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  • Airline Pricing Power And The DOJ's Case [View article]
    So you can say the DoJ is thick and stubborn, while you don't even know who decides cases on merger regulation?

    To clarify, they don't have to convince the DoJ. They go before a judge
    Sep 18, 2013. 12:22 PM | Likes Like |Link to Comment
  • The Justice Department Flies In The Wrong Direction [View article]
    Wait, is this continued speculation that people were trading on inside knowledge of the DoJ's action? If so, read my above comment
    Sep 13, 2013. 11:38 AM | Likes Like |Link to Comment
  • Airline Pricing Power And The DOJ's Case [View article]
    Excellent article. Thanks for making a valuable contribution, unlike most articles on the subject matter.
    Sep 10, 2013. 09:54 PM | 1 Like Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    Oh, sorry, I read it as if you were attempting to defend his number... while also disagreeing with it. I was confused.
    Sep 5, 2013. 10:25 AM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    Because the number I get for $25 is $17.29. It seems you found that number online from some analyst, or close to it. So I say it's that, the analyst you picked says it is that, and you agree with the analyst. So I am not calling you out in any way. I'm simply wondering how $7 was justifiable, as you seemed to defend that number?
    Sep 5, 2013. 10:01 AM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    So you are telling me that, post approval, when we apply the market based equity allocation, then a 25 dollar share price of the new company, which LCC acts as the most reliable predictor for, corresponds to a 7 dollar value for AAMRQ...?
    Sep 5, 2013. 09:49 AM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    The reason that pre-approval AAMRQ was at a lower price compared to the corresponding LCC price was because the value of AAMRQ without the merger is really unknown, and could potentially be zero. Therefore, pre-approval, AAMRQ shares wouldn't reflect an exact equation to LCC, as there is a significant greater risk.

    The article is mentioning the prices post-approval. In that situation, the two would operate as a simple formula of one another (I concede there is also other debt that is being traded that should also be following an equation, but likely isn't, but that's a matter to consider once the basic math is understood).

    The point is, if the merger is approved, and the plan is approved as it was pre-DoJ complaint, then 25 does not correspond to 7 in any way, shape, or form. The article claims it does. How can you claim it is an opinion? It's a pre-set formula that determines return, and the risk is going to be similar for both companies (other than one exception, but again, not the point)... Mind boggling.

    I also love the idea that the made up number was 7 dollars a share in relation to 25. It was 6 to 19 pre-approval (so when AAMRQ carried the risk of DoJ). So even if you never looked at the agreement at all, never valued the debt and figured out the market based equity, never did any of that... you should still know 7 compared to 25 is laughable.
    Sep 5, 2013. 09:26 AM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    I don't even necessarily take the view that the DoJ should win this case. I was only pointing out that the arguments used in the comment above, specifically those arguments I quoted, were irrelevant.

    My post essentially said:
    1) The DoJ's decision wasn't last minute. It was exactly when it was expected.
    2) The fact that past mergers were approved carries zero weight in the matter. So when rptrdrvr said the DoJ "all of a sudden" cares by pointing to past mergers, that is clearly incorrect. While I do suggest they have changed positions to some extent relating to certain matters, that is evidenced in no way by simply pointing to past mergers that were approved of similar or greater size. How many times must I repeat this: it is based on the current market. That is why the last to merge is inherently more likely to get blocked.

    So feel free to make the argument intelligently about why you think US Air / American have a good chance of winning. I wouldn't necessarily disagree. There are valid points. However, walking around as if the past mergers being approved means this one should be approved as well, or that the DoJ just started to care, is 100% irrelevant

    As an incredibly over-simplified example, as you seem to not have understood this last time I made the same points, look at it this way to understand why past mergers don't prove this merger should happen:
    Let's say in a very simple market of la-la-land, it is accepted by everyone that if there are at least 6 companies in the market for toys, and no one of them is more than half the market for toys, then effective competition will continue. The competition authorities, the "la-la-land justice squad," apply these rules to every merger the same.
    So to start, there are 10 companies, each with 10% market share. The first two merge, so now there are 9. A different two merge, so now there are 8. A different two merge, so now there are 7. A different two merge, now there are 6. Four companies each holding 20%, and two companies holding 10% each. The last two try to merge. The la-la-land justice squad stops it.

    Now, did the la-la-land justice squad "all of a sudden" start to care? No. They cared all along. This was the merger that reached the threshold of having a significant lessening of competition.

    Now, if you want to go into substance of why the rules being applied won't actually help competition, then feel free. The la-la-land justice squad isn't perfect, and the arguments exist. Maybe they are wrong, five toy companies can compete just as well as six. However, when the argument used is "You let them merge, so you clearly have changed by not letting us," then I highly doubt you understand these issues well enough to disagree with the lawyers at la-la-land justice squad.
    Sep 5, 2013. 05:47 AM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    "I would also assert that this merger is not a new secret, recently revealed; no, the DOJ had over a year to assess this merger and unlike that of NWA/DAL and CAL/UAL, choose to block it just months before emerging from bankruptcy. If the DOJ felt like they had a case to stop the merger and file a lawsuit, then they should have been prepared to argue in trial; if not, it appears they got the cart before the horse. These two airlines, on the other hand, have argued their case successfully to all concerned (other than the DOJ), and received approval. The final exit from bankruptcy by Judge Lane is only held up due to the DOJ lawsuit..."

    What? The DoJ had told American and US Airways they would make a decision by August 15th. The parties were fully aware a decision had yet to come. The "last minute" argument is non-sensical. They were working on the exact timeline they said they would.

    "So why does the DOJ all of sudden have a problem with airline mergers when the last several (DAL/NWA, UAL/CAL and SWA/AirTran) flew right by?"

    There is nothing new about the last-mover problem. The question is one of competition, and I don't have to explain how being the first to merge might not harm competition, but being the last might. The question isn't one of fairness to the companies, but to the consumer. So no "bigger airlines merged first" argument has any legal relevance. There isn't a decent judge in the US that would take that argument.
    Sep 4, 2013. 11:13 PM | Likes Like |Link to Comment
  • The Latest Developments On US Airways-American Airlines Merger [View article]
    "If the merger gets approved, US Airlines can easily pass $25 per share and American Airlines can move closer to $7 per share."

    That is horrible math... do you just make these numbers up? The shares of LCC will be converted 1 for 1, so if you say LCC would be at around $25, it indicates the price the market anticipates the new company to be trading for. With that being the case, $7 means you don't understand the situation at all.

    Even at $20, the value of AAMRQ would be closer to $9.20.

    Of course, I'm making no claim as to what LCC (and therefore the new company) should be trading at. But to claim $25 LCC and $7 AAMRQ implies you have not bothered to do the math at all.
    Sep 4, 2013. 11:05 PM | 1 Like Like |Link to Comment
  • Vodafone: Value Without Verizon Wireless? [View article]
    ...But there is no real PR problem for Vodafone, as compared to the other companies you listed. The situations are entirely different. The other companies were using non-UK tax law, combined with the laws on taxation of foreign profits, to their advantage. In this case, all they've done is used a tax provision exactly how it was intended.
    Sep 2, 2013. 06:10 PM | Likes Like |Link to Comment
  • Vodafone: Value Without Verizon Wireless? [View article]
    I explain the tax implications in my above post.

    Also, there are some serious company law implications if they decided to do a special dividend for the purpose of "appeas[ing] the tax authorities and politicians." In fact, that is downright absurd.

    Beyond the many problems that come up relating to fiduciary duties, the reasoning also makes no sense when it comes to "appeasing the tax authorities." Sch.7AC exists intentionally, and this deal is the exact scenario it was created to deal with. No one who supports Sch.7AC is going to be displeased here... (Where as the other situations can easily be distinguished, as they are more "manipulative", if you will).
    Sep 2, 2013. 12:55 PM | Likes Like |Link to Comment
  • The Justice Department Flies In The Wrong Direction [View article]
    Prior to the announcement of the decision, the DoJ had yet to make any decision on the merger, meaning it was still open to going either way. So there obviously would be a group of people that believed the DoJ was going to file a complaint.

    Further, there likely were people shorting LCC and going long AAMRQ (in that at that time, AAMRQ was trading below what they would receive given LCC's share price.)

    Further, the price was simply quite high. Pre-approval from DoJ, it wasn't all that bad of a move. Approval wasn't going to move the price upward that much, as evidenced by the fact that most investors acted like this was "out of the blue" (that is, they didn't realize that the DoJ still hadn't made a decision, and therefore they weren't going to get all that enthusiastic that it was approved.). However, obviously a negative decision would move the price significantly down.

    There's plenty of reasons. I haven't even looked at it to fact check that your numbers are correct. The point I'm trying to make is that these numbers don't show a very strong sign of anything at all.

    Further, nothing we can do about it anyways... So it won't really help anything for your investment knowledge to make such a speculation. Really, I would suggest you avoid the "the insiders are tricking us" people.
    Sep 2, 2013. 12:45 PM | Likes Like |Link to Comment
  • The Justice Department Flies In The Wrong Direction [View article]
    Love a good conspiracy there, don't you...
    Sep 2, 2013. 09:52 AM | Likes Like |Link to Comment
  • Vodafone: Value Without Verizon Wireless? [View article]
    "The holding company that holds the stake in Verizon Wireless will sell the European assets to Vodafone, showing a small tax gain likely, and then Vodafone will sell the holding company taking advantage of Sch.7AC (TCGA 92)." (A comment I made on a different article about VOD.)

    The 10bn number would be incredibly high. 40bn gain on the assets, in European market?

    Also, without really looking at it too much, I think it makes more sense for Vodafone America to sell the assets before the transaction. Not really relevant to investors, but just a point I felt was worth expressing.
    Aug 31, 2013. 09:54 PM | Likes Like |Link to Comment