Vodafone Might Collect As Much As $130 Billion From Verizon Wireless [View article]
I, too, am long VOD, and have been for some time. Sold VZ at $36 to buy VOD at $25 because it was supposedly a cheaper way to get Verizon Wireless. So far, that has not worked well.
If the VZ Wireless stake were sold for $120bb ($24/sh), wouldn't the rest of VOD be worth at least one times sales of $75bb ($15/sh)? I am amazed that the market seems to be giving VOD almost no credit for owning 45% of one of the best assets in the world. Is $40/sh in the realm of possibility?
What Salesforce.com Might (And Might Not) Buy With Its $1 Billion [View article]
This is a great article. I appreciate the informative brainstorming as to what will CRM do with the money. And I believe you are correct that there is a purchase in the near future. From the point of view of CRM... Why not borrow $1bb if you can get it at .25% interest, and may never need to pay it back if the stock goes still higher.
As an investor, however, I wonder why a company would ever use cash to buy another company when it could use hyper-inflated stock to make that same purchase.
Cisco: Investors Should Take A Downgrade And A $17 Price Target Seriously [View article]
I certainly hope FBR is correct and this stock trades at $17. This would be one of the great technology buy opportunities ever.
CSCO has $32bb in net cash ($6 per share). At $17, Cisco has enough cash to buy 35% of its outstanding shares, and this does not count the $10bb or so that the company will generate in new cash in the next 12 months. With the reduced share count, EPS would shoot higher, and my shares would be trading closer to $30, where they ought ot be.
I suspect FBR has a client that wants to establish a large position in CSCO, and FBR is doing its part to bring the price down to help that client accumulate more shares.
Why I (Still) Believe Swisher Hygiene Will Decline Dramatically [View article]
No, I had not been through the prospectus. Thank you for the link.
Although the business has not made money in the past, I do not think that guarantees that it will not make money in the future. I know the hole is deep and the odds are against it, but the people running the show have done this sort of thing before. Revenue is now $220mm instead of $60mm, so I do not think it is the same company as it was in May, 2010.
What I found most interesting in the prospectus is the fact that the major shareholders were not able to sell into the offering because the lock-up extended to 4/2012, and by that time Swisher announced it had to restate 2011 financials.
About 55 million shares thought they were going to get more than $5/share, and are now staring at $1.00. They have a big incentive to pull this off.
Regarding "debt free balance sheet and focus on operations": They are not "related", and I did not say they were. They are two separate positives. A strong balance sheet buys time, and for the first time in a year, management can get to work on marketing and operations.
I'm betting a little money that they make it work.
Why I (Still) Believe Swisher Hygiene Will Decline Dramatically [View article]
"I have no reason to believe the existing operation will ever be cash positive"
This is the only statement in your article that is of any consequence. Everything else is "driving while looking in the rearview mirror". If the company is never cash positive you are correct, but...
If the company turns cash flow positive in the second half of 2013 as management has indicated it will be, and continues to be cash positive going forward, this will be a viable business.
I think it is simplistic to base a cash flow analysis on a year when management has been focused only on correcting financials, rather than operations. Let's see what they can do with a no debt balance sheet and full attention to operations.
Clean Energy Boosted By U.S. Natural Gas Refueling Station Plans [View article]
I wonder if ENN building natural gas fueling stations is a plus or a minus for CLNE. To me, the risk in CLNE is not due to the viability of its stategy. The strategy will work, and they are going to be a driving force in getting nat gas to be a transportation fuel in the US.
The question is rather or not CLNE will be a big enough beneficiary of the move to nat gas to become a profitable company. If ENN, then Chevron and Exxon build out fueling stations, why will we need CLNE?
Buy MGIC Instead Of Radian's Overpriced Stock Offering [View article]
Your analysis is passionate and thorough, and I would not be surprised if MTG performs better than RDN from current prices, but....
It simply is not true that the risk levels are the same. It is true that EPS will be hurt because of the 50% increase in shares of RDN, but there is a method to this madness.
With this capital raise (all said and done about $770mm) the survival of RDN is insured (pun intended). In all likelihood, the converts will convert in a few years and $400mm of debt will vanish. Diluted book value jumps to close to $7 with this capital raise, and big money investors are taking an interest in the stock. The new business being written is much higher quality than that written in 2005-2008, so RDN has bought itself enough time to become profitable.
Not so with MTG. According to Credit Suisse, 2012 year end book for MTG will be about $2.06. Further losses in 2013 will bring book lower. 40/1 risk to capital ratios could mean capital raises for MTG, but at far more onerous terms than that of RDN.
Even though everything may very well work out for MTG, the viability of the company remains in question. While RDN is over the hump.
I agree that APA is a great way to play rising oil prices. It will always be more volatile than the majors because its value is so closely tied to current oil prices. And I, too, believe it is the size that a CVX or XOM would like to buy.
Buy APA because you are buying inexpensive oil reserves, not because it is "cheaper" than CLR. I am not sure there is any way to reasonably compare the two.
While APA has meaningful current production relative to CLR. CLR is expanding its production at an astonishing rate, and successful expansion warrants a higher relative price. If expansion is "un"successful, it is a different story.
The CLR story depends on how much oil is really in their Bakken holdings. If Harold Hamm is right, production will continue to grow at a rapid pace for a long time, and today's price will look very cheap. If conventional wisdom on amount of the oil reserves proves to be correct, CLR is an expensive stock. There is also the matter of Mr Hamm owning more than 50% of the company. CLR has merit in its own right, but it does not compare well to any other company.
GameStop's FY12 Holiday Sales Are A Red Flag For Investors Betting On Cyclical Growth [View article]
I don't know who is buying their stuff, but they are selling $9bb per year of it, while the shorts have been calling for its demise for at least three years. During those three years the company has bought back about 50 million shares and paid off more than $500 million in high interest debt.
I do not even need the company to grow sales or earnings if they pay me a 4%+ dividend and buy back 10% of the company each year. The per share numbers will steadily increase.
In two years, they may have fewer than 100mm shares outstanding. If the market cap remains at about $3bb, the stock will be up 20-25% at $30, plus I will have picked up 4.5% per year in dividends. That is not a bad return. Not many companies have been as shareholder friendly as this one.
Radian Reports Fourth Quarter and Full Year 2012 Financial Results [View article]
Everything about this report feels negative.
Book value down to $5.55. Another $1bb in claims forecast for 2013. It is likely book value will not be higher that current stock price a year form now.
Can AES Get Out Of Its Parents' Basement? [View article]
I agree, the question is, "When?"
Here is a company with $5bb/yr in EBITDA and an $8bb market cap. Nextera has comparable EBITDA and a $30bb market cap. I know they are in somewhat different businesses, but the comparison does speak to potential.
It feels to me that when management decides they want to show earnings, the earnings will be substantial and the stock will move sharply higher. Perhaps when senior management gets closer to retirement age, and has received "enough" stock options, the numbers will show earnings in addition to cash flow.
Clean Energy Fuels Will Become Increasingly Profitable [View article]
The real competitors to CLNE are Chevron, Exxon, and the rest of the big oil companies. When they decide to put natural gas pumps in their retail outlets, why will anybody need CLNE?
Vodafone Might Collect As Much As $130 Billion From Verizon Wireless [View article]
If the VZ Wireless stake were sold for $120bb ($24/sh), wouldn't the rest of VOD be worth at least one times sales of $75bb ($15/sh)? I am amazed that the market seems to be giving VOD almost no credit for owning 45% of one of the best assets in the world. Is $40/sh in the realm of possibility?
Macquarie's CEO Discusses Q1 2013 Results - Earnings Call Transcript [View article]
5% yield on a stable $3.50 dividend gets us to $70. Is this a lay-up?
The Weekly Dow: Top 5 Dividend Plays [View article]
What Salesforce.com Might (And Might Not) Buy With Its $1 Billion [View article]
As an investor, however, I wonder why a company would ever use cash to buy another company when it could use hyper-inflated stock to make that same purchase.
Cisco: Investors Should Take A Downgrade And A $17 Price Target Seriously [View article]
CSCO has $32bb in net cash ($6 per share). At $17, Cisco has enough cash to buy 35% of its outstanding shares, and this does not count the $10bb or so that the company will generate in new cash in the next 12 months. With the reduced share count, EPS would shoot higher, and my shares would be trading closer to $30, where they ought ot be.
I suspect FBR has a client that wants to establish a large position in CSCO, and FBR is doing its part to bring the price down to help that client accumulate more shares.
Why I (Still) Believe Swisher Hygiene Will Decline Dramatically [View article]
Although the business has not made money in the past, I do not think that guarantees that it will not make money in the future. I know the hole is deep and the odds are against it, but the people running the show have done this sort of thing before. Revenue is now $220mm instead of $60mm, so I do not think it is the same company as it was in May, 2010.
What I found most interesting in the prospectus is the fact that the major shareholders were not able to sell into the offering because the lock-up extended to 4/2012, and by that time Swisher announced it had to restate 2011 financials.
About 55 million shares thought they were going to get more than $5/share, and are now staring at $1.00. They have a big incentive to pull this off.
Regarding "debt free balance sheet and focus on operations": They are not "related", and I did not say they were. They are two separate positives. A strong balance sheet buys time, and for the first time in a year, management can get to work on marketing and operations.
I'm betting a little money that they make it work.
Why I (Still) Believe Swisher Hygiene Will Decline Dramatically [View article]
This is the only statement in your article that is of any consequence. Everything else is "driving while looking in the rearview mirror". If the company is never cash positive you are correct, but...
If the company turns cash flow positive in the second half of 2013 as management has indicated it will be, and continues to be cash positive going forward, this will be a viable business.
I think it is simplistic to base a cash flow analysis on a year when management has been focused only on correcting financials, rather than operations. Let's see what they can do with a no debt balance sheet and full attention to operations.
A Newbie Active Investor Discusses His Portfolio [View article]
I also like but do not own CAT, IBM, and HCN. I do own C instead of BAC, and AXP instead DFS
Your is a great portfolio. I would like a little more oil/gas like APA or DVN, and a comfortable pipeline company like KMI.
Clean Energy Boosted By U.S. Natural Gas Refueling Station Plans [View article]
The question is rather or not CLNE will be a big enough beneficiary of the move to nat gas to become a profitable company. If ENN, then Chevron and Exxon build out fueling stations, why will we need CLNE?
Buy MGIC Instead Of Radian's Overpriced Stock Offering [View article]
It simply is not true that the risk levels are the same. It is true that EPS will be hurt because of the 50% increase in shares of RDN, but there is a method to this madness.
With this capital raise (all said and done about $770mm) the survival of RDN is insured (pun intended). In all likelihood, the converts will convert in a few years and $400mm of debt will vanish. Diluted book value jumps to close to $7 with this capital raise, and big money investors are taking an interest in the stock. The new business being written is much higher quality than that written in 2005-2008, so RDN has bought itself enough time to become profitable.
Not so with MTG. According to Credit Suisse, 2012 year end book for MTG will be about $2.06. Further losses in 2013 will bring book lower. 40/1 risk to capital ratios could mean capital raises for MTG, but at far more onerous terms than that of RDN.
Even though everything may very well work out for MTG, the viability of the company remains in question. While RDN is over the hump.
The Value In Apache Corporation [View article]
Buy APA because you are buying inexpensive oil reserves, not because it is "cheaper" than CLR. I am not sure there is any way to reasonably compare the two.
While APA has meaningful current production relative to CLR. CLR is expanding its production at an astonishing rate, and successful expansion warrants a higher relative price. If expansion is "un"successful, it is a different story.
The CLR story depends on how much oil is really in their Bakken holdings. If Harold Hamm is right, production will continue to grow at a rapid pace for a long time, and today's price will look very cheap. If conventional wisdom on amount of the oil reserves proves to be correct, CLR is an expensive stock. There is also the matter of Mr Hamm owning more than 50% of the company. CLR has merit in its own right, but it does not compare well to any other company.
GameStop's FY12 Holiday Sales Are A Red Flag For Investors Betting On Cyclical Growth [View article]
I do not even need the company to grow sales or earnings if they pay me a 4%+ dividend and buy back 10% of the company each year. The per share numbers will steadily increase.
In two years, they may have fewer than 100mm shares outstanding. If the market cap remains at about $3bb, the stock will be up 20-25% at $30, plus I will have picked up 4.5% per year in dividends. That is not a bad return. Not many companies have been as shareholder friendly as this one.
Radian Reports Fourth Quarter and Full Year 2012 Financial Results [View article]
Book value down to $5.55. Another $1bb in claims forecast for 2013. It is likely book value will not be higher that current stock price a year form now.
Why is the stock trading higher?
Can AES Get Out Of Its Parents' Basement? [View article]
Here is a company with $5bb/yr in EBITDA and an $8bb market cap. Nextera has comparable EBITDA and a $30bb market cap. I know they are in somewhat different businesses, but the comparison does speak to potential.
It feels to me that when management decides they want to show earnings, the earnings will be substantial and the stock will move sharply higher. Perhaps when senior management gets closer to retirement age, and has received "enough" stock options, the numbers will show earnings in addition to cash flow.
Clean Energy Fuels Will Become Increasingly Profitable [View article]