The Wall Street Transcript

The Wall Street Transcript
Contributor since: 2006
Company: The Wall Street Transcript
The company already pays a $.01 quarterly dividend. Recent discussions by the CEO indicate that a share buyback is more likely.
And what was really sad about the downfall of SNV was the former senior management supplying hundreds of millions of dollars to their buddies developing an elaborate golf resort where they were all members together, and then having to write the whole thing off. That and a very confusing branding strategy of retaining multiple local bank names under a corporate umbrella with a different name needlessly compromised the potential of this stock.
Be that as it may, if a share buy back can trigger a recovery to over $5/share in 2014, many funds and ETFs will buy in and the stock price will be reinforced. Getting from current levels to $5+ will not be easy. They're not exactly pouring cash into banks over there in Southern Georgia and Alabamy just yet.
so, are you saying buy INTC under $21 and sell over $32 until further notice? seems right to me. nice to get the divvy as it trades between those two prices and certainly opens up some interesting long term option plays.
This excerpt is from August 2012 Pace press release:
"The first well was completed using a 20 stage slick water frac. Initial results from the well are very encouraging with the well flowing approximately 2,000 bbls of oil in 93 hours during clean up with an average oil cut of 65%. The well was placed on production on July 27th and is currently producing 240 bbls of oil per day at a 90% oil cut. The 2nd well was completed using 15 stage slick water frac and brought on in early August and is producing at 150 bbl oil per day at 65% oil cut and continuing to clean up. "
If we don't export LNG, the Canadians will make a fortune.
here's their LNG export play:
the Canadian company Veresen wants to build one in Oregon:
we have the best pipeline system in the world and we dominate the safe construction of natgas pipelines and processing systems. the pipeline MLPs are going up and up, just check out these reports:
oil & gas are global commodities. let's not turn the u.s. natgas industry into the sugar industry, that hasn't worked out so well for our tax base...
Interesting report, Yacktman has been holding these for about a year at least now, and he explains his methodology here:
TWST: In today's market environment, how easily are you finding large-cap value opportunities?
Mr. Yacktman: What's unique about today, based on over 40 years of experience, is the difference in forward rates of return is very narrow among various qualities of companies, so we don't see a lot of reason to downgrade quality. The starting point in long-term investing is the long-term U.S. Treasury bond, and that is, in my opinion, overvalued relative to what's out there.
Look at the history of the Federal Reserve in the last 100 years. It started in 1913. The dollar, which was worth 100 cents then, is now worth six cents and on its way to five. So we're going to have inflation, and the Fed has said their goal is 2% inflation.
Well, when you look at the rate of interest you get on long-term Treasuries, there is virtually no real return. When you look at a lot of these high-quality businesses, there's an enormous spread to fixed income, so on a relative basis they are quite cheap. In fact, you get several of these large companies that are in our top 10 holdings where the dividend exceeds the 30-year Treasuries. That hasn’t happened very many times.
TWST: What are some of your favorite investment ideas today?
They've been in business for a while and this management team has been there for 6 years...
Check out the COO's history and work at his previous senior executive positions...
Researching senior management I found out some interesting history, if you read through the interviews then look up some information surrounding previous jobs of the COO it becomes more interesting. Rexall Sundown designed several business initiatives that seem relevant to Herbalife’s business model including including as described in this South Florida Business Journal article.
Rexall Sundown was later sold to Royal Numico which 2 ½ years later put it up for sale again as described in this article in the Sun Sentinel.
Much of the argument surrounding the validity of a negative opinion of Herbalife is centered on whether the Federal Trade Commission will act against the company. A quote from the FTC press release that announced a settlement from Rexall Sundown on their cellulite treatment dietary supplement product “Cellasene” is interesting: “Hundreds of thousands of consumers were misled by the claims for this product,” said Howard Beales, Director of the FTC’s Bureau of Consumer Protection. “This case should alert advertisers to the fact that their chances of getting away with making unsubstantiated claims are slim to none.”
Recently, Mr. Beales has been on the side of the multi-level marketing industry, as discussed in this recent Bloomberg Businessweek article:
The Sunbeam Corporation also has a place in the annals of business approbation. In his book “Mean Business: How I Save Bad Companies and Make Good Companies Great”, Albert Dunlap describes Mr. Goudis as one of his “go to” executives.
In March of 1997, “Rich Goudis led the team that went into Nesoho, the small Missouri town where we manufacture our grills.” In April of 1998 left Sunbeam and joined Rexall Sundown, where he reported to the CFO.
stocks dropped about 10% since the big tussle on CNBC...
It doesn't bother you that the COO was a protege of Chainsaw Al Dunlap?
I looked into it and found out some interesting history on the HLF COO:
I became interested in this because when someone bases their entire argument on an "ad hominem" attack it has been my experience that they have something to hide. So I looked into it and found out some interesting history on the HLF COO:
Interesting history on the HLF COO:
what do you think of the Herbalife situation? It seems their top management is talking very fast and have a history:
More than 100% since the option premium received would be much less than $2.50, currently the January 2.50's of 2014 are about $.45 each. On the other hand, there are options expiring this Friday, which makes for all sorts of fun trading scenarios.
Sorry to hear you have a loss, Jack. Here's a strategy I've been mulling -- since there are publicly traded options on this stock and its currently under $2.50, selling long term puts to accumulate a position. Unlike a typical option sales position, there is limited downside to this strategy since the loss is $2.50/share, with unlimited upside.
OK, well I'm working on a good one now, in the regional banking sector that would fit that criteria. In the meantime, you should check these out:
actually scooter i'm still working on the last one, have you noticed that ZIPR is up about 20% in last 2 days?
thanks, scooter. the rebound in housing stocks last year was not matched by a rebound in forest products (timber) stocks -- its also interesting that banks with lots of "real estate owned" are finally working those bad assets off their books. with the pine beetle blight in canada curbing supply, and demand for construction products increasing, perhaps timber companies are in a sweet spot. the fact that many are REIT structures means that will translate into immediate shareholder income without greedy managers (e.g. AIG) getting in the way...
thanks, the tried and true accounting methods are usually the best. fyi, i think the profitability margins are going up as assets are dropped down to the pipeline MLP that SE controls [ticker: SEP] and the GP fees are sent up to the parent's income statement.
if you're interested in gun stocks take a look at this SA post, now more than a year old...
do you have a link to that pipeline report from CIBC?
Thanks for the compliment, MGI.
The ZIPR has been around for a while and gone through several CEOs in the last 10 years. Now that they've cleaned up the Cali Labor Board nonsense maybe they can find a bigger company to sell out to, it would make sense for a Coldwell Banker or some other national brokerage to have a web division. Its seems odd that ZIPR would be valued at less than $75 mln. when Redfin must have a $250 million valuation at least for precisely the same business. Another reason not to HQ in California.
Interesting feedback BinVest: What do you think of the residential brokerage web companies like ZIPR and RedFin? These seems to be the next step in the evolution of web based real estate financial sites.
I like your "sum of the parts" valuation analysis, very elegant method for your per share estimate. There is another very current comparable in the Pace Oil & Gas, AvenEx, and Charger Energy merger announced today. I own a bunch of AAV and am sitting on a loss right now so I hope they get their sale done.
I also like to play the future demand created by Canadian Pacific ocean LNG terminals with Spectra Energy, the pipeline that is most prevalent in the Alberta and BC fields that will feed into Kitimat and the others coming on line, there is more on that thesis in this post:
There is also a US Pacific ocean LNG terminal in process at Jordan Cove. The play there is through Veresen:
Facebook [FB] owns the web and it bounced off its $18/share bottom pretty quickly. I would buy that stock at a reasonable valuation, say about 20x EBITDA which I think is about $15 or $16/share. These real estate web stocks are about 3x that in relative terms.
I think the unsold inventory in the U.S. is a positive for these stocks -- for the next several years there will be a buyer's market for residential real estate, especially for folks who "buy to rent" and these websites facilitate that trend. That's a good tailwind for CSGP and ELLI for sure...
7:1 leverage is pretty steep, 8x run rate revenues and 100 to 200 times earnings are also steep valuations. i don't think the message of my article is that these are relative value plays...
the entry of new competitors in the home rental business will reduce the profitability of the space, are there new features that will drive new ways of increasing profitability for these new sites? the real estate brokerage services companies like ziprealty and redfin are already causing alarm in the residential brokerage business...
I welcome the insight of your local expertise. I also have the Potlatch Company (PCH) in the list -- that company claims 1.43 million acres in Idaho, Arkansas and Minnesota, managed primarily for lumber for building materials. At a $1.8 billion current enterprise value that implies a value of $1,260 per acre so not far off from your JOE estimate.
Well if its only worth $1,800 per acre then its not a value trap its just over valued. Is that a comparable number from another publicly traded company?
If you simply divide the 573,000 total acres owned by St. Joe by the $1.9 billion, its just about $3,000/acre for northern Florida land. Do you think there is some private equity buyer that will take this company out? That seems pretty cheap, considering alot of the land is improved and what is not developed is available for future exploitation. A more reasonable $10,000/acre triples the stock price.
Interesting point. Do you think the highest and best use of the real estate may be agricultural then? It makes for an interesting comparable with Alico:
It sounds like good timing if they sold Florida Gulf front properties before the housing crisis and the BP oil spill.
Also from their last 10-K:
"On January 25, 2012, we adopted a new real estate investment strategy, which is focused on reducing future capital outlays and employing new risk-adjusted investment return criteria for evaluating our properties and future investments in such properties."