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  • Mr. Market Might Be Mistaken With Creative Learning Corporations' Auditor Change [View article]
    Florida,

    The company is likely to only show franchises that are fully up and running. The number I referenced from the 10Q shows the number of franchises that have been signed and it takes time for the brick and mortar stores (think up to 24 months) and time for the mobile franchises too. Think each franchisee has to buy materials, learn how to teach the classes, etc,.

    Not sure about the website linking problems.

    Curious to know the attrition rates as well.
    Aug 20 06:18 PM | Likes Like |Link to Comment
  • Update: Artal Purchases Of Weight Watchers Indication Shares Are Undervalued [View article]
    Agree with you on Artal doing the best thing for their shareholders.

    "Dilution from executive compensation? Yes, but possibly also dilution from an equity raise (to be announced???)"

    An equity raise to other non-Artal investors could only be 2% to maintain Artal's 51% ownership. That would only raise ~$30 million. That does not seem like a significant amount to lower debt or pay a dividend to Artal and the company has plenty of FCF and cash on hand to pay debt, so a small equity raise does not seem to make sense for Artal.

    I don't deny they could do an equity raise here, but if they were to do an equity raise by repurchasing back shares they sold in the dutch-tender in 2012, then they would be increasing their stake if they are the sole purchaser. So, front running their own equity raise just to maintain control (51%) does not make sense. Ex. 10 million shares issued and purchased by Artal would increase their ownership to 39 million and shares outstanding would be 67 million making their ownership 58% post dilution.

    Like you said, Artal is looking out for their shareholders, so they will buy low and sell high meaning that anytime they purchase on the open market means that shares are low. They could take the company private but they would have to pay off the debt to do so, which would somewhat negate the reason why they took the debt in the first place and they would need something like $2.7 billion to do so.

    Curious, where do you get $12 a share from?

    I agree the growth will benefit from any Obamacare mandate to cover weight loss services, but we shouldn't forget the NIH in the UK is already close to potentially providing WTW and Slimworld memberships for overweight/obese in the UK for free.
    Aug 20 06:07 PM | Likes Like |Link to Comment
  • Update: Winmark Leasing Portfolio Growing, And Share Repurchases Continue To Indicate Shares Are Undervalued [View article]
    Oxboro,

    You point out possibly the biggest reason why most investors stay away from this company, yet is actually the reason why there is an opportunity.

    Accounting has its short-comings and goodwill is sometimes not accurately reflected with certain companies. Some companies produce huge returns on net tangible assets because it is hard to quantify brand assets, relationships with customers, etc,. Winmark earns over 100% after-tax on net-tangible assets after the special dividend and share repurchases. These returns are very special and can be a result of goodwill or intangibles not truly reflecting reality, only GAAP standards. I think that the company is truly returning 9-10% which would mean that there is hundreds of millions of hidden assets not on the balance sheet. Since this is a key reason why there is an opportunity, I'll write up a longer article to address this. Thanks for reading and commenting.
    Aug 18 11:50 AM | 1 Like Like |Link to Comment
  • Platform Specialty Products: Rare Opportunity Continues To Be Available [View article]
    Marc,

    Thanks for the comment. Although we have limited visibility on exactly how extreme tax planning at PAH gets, having a CEO inspired by John Malone is unconventional in corporate America and indicative of what might come.
    Aug 14 11:37 AM | Likes Like |Link to Comment
  • Mr. Market Might Be Mistaken With Creative Learning Corporations' Auditor Change [View article]
    gte218u,

    Good comments and are the reasons why we don't own this company.
    Aug 14 11:32 AM | 1 Like Like |Link to Comment
  • Platform Specialty Products: Rare Opportunity Continues To Be Available [View article]
    Your welcome and thanks for reading.
    Aug 14 09:48 AM | Likes Like |Link to Comment
  • Platform Specialty Products: Rare Opportunity Continues To Be Available [View article]
    Just as a note, the outstanding share calculation includes the following (in millions):

    Current shares outstanding - 137.291
    Conversion of exchange rights PHD held by stockholders of MacDermid - 8.775
    Founder Preferred converted shares - 2
    Estimated shares awarded for founder preferreds (@today's price) - 11
    CAS stock issued - 2
    Options and awards - 0.331
    Aug 14 09:19 AM | Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    bradlewski,

    Very good points. Some of my thoughts:

    1. Yes, there is not enough resources to engage in all 4 activities as you described, so there must be prioritization. Great CEOs are able to deploy the company's resources to the best uses when compared to each other. I agree that the OG should be a large priority currently and going forward since the company can probably achieve the largest returns incrementally and continue to maintain share. M&A is risky since it takes a very specialized skill-set to perform correctly and accrete long-term value, so it could be deemed riskier for a management team to undergo M&A with limited experience, when buybacks is an inherently less-risky endeavor.

    2. Although the dividend could have been used for OG or other uses, the company has a history of purchasing shares at attractive valuations. If my memory serves me correctly, up to 2007 more than 2 million shares were repurchased by the company at something like $3.50 a share. The company is again repurchasing shares in force at below $4. With 20/20 hindsight they have been purchasing shares at undervalued prices.

    We also have to remember that the past strategy was led by the previous CEO and as of Jan 2014 Karen King has joined the company as CEO. Since she has joined the company, FHCO has suspended the dividend, repurchased shares and is starting to invest more in OG and potentially M&A. I think she has made some very good decisions so far and applaud her. I'm sure the board who continues to own a big chunk of FHCO is also applauding King and are convinced she is the best candidate to allocate capital for their investment.

    3. Here I disagree. I think it is very wise to allocate capital to share repurchases even with a company with lumpy revenues since it is less risky. As described above, M&A takes a very rare skill-set from a CEO to make and manage acquisitions profitably. There are too many areas to make a mistake. Martin Franklin, Michael Pearson, the Rales Brothers, and Warren Buffett (not an all inclusive list) have a track record that demonstrates they have the skill set, but many other CEOs do not. It is to be seen if Karen King has it. On the other hand, repurchases are to quote Tom Smith "an investment in a business that management knows well (we hope), requires no additional management effort, no additional capital expenditures other than that used in the repurchase, brings no additional unforeseen risks, and can enhance the control of management and/or large shareholders. Few acquisitions fill this bill."

    Hope that helps.
    Aug 10 10:21 AM | Likes Like |Link to Comment
  • Post Holdings: Great 'Cereal' Acquirer Meaningfully Undervalued [View article]
    Company is much cheaper today. Shorts are getting it right in the short term but long-term this could be very compelling entrance point.
    Aug 8 10:11 AM | 1 Like Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    tony, good question. They have mentioned in the earnings call that they are looking for companies or products that are "complementary to our current offering in market segment, product category or channel aspect." My guess is they could do something similar to male condom competitors by selling lubrication, vibrating rings/toys, female sponges and even potentially male condoms specifically marketed to women. I recently read about Sustain Condoms http://bit.ly/1AYhPC0 which would be an example. Since male condom brands Trojan and Durex mainly advertise to men FHCO could build their marketing around a female only brand, which I think would help differentiate their non-condom products.

    They also could branch out to other female health categories, however, I doubt this would be their first acquisition since I think FHCO is trying to build the brand around FC2. I could be totally wrong.
    Aug 7 04:10 PM | 2 Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    Update:

    Two other directors purchased shares on the open market. While the quantities were insignificant we would note that director Donna Fleck - previous CFO - purchased $10,000 or 13% of her 2013 consulting compensation (she did not receive a fee from being a director).

    Also, the company announced that they purchased 130,000 shares from August 4th-6th. This is a significant purchase since the amount is equal to ~13.6% of total trading volume over that same period. The repurchase confirms our thesis that the company understands how undervalued the shares are currently and appropriating capital accordingly. We think it is highly likely that the company is not finished repurchasing shares - they have 800k shares allowable to be purchased under their current buyback - and it is highly likely that the marketing strategy planning could be close to finished and announced soon. This would again bring certainty to the future prospects of the company and catalyze a much higher price.
    Aug 7 02:35 PM | Likes Like |Link to Comment
  • Update: Dividend Cut Provides At Least 50% Upside For Female Health Company [View article]
    I'll be providing an update soon in an article.
    Aug 3 12:05 PM | 1 Like Like |Link to Comment
  • Avante Logixx: Mr. Market's Unwarranted Reaction Has This Quality Security Roll-Up On Sale [View article]
    dragonkrys,

    Good point about the lock-up also potentially being a reason for the sell-off.

    You mention the valuation based on RMR, which is one good way to look at the company. I'd like to add that Avante's non-recurring revenues could be deemed semi-recurring, albeit in a lumpy sense. Security services are more relationship based. An exercise is thinking about it from the perspective of an executive utilizing security x's services. They are likely to continue to work with security x and less likely to bump around from company to company, say because of price, since security x already knows who they are, how they want to be protected, etc,. So every time the executive needs to travel or needs protection, they will call up security x. Non-recurring revenue demand then is driven by how often the service is needed and not the demand of selling more to different customers, which non-recurring implies. Rolling-up the industry then allows Avante to grow their relationships of straight recurring and semi-recurring.

    Hard not to see Avante being one of the very few "business superstars" that is able to achieve returns on equity well north of 15% consistently the next ten years. They'll most likely be selling their non-sexy security service much like they are today well into the future.
    Jul 29 12:28 PM | Likes Like |Link to Comment
  • Avante Logixx: Mr. Market's Unwarranted Reaction Has This Quality Security Roll-Up On Sale [View article]
    Thanks, will check out.
    Jul 29 10:24 AM | Likes Like |Link to Comment
  • Idenix Pharmaceuticals: Potential Multi-Bagger Means Little Risk/High Reward [View article]
    Thanks aedius. Hopefully you owned some.
    Jul 28 02:50 PM | Likes Like |Link to Comment
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