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  • 20%+ ROIC, Year After Year? Look At Ebix's Capital Allocation [View article]
    Nothing personal Gino, but instead of giving minor updates on financials and regurgitating/cut and pasting old theses, perhaps you can give opinions on the important elements to the EBIX story. Why have people, for the most part, stopped asking questions on conference calls? Why are buy siders not allowed to ask questions on conference calls? Why did they really buy ADAM (it was a terrible company before and management still has not explained the value-add other than a couple sentences in a press release)? Why did they make such a small acquisition recently, when management has been telling investors to expect a bigger acquisition? Ex ADAM and ex gains, organic growth is less than 5% for the past 2 quarters. Do you think this is why investors had such a "tepid" response after q3 earnings? What ever happened to Raina's 8 word mantra/strategy? Why did he say very little on the last conference call? Do you still think EBIX and CRM are comparable per your older post? What are your organic growth rates? Will tax rate changes affect your metrics? Why are you still using a 10% WACC? Clearly I am bearish on EBIX, and there are many red flags. But I consider what management has done as much less that extraordinary. It's not hard to buy growth, and that can be a good strategy... but lets not confuse the reality. If cash runs out, you can say goodbye to growth and goodbye to cash flows. Indeed as noted in the the 10q notes, cash is even less today than it was at quarter end.
    Nov 29, 2011. 01:51 PM | 2 Likes Like |Link to Comment
  • Ebix's Expanded Stock Buyback Authorization Could be a Catalyst for Share Price Appreciation [View instapost]
    are you serious?
    Aug 18, 2010. 11:09 AM | 1 Like Like |Link to Comment
  • AIG Earnings Recap: Will U.S. Taxpayers Ever Be Repaid? [View article]
    AIG will only get $6b from the Alico sale. So, the taxpayer stake is only reduced by $6b, not $15.5b.

    Similarly, if AIG can IPO or sell AIA, the FRBNY owns $16b, so a $35.5b sale will generate $19.5b for AIG.

    These are the crown jewels of AIG and the FRBNY own 60% of each, none of which can be counted for paying down debt.

    And why normalize this quarters earning? The insurance industry is going through a difficult patch, and the only reason AIG is generating any sales is due to undercutting on price to gain volume. This will catch up to them.

    The thesis here continues to revolve around what the government will do with their stake...
    Aug 16, 2010. 10:10 AM | Likes Like |Link to Comment
  • Ebix's Expanded Stock Buyback Authorization Could be a Catalyst for Share Price Appreciation [View instapost]
    How on earth do buybacks illustrate "shrewd" managment? How does it suggest future buybacks? And how does a buyback disprove the short thesis?
    Growth companies generally don't have buy back programs. They use the cash for acquisitions. Slowing of their growth (either organic or via acquisition), would be terrible for valuation. Companies will use the "cheap valuation" as an excuse to buy back stock, but in reality, it's suggestive of something troubling: lack of acquisition opportunities or lack of returns on employed capital. Further, they have liability exposure regarding converts and bank loans. This particular buy back is a lame attempt to scare the shorts and boost their stock price above the conversion price. (I suppose on the other hand, the EZ Data doesn't seem to be working out, so perhaps a buy back is appropriate given their acquisition skills).
    What they should be doing is ramping up their sales force and marketing efforts. They claim to be doing so, but hiring a bunch of people to work out of their India facility isn't the same thing.
    You need to pick apart the numbers and ask serious questions of how these numbers are really adding up. The short thesis is quite simple, and a buyback only strengthens it.
    Jul 7, 2010. 12:51 PM | Likes Like |Link to Comment
  • Gains Forecast for Weight Watchers International (In a Good Way) [View article]
    why on earth would you slap on a 17x muliple for a company that is in secular decline, has nothing in the pipeline for new product, and relies too much on license and internet to drive profits? a 10x multiple is overly generous. and i believe its a value trap. think Blockbuster and Arbitron.
    Apr 11, 2010. 05:28 PM | Likes Like |Link to Comment
  • Amedisys Positioning to Become the 800-Pound Gorilla of Home Healthcare [View article]
    another comment: based on the Dec 2009 final ruling of the CHOW rule, look for more hospice acquisitions and fewer home health acquisitions for companies in the home health space. Two things will occur: 1) lower margins for AMED (hospice is a lower margin biz) and 2) lower than expected growth via acquisitions. Anyone who thinks acquisitions will drive sales needs to get familiar with CHOW.
    Apr 6, 2010. 02:57 PM | Likes Like |Link to Comment
  • Amedisys Positioning to Become the 800-Pound Gorilla of Home Healthcare [View article]
    AMED is priced to perfection. While demographics and penetration penetration potential are good, home health is in the eye of the health reform storm. The simple truth is that Medicare cuts need to be paid from somewhere, and it is widely thought that the larger companies will be allowed to mature and grow but at a cost: reimbursement cuts. Given what has happened in the home oxygen industry, home health may have several years of cuts ahead of it. For now, 2010 shows a 2.5% pricing benefit, and 2011 shows a 3-4% cut. For earnings to break even year over year, there needs to be a massive amount of volume increase. Organic growth doesn’t suggest such gains can come from here, so it will have to be via acquisition. Over the past 5 years, AMED has grown more than 25% twice, once from their TLC acquisition, which has had some issues, and the other from a much lower base. So, it’s unlikely AMED will have so much acquisition growth.
    Further, costs are rising. Despite unemployment, there is a scarcity of nursing supply forcing labor costs higher. Fuel is also rising.
    The real wild card is what the government will do. The home health stocks collapsed last year when Med Pac came out with their suggestions. Onerous, for sure… but what if Med Pac was brought under the Executive Branch? You never know… Time and time again, in many industries, people neglect to discount, even by a little bit, what could happen. Does it matter that the HHS task force opened an office down the street from AMED and down the road from LHCG? Perhaps, perhaps not. They have opened offices in the most towns that have been most proven to have fraud: Miami-Dade, Tampa, Los Angeles, Houston, Detroit, Brooklyn and Baton Rouge (see AMED and LHCG).
    And Daryl, the shorts do have a legitimate argument. 50% short interest is not to be taken lightly, and often times are proven correct. Even ignoring all the noise, there is “fraud and abuse” in this industry, that is a fact. The publically traded companies say they don’t do it. Fine. But what about all those mom & pops that could be doing it, that the big boys are relying on to acquire and drive growth?
    The main point is that if you bought the group in q1 2009 when there was blood in the street, great great job. But, currently, at 12x forward earnings, how much are you really willing pay for a maturing, slow growth, declining margin business with Obama looking over your shoulder? There are even more hurdles in 2014 revolving cuts. A current valuations, it’s appropriate to haircut all possibilities.
    Mar 31, 2010. 01:40 PM | 1 Like Like |Link to Comment
  • Ebix: Fast Growth, Low P/E [View article]
    the key issue is organic growth. q4 was better at 15%, vs. single or negative digits over the past year... but its still nothing get all excited about.
    Mar 23, 2010. 01:28 PM | Likes Like |Link to Comment
  • Ebix: Fast Growth, Low P/E [View article]
    Investing in a company that grows via acquisition is fine if they have enough cash flow and/or cash. Do not be fooled by any “organic growth”. The CEO said they grew organically “above 14%”. This means acquisitions accounted for about 40% of sales growth. The CEO strips down the new acquisitions for cash flow and lets them fade away as deteriorated assets. So, there are no synergies and no growth coming out of the acquisitions. As a result, EBIX needs to keep acquiring. They have a line of credit, but their previous sources of fund came via converts from a fading smaller investor. This is why the CEO had an Analyst Day and this is why the CEO is going around to all the major growth oriented buy side firms. He needs fresh capital to tap acquisition growth. Growth will slow without acquisitions. And it’s inappropriate to apply previous metrics to future trends. Further, there are just too many qualitative red flags to have faith in the management team, which the CEO feels he needs to addresses on every call. The EZ Data CEO received a put on the stock he was given! There are legitimate growth stories elsewhere in the market.
    Mar 9, 2010. 03:00 PM | Likes Like |Link to Comment
  • Amedisys: Why It Will Hit $85 [View article]
    AMED published their 10k today. Look at Provision for Doubtful Accounts on a quarterly basis for the past two years and compare to sales growth. This is a classic way for companies to manage their earnings. The bullish themes may make sense intuitively, but there are plenty of red flags that will keep AMED's multiple lower than many believe it should be.
    Feb 24, 2010. 03:22 PM | Likes Like |Link to Comment
  • EBIX: A Solid Pick in the Software Sector [View article]
    You need to have a castle before you can start talking about the benefits of a moat.
    Dec 30, 2009. 12:18 PM | 1 Like Like |Link to Comment
  • EBIX: A Solid Pick in the Software Sector [View article]
    While the chart and cash flows look good, red flags include: 1) EBIX does not have a killer product in a commoditized industry, 2) EBIX does not spend enough on marketing/sales and R&D making cash flows unsustainable, 3) The CEO of the most recent acquisition (EZ Data) was given cash and stock and a put on the stock! (look at the 10q), 4) at approx $45 stock price, EBIX is on the hook for its converts and the EX Data forcing the company to tap other areas of cash to fund growth, and 5) the EBIX CEO (he has his own website) is unimpressive as evidenced by investor reaction post its recent Investor Day.
    Dec 29, 2009. 12:58 PM | Likes Like |Link to Comment
  • Magna: Situation Rosy - Citigroup [View article]
    Keep in mind that a MGA/Opel relationship may threaten MGA’s other supplier relationships. Why would a manufacturer give MGA its orders (including blueprints) if MGA enters the OEM market? Further, the deal may be considered sign of weakness as MGA is looking (or in this case buying) production orders to fill European factories.
    Jun 23, 2009. 04:02 PM | Likes Like |Link to Comment