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Owen

Owen
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  • Hilton to list on the NYSE [View news story]
    I'm not sure where the WSJ is getting its numbers. According to the NYT, published when the 2007 deal was announced, Blackstone paid $26 billion for the hotel chain (http://nyti.ms/18Hn6B6). If true, they wouldn't even recoup their financing costs for the deal.
    Nov 27 11:01 AM | Likes Like |Link to Comment
  • Caesars: All Earnings To Interest Payments [View article]
    Good article!

    I did notice, however, that the entire model is based on the assumption that financing costs would remain around the current 10% rate. That is a reasonable assumption under the current debt structure. As a takeover target, the picture looks much different.

    A large buyer whose cost of capital is, say, 100-150 bps above treasuries would find CZR to be fairly attractive. Since the operating side of Caesars is healthy and profitable, a large competitor in the entertainment industry (Disney? LVS?) would have no trouble financing a takeover of CZR at under 4% interest rate.

    Under such financing costs, CZR will show an attractive--if not thrilling--ROI of 6%, even without factoring in increased margins for both brands due to reduced competition, and other synergy related savings.

    The regulatory hurdles for such a takeover might be daunting, but when bankruptcy is in the horizon, regulators tend to be more pragmatic and lax.

    So while your analysis is accurate for CZR in its current ownership structure, the value of the underlying operating asset is what will likely determine its long term fate. Given enough time, it is likely to end up in the hands of those who would benefit the most from owning it.
    Nov 26 09:11 AM | 1 Like Like |Link to Comment
  • Green Mountain: Don't Get Too Excited [View article]
    I hate to disappoint you, but there no "ponying up" involved with paying the dividend. The dividend isn't some mystical manna from heaven. It's paid out of the company's own cash reserves, which is why the stock normally takes a $0.25 hit on the ex day. In the case of a short, the drop in stock price pays for the dividend - shorts just pay out the excess cash provided by the $0.25 drop.

    Covering a short to avoid the dividend makes as much sense as buying the stock to collect the dividend.

    But I believe you when you say you don't see a lot of downside. I'm just not sure how hard you looked.
    Nov 25 07:27 AM | 1 Like Like |Link to Comment
  • Green Mountain: Don't Get Too Excited [View article]
    Great article! The FCF analysis is thorough and highly illuminating.
    Nov 22 07:43 AM | 3 Likes Like |Link to Comment
  • Seeking Alpha fires a shot at Bloomberg, StreetAccount [View news story]
    I agree. An announcement of maintaining the same dividend is not newsworthy, and certainly shouldn't use up a quarter screenful.
    Jul 29 05:33 PM | 2 Likes Like |Link to Comment
  • Seeking Alpha fires a shot at Bloomberg, StreetAccount [View news story]
    Thank you! I can't believe I never tried that.
    Jul 29 08:26 AM | 2 Likes Like |Link to Comment
  • Seeking Alpha fires a shot at Bloomberg, StreetAccount [View news story]
    I like the bullet format, but please bring back the ticker.

    More importantly, give users a way to disable the auto-refresh. It's aggravating to read down to the third or fourth screenful, and have the page suddenly refresh and jump up to the top on us.

    Please let us read in peace!
    Jul 29 07:49 AM | 17 Likes Like |Link to Comment
  • Short Charter: Chapter 11 Is Coming [View article]
    Derek hasn't written any articles since this one. I can't say I blame him for that.
    Jun 5 04:05 AM | 1 Like Like |Link to Comment
  • Although the firm sees a "relatively strong business jet recovery," Goldman believes it will ultimately "be muted by the 2014-2015 transition at Bell [characterized by] broader military revenue decline." Given this, analyst Noah Poponak downgrades Textron (TXT) to Neutral from Buy but raises the price target on the shares to $32 from $31. [View news story]
    "[...] lowers the price target on the shares to $32 from $31. "

    Huh? The original article doesn't mention the word "lower".
    May 30 07:33 AM | Likes Like |Link to Comment
  • Is This The Start Of Another Banking Crisis? [View article]
    "how many people would have scooped up real estate in 2007 if they’d known that Goldman Sachs (GS) had a $13.9 billion bet (dubbed “the big short”) against subprime mortgage-related securities at the time? Not one!"

    Nonsense. People bet against highly publicised shorts all the time. Many see it as a point of pride to own something that the analysts or investment bankers are actively shorting, while others dismiss the experts' opinion summarily.

    How many people scooped up technology stocks in 1999-2000 after some notable hedge funds and investment bankers started shorting them? Pretty much everyone.

    Your theory about ignorance doesn't explain the systematic irrationality practiced by most market participants. It is not lack of information that leads us into trouble, but our insistence on throwing caution to the wind and relying on "gut feel" rather than fundamental analysis.

    I'm afraid Mark Twain had it right after all.
    May 29 08:40 AM | 1 Like Like |Link to Comment
  • An interesting exercise in the always dangerous practice of extrapolation: A look at this week's H.4.1 update shows the Fed holding $1.583T of outstanding 10-year equivalents or, a record 30.32%. By extension then, only 69.68% remains for the private sector. Currently, the figure is rising ~0.3% per week as Bernanke and company snap up Treasury bonds (TLT, TBT). Were that pace to continue until 2018, the Fed would be in possession of virtually the entire market. Food for thought from ZeroHedge and Stone & McCarthy. [View news story]
    "only 69.68% remains for the private sector."

    The Japanese and the Chinese governments each owns over $1 trillion of US Treasuries. Not all of it is in 10-year notes, of course, but I suspect the portion owned by the private sector is already less than half of the "69.68%" number quoted.

    At a yield of 1.7%, the only ones holding U.S. 10-year debt are those who can't replace it with another investment.
    May 24 03:48 AM | Likes Like |Link to Comment
  • Debunking Popular Bitcoin Myths For Goldbugs [View article]
    "I also wonder if an antagonistic government could harness enough computing power to take over the blockchain."

    Anyone, private or government, who had the computing power to crack a double SHA-256 hash would find far better uses for that ability than taking down Bitcoin.
    Apr 5 06:05 AM | Likes Like |Link to Comment
  • Debunking Popular Bitcoin Myths For Goldbugs [View article]
    "Bitcoin are about as difficult to recreate now as performing gold alchemy or stumbling on newly accessible mineral deposits for all intensive purposes."

    Is "for all intensive purposes" pidgin for "for all intents and purposes"?
    Apr 2 10:41 PM | 1 Like Like |Link to Comment
  • Get Bond-Like Returns From Uncommon Stocks [View article]
    "About 6 months ago Varan a regular commenter was attacking my article stating every retiree needs a large concentration of bonds (TLT) and cited the risk in income by not doing so. I decided to buy one share. That share is down -6.31% since I purchased it."

    So in your mind, Mr. Wells, the fact that an investment is down six percent in six months is enough to prove it was a poor choice?

    I'm not a fan of bonds either, but I base that on fundamental analysis, not just on fluctuations over the past six months.
    Mar 28 09:22 AM | Likes Like |Link to Comment
  • Get Bond-Like Returns From Uncommon Stocks [View article]
    Bob,

    I just did exactly that. I plugged in the numbers for GIS and for the S&P for the last three years into a spreadsheet, and calculated the Beta as per the standard formula. The result, not surprisingly, was 0.4305, or about 43%. By all means, please do so yourself to verify.

    The Yahoo Finance pages are riddled with inaccuracies and outright mistakes. I'm surprised that an analyst with your experience doesn't take one look at the chart and realize that a stock that mimics the market movements so closely shows up with a Beta of _negative_ 0.01, of all things. There are some numbers you don't have to calculate to four decimals to realize the quoted figure is bogus.

    Please, take the time to correct your article and provide data you either derived yourself or taken from a reliable, trustworthy source.
    Mar 26 01:32 PM | Likes Like |Link to Comment
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