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Owen

Owen
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  • Spyder's Technical Accounting Analysis Of Rent-A-Center Indicates Earnings Are At Risk [View article]
    Thank you for your reply! Interesting points and useful analysis.
    Aug 28, 2015. 09:33 PM | Likes Like |Link to Comment
  • Spyder's Technical Accounting Analysis Of Rent-A-Center Indicates Earnings Are At Risk [View article]
    Good article!

    What makes you think RCII may be capitalizing normal operating costs? What are the amounts involved?
    Aug 28, 2015. 08:15 AM | Likes Like |Link to Comment
  • Short Gener8 Maritime: Poorly Managed And Overextended Tanker Firm [View article]
    > Minus the $1.43B in remaining installments, GNRT gets net cash of $170M <

    You're making the same mistake again. There is no "minus the $1.43B". The $1.43B goes from one pile to another. Once the payment has been made, the value of their fleet increases by the same amount.

    A ship is not a chewing gum. When you buy a $1B ship, you are not $1B poorer. You simply have $1B less cash (or $1B more debt), and $1B more worth of ships. Assuming you paid the market price for the ship, your total assets doesn't change as a result of the payment.

    In a fire sale situation, GNRT will sell the vessels _along_ with the $1.43B debt. The total under construction will still be worth $760M before markdown, as I showed above.

    Your accounting sounds like you have already decided on the final answer, and are now forcing the calculation to prove it.
    Aug 26, 2015. 11:12 PM | Likes Like |Link to Comment
  • Short Gener8 Maritime: Poorly Managed And Overextended Tanker Firm [View article]
    Thank you for your detailed reply.

    No, I did not discount their debt. My calculation was as follows:

    $800M (vessels) + $760M (vessels under construction) - $310M (markdown) + $450M (current assets) + $65M (other noncurrent assets) - $835M total liabilities = $930M net tangible book value. That divided by 82M shares gives $11.34 per share.

    The $1.43B payment due is not a net liability. Once the payment is made, the value of vessels under construction immediately jumps by the same amount, so that doesn't change the net book value, although it does add considerable leverage to the balance sheet.

    Funding gap is a problem for a going concern, but if those vessels under construction are sold still in the shipyard, complete with the obligations, the buyer gets $760M + $1.43B = $2.19B of assets at a price of $1.43B + 0.8x0.76B = $2.04B, while Gener8 gets a much needed $608M lifeline, and rids itself of that upcoming $1.43B obligation, while reducing its future fleet.

    In such a scenario, it is left with just the current $800M fleet, but a much healthier balance sheet, and no monster payment obligations looming in its future.

    If the company is worth $11.34 per share to a potential well-funded competitor, who gets the fleet at a 20% discount, you are a braver investor than I am shorting it at $11.79.
    Aug 26, 2015. 09:13 PM | Likes Like |Link to Comment
  • Short Gener8 Maritime: Poorly Managed And Overextended Tanker Firm [View article]
    Their latest 10-Q shows $800M in vessels and $760M in vessels under construction. If you mark those down conservatively by 20%, that still results in net tangible assets of about $11.30 per share.

    So, in a liquidation or distressed asset sale situation, they are still worth the current share price even with zero earnings.

    What am I missing here?
    Aug 26, 2015. 11:59 AM | Likes Like |Link to Comment
  • El Pollo Loco: PE 'Bust-Out', 20+ Years Of Failed Domestic Expansion, Pre-IPO Window Dressing Make An Ideal Short [View article]
    > congrats, good call! <

    Hardly. If you were able to short the stock, which wasn't easy to borrow, you paid 108% a year stock borrowing fee, which ate up over twice of what you've gained on the price drop.

    Same results if you did this using options, as the Put-Call parity point was shifted to a zero-arbitrage price, making such trades effectively identical to borrowing the shares.

    This is one of those trades that looks great on paper, unless you try to actually carry it out in the real world.
    Aug 17, 2015. 07:48 AM | Likes Like |Link to Comment
  • Anacor Pharma's Misunderstood Clinical Trial [View article]
    Good article! I love the Miracle Whip trial.
    Aug 13, 2015. 03:34 PM | Likes Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]


    They do, but what makes you think that was a factor in his decision to buy them?

    Based on other purchases, and on comments Buffett made, I have no doubt he would have bought IBM even if it paid no dividend at all.
    Aug 10, 2015. 11:22 PM | Likes Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]
    As I've mentioned above in my point #3:

    "Dividend, and dividend growth rate, are minor considerations to Buffett. Since he sees shares as representing ownership of a business, he doesn't care how much of his retained earnings are distributed as dividends. In fact, for tax optimization, he'd prefer earnings were retained and reinvested rather than paid out as dividends."
    Aug 10, 2015. 10:24 AM | Likes Like |Link to Comment
  • Caesars Entertainment EPS of $52.06 [View news story]
    <Q1 EPS of $52.06 may not be comparable to consensus of -$1.55.>

    "May not be" - how cute. Out of the $7.722 billion net income, $7.955 billion is an accounting gain from writing off the debt of the spun-off bankrupt CEOC. Without that, CZR has a net loss of $233 million, or $1.57 a share, essentially in line with estimates.
    May 6, 2015. 07:10 PM | Likes Like |Link to Comment
  • Annaly Capital slips after downgrade [View news story]
    How likely is the Fed to increase the overnight rate before it starts unloading the trillions of long term treasuries it accumulated during the various QE stages?

    Dumping those notes and bonds will seriously depress treasury prices, which means higher yields across the yield curve. Unless there's panic buying of treasuries, we're likely to see the yield curve steepen as the overall rates go up.
    Apr 8, 2015. 04:34 PM | Likes Like |Link to Comment
  • Annaly Capital slips after downgrade [View news story]
    I thought Annaly makes its money on the spread between short and long term rates. An increase in the overnight rate will only hurt NLY if it is accompanied by a flattening of the yield curve. Is that in the cards now?
    Apr 8, 2015. 11:14 AM | 2 Likes Like |Link to Comment
  • Jamba: Misunderstood Asset-Light Plan Is Dilutive And Destroys Value [View article]
    >so last year, the California stores had a half year of half the impact. According to an analyst note, this was an 80bps headwind to margins in 2014, so by extension, it would be a 360 bps headwind in 2016 vs. 2013<

    I'm not sure I understand the math. If one quarter of the full impact is 80 bps, wouldn't the full impact amount to 320, not 360 bps?

    Also, did that analyst assume no change in the selling price, or did he take into account that at least some of the increased labour costs at such retailers would be passed on to customers?
    Mar 27, 2015. 11:04 AM | Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    Well said, Dialectical Materialist.

    The odds of the Don't Come bet in craps are actually slightly better than those of the the Come bet, yet it is still an unpopular bet that attracts derision.
    Mar 3, 2015. 11:21 AM | 2 Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    Well said, civ-e.

    I engage in short selling quite often myself, yet I despise the type of glee-- verging on schadenfreude--that is often expressed by short sellers when the stock goes down.

    I'm not sure about the exact ratio, but it seems many short sellers are far more delighted by the misery of others than by their own enrichment.
    Mar 1, 2015. 09:16 AM | 1 Like Like |Link to Comment
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