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SevenCostanza

SevenCostanza
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  • Our Best Investment Idea For 2013: Gramercy Capital, Part II [View article]
    Nice article, Chris. My only word of caution is that comparable REITs are trading at historically high valuations due to ZIRP and hunger for yield. GKK could become similarly overvalued - but the price targets here could come down if the sector as a whole returns to more normal levels. Still, at $3.60, there's a good margin of safety either way.
    Feb 12, 2013. 09:17 PM | 1 Like Like |Link to Comment
  • You Can Be A Stock Market Genius: Uncover The Secret Hiding Places Of Stock Market Profits [View article]
    Good summary! If I could only have two investing books they would probably be this one and "Margin of Safety."
    Feb 9, 2013. 11:06 AM | 1 Like Like |Link to Comment
  • Nationstar Acquisition Of Equifax Settlement Services Is Move Toward Higher-ROE Model [View article]
    Good qualitative analysis of NSM's business model!
    Feb 8, 2013. 03:33 PM | Likes Like |Link to Comment
  • Turn Steel Into Gold With ALJ Regional Holdings [View article]
    Fidelity has always done a good job for me with these types of transactions. Just call them up, say you have a security that has a tender offer, and tell them you want to do it. If they try to assess a fee, just huff and puff a little and ask them to waive it. (Tenders are always free for 'premium' clients anyway)
    Feb 7, 2013. 10:50 AM | Likes Like |Link to Comment
  • Event Driven Q&A Forum [View instapost]
    Sure! Here's another discussion on the subject: http://bit.ly/XnzE8m)/
    Feb 7, 2013. 09:03 AM | Likes Like |Link to Comment
  • Event Driven Q&A Forum [View instapost]
    Yeah I agree. Took a 15-minute look this morning and I can't tell how it's not overvalued. And that was dinging it $0 for its deferred tax liabilities. I also used 2011 numbers to avoid dinging it for one-time issues at its JV it took a writedown on.
    Feb 5, 2013. 09:19 AM | 1 Like Like |Link to Comment
  • Event Driven Q&A Forum [View instapost]
    The warrants would adjust for your standard corporate actions like a spinoff. The TARP warrants in general actually have much more extensive protections for holders than your standard warrant or option. HIG's strike and shares per warrant adjusts for a quarterly dividend over $.05, for example. The strike has already adjusted down to $9.599 from an initial $9.79. Also some anti-dilution provisions. I'll link to the prospectus below - check out page s-40. These are fun little instruments.

    Regarding HIG itself: HIG is weighed down by variable annuities it wrote - especially in Japan. It guaranteed a rate of return, and rates in Japan are 0% and might be for a while. This is a big liability, and/or opportunity, depending how you view it. Note the liability floats somewhat with USD-YEN. Yen down, HIG's liability is less. And vice-versa.

    http://1.usa.gov/TASLxn
    Feb 4, 2013. 03:38 PM | Likes Like |Link to Comment
  • Suntech - Dead Man Walking [View article]
    Well the company has to do something with them. I think refinancing the debt is out of the question given the company's financial position. One option is a straight chapter 11: equity wiped out, bonds own the new equity. Another option is a debt-equity swap outside of chapter 11, where the company massively dilutes and issues the new equity to old bondholders in exchange for their bonds. I guess another option would be giving bondholders new equity (again, massive dilution) in exchange for pushing back the maturity, taking a principal haircut, etc.

    The bonds are forecasting that the anticipated value of the entire company is worth only 50% as much as the maturing bonds' face value. The stock is forecasting the company is worth the bonds' face value plus some. One of these is wrong. Methinks it's the stock.

    Unless there is some weird Chinese klepto-capitalism scenario I am not thinking of.
    Feb 4, 2013. 03:17 PM | Likes Like |Link to Comment
  • Suntech - Dead Man Walking [View article]
    While I agree with your overall conclusions, there is no mention of the debt maturity in March. Bonds trading at <50 implies equity gets wiped out. This is probably THE salient point to think through before toying with a long or short position in STP right now.
    Feb 4, 2013. 12:07 PM | 1 Like Like |Link to Comment
  • Event Driven Q&A Forum [View instapost]
    There are some warrant prices out there that are still head-scratchers. Some of the TARP warrant have traded in the last 6 months for almost no or even negative time premia: HIG-WT and FFBCW come to mind, I'm sure there are others.
    Feb 1, 2013. 10:14 AM | 1 Like Like |Link to Comment
  • Our Best Investment Idea For 2013: Gramercy Capital [View article]
    Well your Bloomberg appearance was timed just about perfectly!

    http://bit.ly/U861LF
    Feb 1, 2013. 09:49 AM | 1 Like Like |Link to Comment
  • I Got 99 Problems But A Proration Ain't One: Exploiting A Loophole In The PPG-GGC Exchange Offer For Fun And Profit [View article]
    Well that would be about a 2000% return for GKK - I'm long that too, so I like the way you think!

    Seriously though, my expected price range is about exactly the same as yours. 68-81.6 (57 on the low end if cost synergies don't materialize). EV/EBITDA of 8 in each case - between OLN and WLK.
    Jan 28, 2013. 11:29 PM | Likes Like |Link to Comment
  • Georgia Gulf Looks Cheap Following PPG Acquisition [View article]
    I posted the comment below over at Chris DeMuth's article, but I believe it is germane to yours as well. Bottom line, I agree with you, the market has not yet priced in the positive changes to new GGC. A couple additional points:

    1) New GGC should trade at a cheaper multiple than DOW, if only because DOW is bigger. WLK is a closer comp, in my opinion.
    2) You covered cyclicality - I would also add that management put a little nugget in the presentation stating that a return to normalized housing starts would add $100m of EBITDA. This EBITDA should flow pretty directly to the bottom line as $100m of incremental cashflow.

    "I just played around with some numbers based on management's projections for cost synergies and looking at where comps are trading (dow, wlk, oln). Pro-forma GGC right now, not getting credit for any cost synergies, is about the same as OLN on an EV/EBITDA basis even though OLN doesn't produce FCF. I get a reasonable price band from $57.5 on the low end (assuming no synergies realized, GGC trades slightly cheaper than closest comp WLK) to $68 on the mid-end (full cost synergies realized, GGC still trades slightly cheaper than WLK). I think this is conservative. Add another 20% price appreciation if housing starts return to a normalized run rate and GGC realizes +$100m EBITDA (per management). That gets you to a range of $69-$81.6."

    http://seekingalpha.co...
    Jan 28, 2013. 09:58 AM | Likes Like |Link to Comment
  • I Got 99 Problems But A Proration Ain't One: Exploiting A Loophole In The PPG-GGC Exchange Offer For Fun And Profit [View article]
    Just played around with some numbers based on management's projections for cost synergies and looking at where comps are trading (dow, wlk, oln). Pro-forma GGC right now, not getting credit for any cost synergies, is about the same as OLN on an EV/EBITDA basis even though OLN doesn't produce FCF. I get a reasonable price band from $57.5 on the low end (assuming no synergies realized, GGC trades slightly cheaper than closest comp WLK) to $68 on the mid-end (full cost synergies realized, GGC still trades slightly cheaper than WLK). I think this is conservative. Add another 20% price appreciation if housing starts return to a normalized run rate and GGC realizes +$100m EBITDA (per management). That gets you to a range of $69-$81.6.
    Jan 25, 2013. 06:23 PM | Likes Like |Link to Comment
  • I Got 99 Problems But A Proration Ain't One: Exploiting A Loophole In The PPG-GGC Exchange Offer For Fun And Profit [View article]
    Fidelity was likewise free, and I asked them to take care of the paperwork over the phone. If you have a smaller account though, I believe they would charge you $38. However - I did odd-lot tenders when I did have a smaller account, and every time I just asked them to waive the fee as a courtesy. They always did.
    Jan 24, 2013. 03:39 PM | 1 Like Like |Link to Comment
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