Seeking Alpha


Send Message
View as an RSS Feed
View Workinhard's Comments BY TICKER:
Latest  |  Highest rated
  • Investors lose bid to stop vote on Kinder Morgan combo deal [View news story]
    this is the risk you take when you hold any MLP. They never guaranteed you they would never sell or merge.
    Nov 6, 2014. 06:02 PM | 1 Like Like |Link to Comment
  • Rushing Toward The Cloud Crash [View article]
    Dana - first if Amazon ever decides to "turn on the profit machine" it will be by raising prices, not something they have done before. This would also allow competitors to undercut them. Throw in sales taxes & shipping costs and suddenly they don't look like the no brainer place to buy things.

    Second, if AMZN does ever start making a consistent profit, the market will start applying a retailer like PE on their stock. So lets say AMZN makes $10/share in a couple of years, slap a 18 PE ration on that and you have a $180 stock price.

    Amazon reminds me a of a big bull buck, being stalked by a pack of wolves. The buck can crush one, two or three of them. But eventually the pack will take down the buck. Amazon has crushed a few competitors in their day but they have some strong "wolves " coming after them.

    Bezos will find out soon enough that the race to lower prices can have a unexpected ending.
    Nov 6, 2014. 05:41 PM | 4 Likes Like |Link to Comment
  • American Realty: What Investors Must Consider Now [View article]
    A few points of disagreement.

    1) The FBI is not going to waste limited manpower and budget on any action against ARCP - they are there to get the info they need on the two fired employees who admitted to the coverup. They are not there to take down ARCP.
    The press played it up and the panicked investors fled. Maybe the press will cover the Justice dept's criminal investigation of JP Morgan for FX market rigging, announced today. The market really panicked and sold JPM down a whopping 1% today.

    2) While the intentional cover-up was a serious ethical and criminal act, the original error in Q1 was an inadvertent , junior accountant type of mistake - they added the wrong number back ! Why they didn't just admit to it is the million dollar question. My guess is that Schorsch created an environment where any mistake meant you were fired. Schorsch needs to go from the ARCP BOD, when he goes, that will break the sleaze link and ARCP will trade up on that news.

    3) Insurance should cover the damage claims, and the lawyers filing the suits will settle for a fraction of their claim if they can get a payoff quickly paid to them. They will keep the majority of the payout and the investors will see squat.

    4) ARCP will be forced to slow down and digest what they have, that will be a good thing. I would think they would cut the dividend - maybe frame it as a temporary cut - and use those funds to possibly buy back shares.

    5) Once ARCP's forensic audit is done (and assuming no major add'l issues) , ARCP's numbers will be the cleanest numbers out there. Think about it, if you are an ARCP employee, you know that every number you put out will be double and triple checked. If you are the auditor, you know that every thing you do will be scrutinized.

    6) While ARCP is definitely a traders stock now , its also a deep value situation and I think there is a good possibility that this will be not only a good short term opportunity but a longer term one as well.

    7) David Kay was in the middle of a full blow crisis last Thursday , of course he had to cancel Brad's interview. How could he even think of HAVING the interview with Brad , he wouldn't be able to answer anything because so much was unknown. And what analyst questions is he dodging? He had a conf call and laid out everything he knew. He will not know anything else until the audit is complete. At that point I would expect a conf call , maybe in conjunction will the Q3 earnings conf call. Let's just hope the analysts have the moxy to ask the questions that need to be asked. And lest you forget, Brad did have an interview with David Kay a while back , and Brad just tossed him softball questions. If Brad wants to have another interview with David Kay, I am sure he will have his chance in the near future. But since Brad is out of ARCP , he may not want to meet with David Kay.
    Nov 4, 2014. 11:30 PM | 20 Likes Like |Link to Comment
  • Update: The FBI Is Looking Into American Realty Capital Properties [View article]
    If the FBI actually does get involved, it is likely that it will be to go after the two fired individuals as opposed to going after the company itself. The FBI has limited manpower and budgets and is not going to spend a lot of time on something like this when they have bigger fish to chase.
    Nov 3, 2014. 04:10 PM | 3 Likes Like |Link to Comment
  • Lesson Learned: I Was The Sucker [View article]
    If this error was initially reported , it would have been a minor issue that would have not resulted in thus type of drop. Yes, people would have rolled their eyes , "there goes ARCP again", but it wouldn't have been this bad of a reaction. Companies make revisions all the time, because estimates, accruals and judgment calls change over time and inadvertent errors happen and need to be corrected. And yes, if you read the transcript of the CC, what happened in Q1 was an inadvertent error.

    What happened next is the real issue, the discovery and the INTENTIONAL attempt to cover it up and correct it in the next period. Stupidity at is finest - acknowledging the error to mgmt , the BOD and the auditors SHOULD have been the automatic response. They would have looked at the materiality of the error and probably corrected it in an 8K filing.

    The concern is this - what type of corporate culture was in place that would have led two high ranking individuals to make this large of an error in judgment - risking their careers and substantial compensation? In my opinion, because of previous accounting mis -statements , "Nick the Slick" likely went around saying something to the effect "if anyone makes another mistake they are fired". So he tried to rule by fear and intimidation and created an environment where no one wanted to admit to any mistakes or pass along bad news.

    We will soon find out what type of leader David Kay is , but one thing that the BOD should do is to get Nick Schorsch out of ARCP and not have him involved in APCP at all.

    As for the investment merits of ARCP, they will likely be out of the acquisition game for at least a year, which may be a good thing - consolidate and get your hands around what they have. They are likely trading at a pretty significant discount to NAV. I would expect some cut in the dividend next year, possibly having it framed as a temporary cut. Probably will see some asset sales. Lawsuits a plenty, (with the lawyers getting the majority of the settlements). Cole sale may have to be renegotiated.

    Nov 14th is a big date, as that is when they need to get their Q3 numbers filed. Not sure if any covenants will be violated if they miss this. But whenever the numbers are released, you can be sure they will have been double and triple checked by multiple parties so they should be very clean going forward.

    ARCP mgmt has always been very aggressive and very, very arrogant and borderline unethical. David Kay sounded like a very humbled man on the call on Wed, we will see if he and the BOD do what Brad suggests - PUT THE SHAREHOLDERS FIRST!
    Oct 31, 2014. 01:13 PM | 8 Likes Like |Link to Comment
  • Fifth Street Finance: This High Yield Stock Remains Deeply Undervalued [View article]
    FSC mgmt has one goal - to issue as many shares of FSC and FSFR as they can - shareholders be dammed - to increase the mgmt fees of FSAM. They proved this with their disastrous secondary of FSFR which diluted the NAV by over 15% and they will do it again with both companies.
    Oct 30, 2014. 11:15 PM | 6 Likes Like |Link to Comment
  • Disaster Strikes For American Realty Capital Properties [View article]
    I think the corporate culture fostered by the previous CEO, Nick the Slick, contributed to the environment where the accounting people involved in this made an accounting mistake in Q1 and were either too fearful to report and correct it or thought that it was small enough that they could correct the mistake in Q2. They obviously should have come clean and it would have been reported as a honest , inadvertent mistake (which I believe it initially was). Instead , they tried to cover it up and fix in in the next period but someone in the accounting dept called in an anonymous call to the BOD's audit committee. To it's credit, the audit committee followed up on the tip and engaged a forensic audit team for 6 weeks.

    One of the turnoff's to me has been the arrogance of ARCP mgmt - well David Kay certainly sounded humbled today on the call. And you can be sure that any numbers you see from ARCP going forward will be squeaky clean, having been double and triple checked by multiple parties.

    The stock will be volatile the rest of the year , until the audit committee finishes up , and it will certainly slow down the pace of acquisitions -which could be a good thing. David Kay said that the dividend was safe and would not be affected but i would not be surprised by a cut. But i think the pfd dividend is safe.

    Oct 29, 2014. 11:07 PM | 1 Like Like |Link to Comment
  • Is American Realty Capital Properties A 'Sucker Yield' Bet? [View article]
    That is great news, i would encourage you to ask the tough questions that the analysts seem to dance around in the conf call, many of which you have raised in your article. And bottom line is, the market does not trust ARCP management - I hope that you relay that fact to David Kay and get a response from him on what ARCP will do to change that reality.
    Oct 26, 2014. 07:20 PM | 2 Likes Like |Link to Comment
  • Is American Realty Capital Properties A 'Sucker Yield' Bet? [View article]
    Brad - bottom line is a person in your position (REIT newsletter publisher and most followed reit poster on SA) should not take the attitude towards the largest public net lease reit that "I'll let things shake out for a few quarters and see how they play out". You should be interviewing David Kay and asking all the questions you have and reporting the answers to subscribers/followers. You should be on the quarterly conf calls asking the questions that the analysts don't want to ask.
    Oct 24, 2014. 10:52 AM | 6 Likes Like |Link to Comment
  • Is American Realty Capital Properties A 'Sucker Yield' Bet? [View article]
    Brad - you previously has an interview with Nick S. where , frankly, he wasn't asked many of the tough questions about excessive executive comp and questionable mgmt decision that surround ARCP.

    Now David Kay is the man in charge. He has stated that one of their goals is to get the ARCP story told and to improve their relations with investors and build creditability. You are a big voice in REIT land and I can't imagine David Kay would turn down and opportunity to have an interview with you. This would be your chance to ask all of the tough questions that you have posed above and get answers.

    What has happened in the past is done , the question is does ARCP mgmt get that they have a credibility issue and what are they doing to address it. You can wonder all you want but I think that the biggest triple net lease out these should be a company you would want to talk to and get your hands around so that you can make a buy or sell call - not just hold and wait to see how their story plays out over the next year.
    Oct 23, 2014. 11:36 AM | 10 Likes Like |Link to Comment
  • Linn Energy exposed to deteriorating oil prices, analyst warns [View news story]
    Earnings are to be released 11/08, are they in a quiet period now and can't respond to GS hedging comments?
    Oct 14, 2014. 09:49 PM | Likes Like |Link to Comment
  • Bank Of America Is America's Least Favorite Bank [View article]
    They have the highest number of complaints because they have the highest number of customers. Hopefully you understand that issue and how meaningless your point is unless you showed complaints per 1,000 customers.
    Oct 10, 2014. 07:19 PM | 8 Likes Like |Link to Comment
  • Retirees, You CAN Count On Dividend Stocks To Deliver From Here [View article]
    I don't have a 3 or 5 yr cash cushion as you mention in your comments, but I have a targeted portfolio with a significant weight in fixed income , so I don't carry a high cash balance or reserve. A 3-5 yr cash cushion seems like a pretty sizable number for most people. I understand where you are coming from with the cash reserve - it allows you to be more aggressive with the rest of your portfolio but if you think about it, what do you really have if you have a large cash reserve? You have a balanced portfolio of stocks and cash vs a balanced portfolio of stocks and bonds.
    Sep 30, 2014. 12:07 PM | 1 Like Like |Link to Comment
  • BioSyent: A Great Micro Cap [View article]
    Stock has been hammered the last couple of days, any thoughts from anyone? I don't see any news reported.
    Sep 24, 2014. 11:00 AM | Likes Like |Link to Comment
  • Can General Electric Return To Its Previous Blue-Chip Dividend Growth Stock? [View article]
    Not sure if this is how Fastgraphs works , but the chart with the payout ratio on it has the stock price scale on the left side so it is not easy to see what the actual payout ratios are. Does it work differently if you are on the website?
    Sep 23, 2014. 08:07 PM | Likes Like |Link to Comment