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noni moose

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  • Berkshire Ups Their Bet On Chicago Bridge & Iron [View article]
    I can't view your piece as credible or of value.
    -You state that BRK "just upped its stake" in CBI. Actually, it did so at the end of June. This was before the face plant by the CEO on the conf call noting that cash flow was poor, but would improve as CBI reaches milestone payments on other large projects, not the nuke projects, which were the central focus of the short report.
    -Oh yeah, and this was the same conf call in July where the CFO conveniently became ill earlier that day. What a joke.
    -You, and everyone else, has no idea how many shares BRK now owns. You will have to wait until the next filing. You assume that the ownership position has not changed, but clearly some large holders exited in July and August (after the conf call) to push the stock down from 70 to the high 50s. Was it BRK? Who knows.
    -Why did you not address the issues as highlighted by PP? Your article would have carried weight if you at least made an attempt. Instead, you disparage the research firm. Your piece brings little value to the debate.
    Aug 17, 2014. 02:36 PM | 2 Likes Like |Link to Comment
  • Chicago Bridge And Iron - Speculative Buy [View article]
    No, the buyside understands the cyclicality very well. As long as commodity prices do not roll over, CBI is a momentum trade well positioned (to be awarded energy and chemical projects) owing to cheap domestic gas. And the sell-side analysts love growth, which CBI should provide given its energy/chemical/power exposure. So they will continue to be cheerleaders.

    But the issue at current is not about cyclicality. It is about fundamentally altering the risk profile of the company through a strategic acquisition-Shaw Group and its 2 nuclear projects-Vogtle and Sumner-all-in construction and financing costs of $15b each. Neither project is even 2 years along and CBI has already adjusted the project reserves by about $800m. Hence, the difference in trend in 2013 between reported earnings (which are subject to favorable reserve adjustments) and cash flow, which is not. Projects that deteriorate tend to continue to deteriorate. And as noted above, liquidity (deteriorating cash flow) potentially becomes a major issue. Shaw found itself in a similar situation in the early 2000s and had to raise additional equity. Could CBI mgmt obfuscate and outrun these issues by signing on more multi-billion $ lump sum projects? Anything is possible, though that just delays the day of reckoning, it does not avoid it. But as I noted above, after running worst case, middle and best case scenarios, this stock does not even come close to being attractive at current.

    As an aside and no offense, but you need to do thorough research. The current management was not involved in doing the majority of the acquisitions dating back to the late 90s--they deserve no credit for those past successes. Further, past management was laser focused on project execution (self performing all of the work), cash flow and risk, the current CEO and CFO could not be bothered. Lastly, if I am even remotely correct, your pretty FAST graph valuation charts are not meaningful given the risk profile of the company has been altered versus the past--the valuation ranges of the past have little meaning. Good Luck!
    Jun 22, 2014. 10:05 PM | 2 Likes Like |Link to Comment
  • Chicago Bridge And Iron - Speculative Buy [View article]
    It is interesting that the accounting has garnered all of the attention--is it correct or not? As outsiders, we are not going to be able to understand all of the cross-currents that are occurring due to cost of completion accounting and reserve-related merger accounting. But I have a suggestion for anyone willing to play this name. Think about the track record of E&C companies operating in the utility power plant construction segment--how have they done historically? Go back and look at Shaw Group's track record, which is the company that CBI acquired. Shaw's performance is at best poor. And the nuclear power industry does not have a good on time, on budget track record.

    In my mind, regardless of whether the accounting machinations are deemed appropriate, CBI will have a liquidity event at some point in the future. But I have no idea when this will occur. So, if you decide to own this name, I would suggest you make the position small and stay close to the exit door.

    Investing in the E&C space is truly an exercise in understanding both risk and investor perception. I do not think the valuation adequately discounts for the potential downside.
    Jun 20, 2014. 11:21 AM | 2 Likes Like |Link to Comment
  • Chicago Bridge And Iron Says It's Solid [View article]
    This stock has been a moonshot since mid-Nov. Do you not think the positives you highlighted are already factored in?
    Have you gone back and looked at the history of Shaw and analyzed the volatility/difficulty of operating in the power plant construction space?
    JEC, which I consider best in class in the E&C space, has long avoided the power plant construction space owing to a skewed risk-reward in favor of the utility customer. Does this not give you pause to see CBI entering this sector after having solely focused on energy and chemicals for more than the last decade?
    If we do experience improvement in global economic growth, are you not concerned about the many fixed price projects in both companies' backlogs that could be subject to both materials and labor cost inflation? Was not this one of the reasons for the recent earnings problems at KBR?
    Do you know what Jim Bernhard, the CEO of Shaw up until the merger, has done with his equity stake in Shaw?
    When looking at E&C companies, it is easy to get caught up in the excitement of management commentary about the many multi-billion dollar projects that are "coming to bid". The investment reality, however, is to spend your time fully understanding the risks and investing in those instances where the Street is too bearish. Good luck!
    Feb 22, 2013. 10:57 AM | 2 Likes Like |Link to Comment
  • Canadian Pacific Stock Should Return To Earth Over The Next Year Or Two [View article]
    I do not know much about the railroad industry but a few questions as I read your initial paragraphs.
    1. Did you check your capx math, because I get CN spending 95k per mile, about the same as CP? So it seems like your underinvestment argument does not hold.
    2. Dont railroads spend on more than just track? Why is it appropriate to compare the rails capx to track if spending on locomotives and railcars is a part of the capx budget too? Do you know what the mix of spending is among these 3 railroads between track and other areas like equipment? Why didn't you include the capx for the other public railroads too?
    3. I would imagine that rail track is a long-lived asset. Does it make sense to compare railroads capx for 1 or 2 years? I would think you should compare over a much longer time frame, one that is closer to the estimated economic life of the asset.
    Mar 24, 2014. 10:23 AM | 1 Like Like |Link to Comment
  • Lindsay Corp.: Strong Balance Sheet, Reasonably Valued, And Rapid Dividend Growth [View article]
    Good write-up. LNN is a gem in a globally growing sector truly dominated by 2 companies. But the turbulence that is coming in the next 2 quarters (minimum) should be notable. I am patiently waiting (a Munger strength) for a much cheaper valuation. As you noted, the earnings yield is very attractive, which only means something when you can be reasonably sure that the earnings are stable/growing. That is unlikely to be the case over the next couple/few quarters.
    Jan 30, 2014. 07:42 AM | 1 Like Like |Link to Comment
  • Caterpillar: Making Money Alongside Oberhelman [View article]
    From your conclusion--"After my examination I rate Oberhelman as an above average CEO and will definitely include this as a positive factor into my valuation of the company"--you have got to be kidding me. Please do some in-depth research involving CAT's acquisition of Bucyrus at the top of the mining capex cycle. Talk about one of the largest examples of destruction of shareholder value that I have seen in years. He may be a solid operating exec, but when it comes to allocating capital, he is clearly one of the worst. I only wonder how long it will be before the board takes matters into its own hands.
    Jan 13, 2014. 05:24 PM | 1 Like Like |Link to Comment
  • Translating Apple Inc.'s Guidance Into An EPS Number [View article]
    Need to adjust the share count down for the share repo activity that occurred during the 3Q--down 11m according to the cfo. Up to you to determine if want to assume another accelerated sh repo--co is generating notable free cash, so not a real stretch imo.
    Jul 23, 2013. 07:58 PM | 1 Like Like |Link to Comment
  • American Greetings Waiting To Greet A Higher Bid [View article]
    This family makes the Dolan clan look downright charitable.
    Apr 30, 2013. 09:34 PM | 1 Like Like |Link to Comment
  • Book Ideas For The Thoughtful Investor [View instapost]
    I agree with your selections, have read and benefitted from them. Also might want to look at:
    Value Investing--Greenwald
    The Most Important Thing--Howard Marks
    Margin of Safety--Klarman
    Thank you for your write-ups, very thoughtful ideas. Good luck to you.
    Feb 18, 2013. 09:49 AM | 1 Like Like |Link to Comment
  • Shale: This Time It's Different [View article]
    Thanks for the history, I did not know that this was the 3rd or 4th redux. I am and have been short CRR (and others) for a time on the belief that shale gas E&P will have to slow materially. I have also started to look at some of the gas dependent chemical cos. CERA, I believe, regularly updates shale gas basin economics and there are few (1-2) that appear to make economic sense. And this has been the case for an extended period. US shale gas economics do work if we are talking about export to, say, Europe, but not for domestic consumption. Technology has certainly improved over the decades, but still not there yet. Interesting that the EIA recently materially lowered its estimate of recoverable gas in the lower 48. Thanks again, I enjoy reading your pieces.
    Feb 8, 2012. 08:36 AM | 1 Like Like |Link to Comment
  • Update: ValueVision Media Q3 Earnings And Activist Bow Out [View article]
    I suggest you listen to the CEO's presentation at Goldman conf from earlier today-11/20. Very enlightening, and potentially very powerful. I remain long. Good luck.
    Nov 20, 2014. 05:15 PM | Likes Like |Link to Comment
  • Berkshire Ups Their Bet On Chicago Bridge & Iron [View article]
    I think the 2 hedge fund analysts that started the firm are LSU alums. On the most recent conf call, one of the sell-side analysts specifically asked the CEO to address the report, but he refused. Plus, the CFO was absent citing illness-very convenient. If anything positive came of the report, CBI's disclosures are clearer in their 10Q filings. The result is a better picture of the issues--almost $1b of billed/unbilled receiveables on the 2 nuke projects, and material non-cash reserves running through the P&L that boost oper income, but do nothing for operating cash flow. The accounting is not fraudulent, it is GAAP. That does not mean that the company is as profitable and financially healthy as believed-as evidence of that, look at this report's rec to buy the stock. There is much that could go wrong with CBI, and imo the current price does not adequately reflect that.
    Aug 20, 2014. 08:58 AM | Likes Like |Link to Comment
  • Berkshire Ups Their Bet On Chicago Bridge & Iron [View article]
    Sorry, I checked, and you are correct, a 13G filer. Again, good post. I also found it interesting that the short report firm is based in Baton Rouge, which is also the headquarters of the Shaw Group (the company that CBI acquired), which was the company that was originally awarded the 2 nuclear projects that were the subject of the short report.
    Aug 19, 2014. 08:39 AM | Likes Like |Link to Comment
  • Berkshire Ups Their Bet On Chicago Bridge & Iron [View article]
    I agree with your comments, though the downside may be notable should one take into account the need for additional equity in the face of increasing nuke project losses. I note the credit downgrade of SCANA on Friday as another storm cloud on the horizon. Also, BRK is a just under 10% holder. I believe any holding over 5% puts them as a 13D filer. Good post.
    Aug 19, 2014. 08:10 AM | Likes Like |Link to Comment