cheapstockhunter

http://cheapstockhunter.blogspot.com

9 Comments

    • ON: Wed Jul 9th 12:05 PM
      Commented on:
      How 'Timber-Like' Are Timber REITs?
      I respectfully disagree with your analysis. In 2007 intersegment sales of timber were lower because of weakness in housing and the related weakness in their wood products division (lumber). Because pricing was much stronger in pulp (driven by China demand) the company, in the best interest of creating shareholder value, delayed harvesting some timber, and more aggressively harvested softwoods to take advantage of pulp pricing. This I am sure generated a higher ROIC than would be the case if they cut more hardwood. Also, while resource sales were about 20% of total, I believe the more relevant metric the market values these assets is the EBITDA they generate. In 2007 PCH generated about 60% of its EBITDA in its resources & real estate segments. that is all.
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    • ON: Mon Feb 18th 00:41 AM
      Commented on:
      Timber REIT Potlatch Corp. Can Help Grow Your Portfolio
      schwettyballs. thanks for the insight. i am aware of the real estate bubble, which is why the analysis excludes CURRENT prices of $1400 per acre and instead uses the 5 year average of $800 per acre. I would argue that timberland values are probably a bit more inelastic than residential housing, but I chose to use the lower 5 year average nevertheless.

      In terms of the HBU land which probably is more correlated with discretionary spending and real estate market, I agree that there may be some volatility, but probably less than you think. The folks purchasing these types of property are generally well funded institutions (Nature Conservancy, State of Idaho) as well as high income individuals that are looking to purchase land for recreational use or as a vacation home. These types of customers are likely not the same folks that are applying for sub-prime loans.

      The analysis tries to be as conservative as possible, but the wide margin of safety provides some wiggle room if PMV (private market values) fall off some
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    • ON: Mon Jul 23rd 08:15 AM
      Commented on:
      Why Google Should Buy Yahoo!
      Perhaps Coke should buy Pepsi also?
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    • ON: Mon Jun 25th 22:20 PM
      Commented on:
      Monsanto Earnings: Volatility Is The Name of the Game
      Two comments. Jim Croce sang that song, and while I agree with your ag thesis, SYT (Syngenta) is the best way to play the trend in agricultural seed/fertilizer demand. SYT trades at a 6% forward earnings yield vs. 3.5% for MON, yet has a similar growth rate. Much better international penetration, more diversified, and higher ROIC, makes SYT the better investment at current prices, IMHO.
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    • ON: Mon Jun 25th 22:19 PM
      Commented on:
      Monsanto Earnings: Volatility Is The Name of the Game
      Two comments. Jim Croce sang that song, and while I agree with your ag thesis, SYT (Syngenta) is the best way to play the trend in agricultural seed/fertilizer demand. SYT trades at a 6% forward earnings yield vs. 3.5% for MON, yet has a similar growth rate. Much better international penetration, more diversified, and higher ROIC, makes SYT the better investment at current prices, IMHO.
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    • ON: Sat Jun 2nd 18:52 PM
      Commented on:
      The Return of NILF
      i love milfs.
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    • ON: Wed Apr 18th 00:21 AM
      Commented on:
      Agricultural Commodities: Profiting From Supply and Price Increases
      Syngenta is 17.5x forward earnings and trades at about 50% of Monsanto's multiple. I think that is fairly attractive for a firm with higher profitability (as measured by ROIC)...Also, a string of new "biotech trait" products (double & triple stack) in 2007&8 provide a reasonable catalyst.....Disagree with your conclusion on Syngenta...Also, Mosiac sells much more commoditized products than SYT or MON, just look at the R&D spending. The higher value-add products like seeds and pesticides sell for 20-60$ per acre, and nitrogen&phosp... products have much lower margins....Lasly I think ADM should see margin compression in its ethanol business, offsetting the expansion in its other businesses. Just my humble opinion.
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    • ON: Thu Nov 30th 21:27 PM
      Commented on:
      Why I'm Not Dipping Into Walter Industries
      Elias. Do your homework. You cannot just pull a bunch of numbers off of morningstar and make a thoughtful investment decision, without reading the 10-K and having a true understanding of the financials.

      Your analysis is totally flawed. Please read the 10-K and re-evaluate before you continue to spread your wisdom across the internet

      1. Debt balance. You need to look at net debt. Secured Mortgage backed debt must be evaluated in tandem with the offsetting mortgage recievables. Mueller Water debt, which will be spun out in 2 weeks should also be properly accounted for when making an estimation of company liabilities, relative to the companies earning power

      2. Relative Valuation ratios. Who created the "industry" peer group P/S and P/E ratios you are using as comps? Are they conglomerates? Homebuilders? Coal companies? If this is a coal company universe, are you comparing to conventional steam coal producers or met coal producers? Any idea which has higher margins?

      3. How did you arrive at those free cash flow assumptions over the next 5 years? Did you listen to the conference call? Do you know what wall street estimates are? Most folks that follow the company expect them to earn about 250-350mm in cash flow next year. The Kodiak and Mine 7 initiatives over the next 3 years have the ability to add 25-40% increase in production. Based on next years revenue of 1.1B, 300mm in cash flow, and cap-ex estimate of 60mm (discussed on conference call) I arrive at a free cash flow / revenue yield of about 20%. Put that into your model.

      4. Book value of equity. Company has a negative equity balance stemming from a transaction with KKR 5 years ago, that skews the amount of accounting book value on the balance sheet. Evaluate the real tangible assets the company relative to its debt, you will find the company has sufficient resources to cover its liabilities. Try looking at the company as an aquirer would? Do you think they care more about the number that morningstar has under "shareholder equity"? Or would they be more concerned with the real world market value and earning power of Walter's assets.

      I understand your need to constantly repost this analysis as your short position continues to keep you up at night, but please do your homework before spreading your gibberish all over the internet.
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    • ON: Thu Oct 26th 20:04 PM
      Commented on:
      Trucker C.H. Robinson's Strategy of Not Owning Its Trucks Pays Off
      Trent, I agree with your conclusion that the non-asset based players are a smarter way to play the transportation space. While they have less operating leverage, at this point in the economic cycle, they will see less multiple compression when the "soft landing" materializes, because they have much lower fixed costs. That said, I recently looked at the group and felt that the valuations were a little rich, with the exception of PACR, a company that shares many of the same competitive advantages as CHRW, but at half the multiple. Have you ever looked at this name? I wrote an article in my blog about PACR....Thnks

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