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crimsonbey

crimsonbey
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  • DryShips Is About As 'Greek' As Papa John's Pizza [View article]
    the benefits of ORIG ownership flow to support DRYS lifeline essentially, as daily rates in drilling reprice and more cashflow is needed to support debt repricing in debt it will weigh on ORIG to pay dividends and the value proposition via contract expiration/renewal optionality.


    The proper thing to do would have been to merge DRYS into ORIG at a premium eliminating the perceived premium when they still had tanker ownership.

    Management interests are completely not aligned with shareholders. Just in time decision making processes is not from lack of strategic thought but because they treat this company as a control holder with no real value ex post debt. My guess is they will do a reverse and once it declines some more a rights issue or a raise at 2.50 or so post 10 for 1 reverse. The whole point is to grow value at ORIG if possible while making DRYS value neutral to negative, you as a shareholder will never benefit from the value at ORIG from both structural and incentive issues. Short term the cycle is against you, long term management is not aligned in your favor.
    Jul 6, 2015. 03:02 AM | 5 Likes Like |Link to Comment
  • A 25% Tax Sheltered Yield: Goodrich Energy Preferred Convertible [View article]
    debt is around 600
    preferred is ~ 300
    common is ~ 100

    but proved assets are around 600

    the problem from several perspectives...
    for a buyer they would still have to prove up a lot of acreage spending money
    as going concern they need higher prices and higher production to cover cash flow
    from management perspective there seems no sense in streamlining preferred layers nor conserving cash, i sort of expect them to stop paying the preferred dividend sooner or later

    in some sense you are making a land play that in the future things prove out and cash flow will carry you through, no matter where you are equity, preferred, debt. I essentially think that unless they start covering interest and some cap-ex it keeps spiraling down.
    Jul 6, 2015. 01:54 AM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    The dividend is not sustainable for the combined entity. Long term structure of debt no matter how it is financed is not sustainable, unless and/or until some of it gets paid back.

    Book drops to ~7-ish after merger without taking into account debt or payback costs. Theoretically it goes to 6 or below depending on debt and terms.

    Nobody can say how if/when they change the debt/equity dynamic to make the risk worth it post merger. The worst possible outcome is the merger with the loan extended and not having long term debt in place, it would imply not being able to finance at market or willing or able to pay market terms, ergo expectations and reality completely different from management 'progrnosis' going forward.
    Jul 2, 2015. 01:20 PM | 1 Like Like |Link to Comment
  • Pacific Drilling - Shares Trading At Liquidation Values [View article]
    The problem with them is they need funding or a contract, perhaps even two for the flexibility of time to reach value. None of that is available today.

    Theoretically you could argue that even at half-of value which is below debt the company would be in-line with TODAY's values of rigs. What everyone wants is to jump through to the light in the end of the tunnel. But you shouldn't forget that it takes time for rigs to exit the market, oil price to stabilize as declining yields in non-economic fields take time to mature and eventual plug and abandonment occurs, and big companies see the necessity to resume exploration as costs/returns align better.

    The cost of holding through the tunnel is not apparent until the events that wipe out equity completely. Perhaps the cost for me would be below a dollar? perhaps lower, but for others it is higher or lower than mine. What is the real cost someone would be willing to bare if one were to assess the true loss probability as say 1 in 3 or 1 in 2? what sort of a return would you require? because for me it would be very very very high. Thus right now the company is extremely richly valued in my view.
    Jun 30, 2015. 08:37 AM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    you have to know how they finance the merger. if they have to cut div this will get very "dislocated"
    debt theoretically would have some sort of covenants
    Jun 24, 2015. 11:11 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    they need 250 mil to bridge gap for their cash portion of the offer and it can't come from properties.
    The other 300 mil or so would go to take out the mortgages on TSRE (i assume). In my view it is very likely that they could assume those but perhaps still pay a point or so for that.

    Mortgages and bonds/notes are different. Notes have higher rates but they do not amortize so cash flow wise it gives you more flexibility.

    A 15/15 year mortgage @4% fully amortizing would cost 8.9% a year in cash flow since you would have to payback a portion with every payment. You also have to pay every month instead of twice a year.

    You have to assume that they cannot borrow 100%+ against properties and the 3.23% you mention is probably because they have a lot of equity in the property if they didn't it would be higher. For the notes the debt/equity portion would be company wise so it would require higher rates.
    Jun 23, 2015. 06:51 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    I think it was the 3rd quarter.

    The problem is not financing but the rate+cost they pay for it. Imagine they issue 500 5yr notes with 6%, this pushes the interest cost to ~12+ from their assumed 10. (4.25 + 7.5 ) quarterly
    You also have to realize that operating costs for TSRE can't be lower than internalized costs they had unless you consolidated the internal operations. Lets say that also goes to 18 from 16.

    This is 4 mil total change... At that point you get to distributable flows of around ~6 mil a quarter or roughly 12 cents a share.

    In order for the deal to actually be acretive they need both the cost of funds under a certain hurdle which seems unlikely and operating costs to be lower. This is without the first year costs of issuance and merger expenses.
    Jun 22, 2015. 09:33 PM | Likes Like |Link to Comment
  • Seadrill Will (Eventually) Buy North Atlantic Drilling [View article]
    all of that is irrelevant.

    what has to be relevant is that any decision or a problem has to have healthy criticism from a myriad of vantage points to be healthy so that when you are making a mistake it is not compounded like interest into a fracture of your own ability. if there is an understanding from top down and bottom up that once you remove this aspect collapse is near, there has to be consensus on establishing or re-establishing reality. if this does not happen it does not matter.

    concentrating on specific symptoms of the underlying problem won't solve it. there has to be some sort of purge of lobbying interests and re-establishment of boundaries for everyone, EVERYONE... (except the general public which is already bound head to toe)

    rules of an open pyramid do not work when you have hard lines on the bottom but the top has no structure it becomes a volcano.
    Jun 22, 2015. 08:53 AM | Likes Like |Link to Comment
  • Kudrin Could End Russian Sanctions, A Bull Rally Would Follow [View article]
    "Why don't we bring the presidential elections closer and announce a new program of reforms?"

    This is impossible (or extremely unlikely) Putin wouldn't be able to run if they moved the election date closer according to constitution.

    Your looking at it through quadruple lens rose colored glasses. Kudrin has been in gov't since Yeltsin, he is not an outsider.

    The most likely outcome is in December sanctions won't get extended and in January they end at least from Europe.
    Jun 22, 2015. 05:23 AM | 4 Likes Like |Link to Comment
  • Seadrill Will (Eventually) Buy North Atlantic Drilling [View article]
    you have to remember that SDRL is listed in US and Europe, and my guess is a lot of companies are so there is a more or less reason to do what is asked.

    Switzerland more or less didn't do the same. But Swiss aren't in NATO.

    It takes a lot of courage to defend the constitution against the systemic breaking of it and our rights. Assuming the law can be broken by the system but not the public is a one sided road to destruction when no law is applicable because top/down and bottom/up enforcement no longer works. That is where it always ends.

    The arctic angle is interesting in preventing development but it won't really stop things after Russia goes its' own way and starts making equipment which will happen in five years or so, probably. They are building an extra ship yard for that actually.
    http://bit.ly/1LcfrNI
    Jun 21, 2015. 09:08 AM | 1 Like Like |Link to Comment
  • Seadrill Will (Eventually) Buy North Atlantic Drilling [View article]
    Theoretically we will find out Monday or Thursday-Friday next week.

    I think owning interest in fields or buying interest in fields is not against "sanctions" but supplying technology (drilling rigs) is prevented.
    Jun 20, 2015. 05:54 PM | Likes Like |Link to Comment
  • Lumber Liquidators: Gas Stove Is A Higher Level Formaldehyde Source In The Home [View article]
    Do you fathom the impact from a marketing point of view?
    You do understand that from a consumer perspective it is a very long time if they ever recover market-share (if at all) if not go down completely.

    The macro factors regarding household formation and home improvement in their industry segment won't help matters either.
    Jun 20, 2015. 03:03 AM | 4 Likes Like |Link to Comment
  • Seadrill Will (Eventually) Buy North Atlantic Drilling [View article]
    minority would have to vote for this, if what you said was true then Sun Pharma would have bought out minority interests in Taro a while ago.
    Jun 19, 2015. 04:36 PM | Likes Like |Link to Comment
  • Pacific Drilling Is Substantially Undervalued And May Be Takeover Candidate [View article]
    I more or less agree with some stipulations.
    A company that can secure contracts is worth more than the one whom has rigs on hand. Contracts can pay for rigs, Rigs cannot pay for contracts.

    Also new fleets do matter and the shortage is set precisely by the absence of utilization for the broad market. The problem is that lag time wise by the time you build to satisfy the demand the market dynamic could have shifted.
    Jun 18, 2015. 07:50 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    your right, however the 6-7debt would require 18%
    at 4% you get 12% with 8%
    at 6% you need 18% with 12%
    from my point of view (my opinion only)
    you need to cover the debt premium paid with risk adjusted reward for you taking the debt risk.
    Jun 18, 2015. 06:51 PM | Likes Like |Link to Comment
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