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  • A Win-Win Deal For Struggling Supervalu [View article]
    Not anymore, they sold all the best real estate with this sale to Cerberus.
    Feb 3 05:43 PM | 2 Likes Like |Link to Comment
  • How To Evaluate The Dell LBO [View article]
    I don't get your numbers. There are 1.765 billion shares outstanding and Michael Dell owns 285 million. Roughly another 20 million in options in the money. Let's say he/they pay $16 a share, possible but generous. You need about $23.5-24 billion to pull it off. (1.46 billion shares by $16. This assumes Michael Dell leads the buyout and keeps his share). A $15 billion loan package has been all over the news, that still leaves $9 billion. Say you use $6 billion of overseas Dell cash, that will net you $5 billion tops after tax. If you can pull $3 billion combined from Microsoft and Silver Lake and Mike Dell puts in a billion you can pull it off. Lots of if's in there. $16 is a top, top price. Probably more like $15.
    Feb 2 10:57 AM | Likes Like |Link to Comment
  • Why Is Dell Still At Only $13? [View article]
    I get your point lonely but bottom line is their major business is suffering (PC's) and they have not proven they can compete in other, newly acquired, business units. As for cash, well their net cash is $4 billion. However, they have $10 billion in cash, almost all of which is overseas and would require large taxes to repatriate. Their $6 billion in debt is mostly here in the US. I think a buyout is a wise move since Michael Dell and partners will be more patient regarding a turnaround and I'm sure he cares about what happens to his employees. Buy the rest of us out and work his turnaround.
    Feb 1 10:54 AM | 1 Like Like |Link to Comment
  • What Will The 'New' Supervalu Look Like? [View article]
    Cerberus is in it for a buck as all of us are. Small correction on what Cerberus is doing regarding a purchase in the surviving SVU. They have offered to buy up to 30% of existing shares from current holders at $4 a share. If current shareholders don't tender 30% of the current share count then SVU agrees to issue new shares at $4 a share so Cerberus can buy up to 19.9% of the company. So it's not both, it's one or the other.
    Jan 31 05:16 PM | Likes Like |Link to Comment
  • Why Is Dell Still At Only $13? [View article]
    Could it be that the stock has run from $9 to $13 Plus? I read that as a 45% increase in price. It's all about risk/reward George and if this deal falls apart so will the stock since it's now in the hands of speculators playing a buyout. For full disclosure I'm long the stock and expect a buyout offer but Dell IS a troubled company.
    Jan 31 05:02 PM | Likes Like |Link to Comment
  • I Love ExxonMobil And You Should Too [View article]
    It's a great company to own long term because they have always had the highest ROIC in the business. Very disciplined.
    Jan 22 12:18 PM | Likes Like |Link to Comment
  • What Will The 'New' Supervalu Look Like? [View article]
    I question your math in a few areas. Even if one assumes SVU meets it's debt reduction goal for this year ending in late Febuary 2013 I believe they will have much higher debt levels than you assume. If they meet their goal it implies debt (including leases) of $5.8 billion. This sale involves the assumption of $2.4 billion in debt and $800 million in lease obligations by the new Cerberus firm along with a $100 million cash payment. Seems to me debt will remain near $2.5 billion. And although the new Albertsons will assume some multi employer pension obligations, total pension obligations will still exceed $1.4 billion. (although that's not direct debt) Also, on the call the company indicated the surviving SVU will generate $175 million in free cash flow going forward. Unless there's a further sale of assets I don't see how they can reduce debt by $500 million next year.
    Jan 13 10:12 AM | 1 Like Like |Link to Comment
  • Supervalu Is Still A Super Value Even After Cerberus Deal [View article]
    Saibus, curious why you think SVU will be responsible for the $ 140 million bond debt due at Albertsons in May when Wayne Sales indicated on the call that this will close by the end of calender quarter one of 2013.
    Jan 11 09:51 AM | Likes Like |Link to Comment
  • Cerberus Thinks Supervalu Is A Super Value [View article]
    This thing is going to be broken up with many of the locations ultimately closed. For that reason it makes more sense for a Cerberus than for a Kroger/Safeway. I still would expect Kroger and other companies to come in for specific locations, perhaps in the mid atlantic area once these initial transactions occur. (Those being Cerberus buying Albertsons and making an investment in SVU and KKR buying Save a Lot)
    Jan 6 09:47 AM | Likes Like |Link to Comment
  • Exxon Mobil: Valuation Discussion [View article]
    Not sure I buy the analysis that buybacks don't add to return for the long term investor. They have recieved a bad reputation in recent years because they tend to be used heavily by tech companies that issue stock options by the boatload in place of salary/bonus compensation. XOM has actually used their buybacks to significantly reduce the number of shares outstanding. This means more EPS for the remaining shareholders. I own XOM bacuse it has the best long term history of return on capital employed in the business. Very long term oriented and careful about the projects they take on.
    Dec 31 09:56 AM | 2 Likes Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    This thing will play out by month end. Cerberus will buy Albertsons and either KKR or Cerberus will buy Save a Lot. Cerberus will also make a cash investment of around $150-200 million for 50 million shares. Once that happens SVU will have $1 billion in debt left, and 650 stores across 8 banners along with the wholesale business. (which will retain it's business with Albertsons and Save a Lot) Much of the multi employer pension underfunding will go with the Albertsons sale but the Supervalue DB plan underfunding will remain. ($1 billion at todays interest rates, much lower once rates rise) So we're left with around $500-600 million of EBITDA to service a much smaller debt load. Then they set about selling additional units and reinvesting in the ones that need it. Slap a 6 time multiple on the EBITDA you get $3-3.6 Billion less the debt and pension shortfall. More shares now, 270 million fully diluted. Should trade at $4-5.
    Dec 5 09:46 PM | Likes Like |Link to Comment
  • Stick With Supervalu - A Sale Is In The Works [View article]
    No matter how this plays out, a total sale, or a sale of various banners it will be brutal for employees. When KKR bought out Safeway 20 years ago they found out that whole divisions were unprofitable and closed a huge number of stores. Cerebus did the same thing with the portion of Albertsons they bought 5 years ago. (some they sold off, others they closed) Without having more internal data it's hard to prove this is the case here but the closing of 60 stores earlier this fall shows it likely is. Buyout firms will be much tougher with the unions than current management has been. The recent pay freeze and elimination of 401 K match is a prelude to similar or larger cuts to union wages and benefits no matter who ends up with the company.
    Nov 30 10:19 AM | 1 Like Like |Link to Comment
  • Stick With Supervalu - A Sale Is In The Works [View article]
    Worst case they can sell off Save a Lot to KKR and probably Jewell-Osco to Cerebus. Unfortunately that isn't very tax efficient as they will pay some taxes on the sale. Still, after tax I would expect at least $3 billion which will buy them time and allow some funds to buy back debt at a discount. They can then breath a little and pursue the sale of the rest of the company in pieces or work on a turnaround.
    Nov 29 10:14 PM | Likes Like |Link to Comment
  • Altria Will Slash Its 6% Dividend And Here's The Reason Why [View article]
    I agree it makes no sense to sell SABMiller. My point was that MO has plenty of options to maintain it's dividend. The analysis by Greg about a dividend cut is the type of simple financial analysis often done by numbers heavy "B" school types that don't look into the whole company.
    Nov 20 10:00 AM | 1 Like Like |Link to Comment
  • Altria Will Slash Its 6% Dividend And Here's The Reason Why [View article]
    Greg, I would suggest they could just sell a few shares of SAB Miller if they get in trouble. In fact they could sell all of it and pay off 100% of their debt. Then there's plenty of cash flow to support the dividend and your concerns about the debt disappears.
    Nov 16 03:59 PM | 2 Likes Like |Link to Comment