided that two conditions are both met: (i) volume weighted average trading price over a 45 trading-day period is less than $0.50 and (ii) Lemtrada sales in last four calendar quarters are less than $1 billion.

    If these conditions are met, the redemption price will be the volume weighted average trading price paid per CVR for all CVRs traded over the 45 trading-day period that ends on the fifth day before sanofi-aventis has sent notice of the repurchase.

    Do you think they can hit $1 billion in trailing 4 quarter revenues by 4/1/17? Would this put a $0.50 floor under the rights so that they can't be redeemed if it looks like the trajectory is going to enable them to hit the 2nd milestone? Could it limit the downside since they would have to pay the 45 day average trading price to redeem the rights?
    Jul 31, 2015. 10:18 AM | Likes Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    Ultima - don't your "Cash Flows Lost" calculations from the Eirik Raude, Leiv Eirikson, Olympia, and Mylos assume that they incur the same amount of expenses while losing all the revenue? What is the variable cost of running the rigs versus not running them?
    Jul 31, 2015. 09:32 AM | Likes Like |Link to Comment
  • Ocean Rig UDW: Announces Full Settlement Of The Affiliate Loan And Suspension Of The Dividend [View article]
    With the conversion of the loan complete and the equity issuance at $7, the share count has increased by 6.36 million shares and net cash has increased by $73.9 million. So effectively, in a round about way, they sold 6.36 million shares at a price of $11.63 per share. Not distributing $105 million a year to shareholders is being taken as a negative by the market, but given that it will help ensure the solvency of the company in the medium term, is a positive for the equity. They could/should use those funds to buy back the debt that matures in October 2017 which is trading at 80 cents on the dollar (an 18% yield to maturity).
    Jul 30, 2015. 02:20 PM | 1 Like Like |Link to Comment
  • Solomon's Long Duration Investment Wisdom [View article]
    "At the market's close on July 27th of 2015, the S&P 500 Index was nearly flat from the beginning of 2014."

    This should read "from the beginning of 2015". Total return for S&P 500 Index from the beginning of 2014 through July 27th is close to 17%.
    Jul 30, 2015. 01:27 PM | 1 Like Like |Link to Comment
  • Intel/Micron: 3D NAND And SSDs About To Explode [View article]
    I'm just glad the stock is down 50% since December so that those darn "toxic" convertible securities aren't "costing" the company as much as they were last year. Only if they had bought them all back last year at twice the price, then things would be even better....

    "the conversion value in excess of par is a number that every hedge fund I've spoken with about Micron is intimately familiar with. They watch it closely and unfortunately it has been growing." EP July 26, 2014

    Hedge funds must be loving that the conversion value in excess of par is coming down rapidly. Must be the reason for all the buyers lately.
    Jul 22, 2015. 03:43 PM | 2 Likes Like |Link to Comment
  • Ocean Rig UDW: Offering Of 28,571,428 Shares At A Price Of $7.00 Per Share. [View article]
    This offering could be not so terrible if it was a necessary requirement for the company to expand their fleet by 2 rigs by buying distressed assets. I would've hoped that a definitive transaction would have been announced concurrently with the offering, and that the offering would have been required as a condition to obtain financing for the new rigs.

    From the Q4 press release on 2/25/15:
    With this strong backlog, Ocean Rig is well positioned not only to weather the storm but also to pursue distressed asset opportunities as they arise.

    From the press release announcing this transaction:
    "proceeds from the offering for working capital and general corporate purposes, including the acquisition of drilling rigs"

    If they expanded their fleet from 10 rigs to 12 rigs, and those rigs were as equally valuable as the existing rigs, the fleet would grow 20%. The 28,571,428 shares issued represent 18.3% of the total shares outstanding post transaction. If the only way they could obtain financing for the new rigs was to issue equity, then this could have been a necessary move.

    However, it does not excuse buying back stock from DRYS at $9 and selling essentially the same stock 2 weeks later for $7. It does not excuse making $100 million of dividend payments only to turn around and sell stock for $7 to finance the dividend (turning a cash dividend into a stock dividend). It does not explain why they couldn't tap the $528 million on their balance sheet to fund purchases of rigs.

    Too many unanswered questions. Holders need to hope for clarity on distressed rig acquisitions in the near future.
    Jun 3, 2015. 07:07 PM | 3 Likes Like |Link to Comment