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  • The Train Wreck Continues [View article]
    "Our combined US Matching and Payments businesses, which represented 80% of revenue in Q1, were breakeven from an operating loss perspective, and were profitable on an adjusted EBITDA basis"

    Not a joke.
    May 20, 2015. 12:05 PM | Likes Like |Link to Comment
  • The Train Wreck Continues [View article]
    Care does need to be more candid about the marketing numbers, and the CEO has said that Care will lay out exactly what the numbers are for new members in the next earnings call. The only reason to disclose more is if the numbers are improving.

    When examining the results, it's important to compare apples to apples. The core business is profitable and driving down costs by 15% over 2014. The increased SG&A and marketing expenses are due to building out the European and B2B (and Citrus Lane) businesses. The gross margin declines are because lower margin payments is now a bigger share of revenues. Care has raised $278M and the market value of the stock is roughly $200M. That is not a massive destruction of shareholder value. I wouldn't worry too much about the used furniture or subleases. Those are not even side issues.

    It's not easy to get people to pay to use a website. The fact that Care manages to get ordinary (not just wealthy) families to pay an average of $167/year to use a website shows just how much latent demand there is for the service. As costs for web advertizing continue their inexorable decline and brand awareness of increases, it is highly likely that Care will emerge as a highly profitable and zero capital business with a massive market opportunity.
    May 20, 2015. 09:16 AM | Likes Like |Link to Comment
  • Turning Losses Into Profits, Maybe [View article]
    Hey guys I have some thoughts on here.
    May 16, 2015. 04:48 PM | Likes Like |Link to Comment
  • Niska Gas Storage cut to Sell with $0 price target at Citigroup [View news story]
    What is gas migration? And what about the loan due in 2016? Any chance NKA could be bailed out by the steeper curve? thanks
    May 15, 2015. 07:13 PM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    May 11, 2015. 05:51 PM | 2 Likes Like |Link to Comment
  • Pioneer Natural sinks 2.5% as Einhorn slams PXD, other frackers [View news story]
    That does seem like a big hole in his presentation.
    May 5, 2015. 09:04 AM | Likes Like |Link to Comment
  • Turning Losses Into Profits, Maybe [View article]
    Care isn't Twitter. It doesn't trade on inside baseball like mobile conversion rates. It trades on "does this company have a prayer of ever making money."
    May 4, 2015. 08:54 AM | 1 Like Like |Link to Comment
  • Turning Losses Into Profits, Maybe [View article]
    They'll probably have 20000 tax customers by the end of the year (for the tax customers, matching is included in the $800/year fee). Those tax customers have a NPV of $4000/per customer and should generate about $12M of cash flow. If matching is the razor blade, then the payments are the recurring, high margin razor blade. It's hard to go out of business when one of your businesses is a high-margin, recurring business like payments/tax preparation.

    The problem with the matching business is that it's competition is free. There is no cost to word of mouth or Craigslist or canceling the service and relying on one sitter once you find her. The payments is the need to have service that will cement Care's hold on the broad domestic services market, not just babysitting.

    I don't think it will take a long time to figure this out. There aren't a whole lot of high growth, high-gross margin companies out there with a real path to profits, and Care is one of them.
    May 3, 2015. 08:06 PM | Likes Like |Link to Comment
  • Turning Losses Into Profits, Maybe [View article]
    My CRCM call not looking so hot, lol.

    Add up Breedlove associates and Homepay search traffic and equals 100% more than the old Breedlove alone. A lot of traffic for the tax product. If Care ever acquired SC and then switched the power users from ADP to Homepay = $$$.

    I see Care is hiring a third person to do policy stuff. It's bigger than some think tanks. A VP, director and associate of policy. Hard to know what all those extra salaries are doing, must be in anticipation of new regulations surrounding the amnesty.
    May 3, 2015. 11:52 AM | Likes Like |Link to Comment
  • TheStreet: An Interesting Play Below $2 [View article]
    TST also has a $150M NOL asset, so the cash is more valuable being invested in acquisitions than paying TCV an expensive ransom. And if TST management were really committed to boosting the stock price, it wouldn't be diluting shareholders by 2-3% per year. The real yield is closer to 3% than 6%.

    TCV is probably more interested in the financial info businesses than in the stock tips, that's safe to assume. The CFO has said the two businesses will probably be split. Maybe TCV will buy the financial info biz (in exchange for preferred stock) and leave TST shareholders the tax asset, the cash and the profitable subs business.
    Apr 27, 2015. 04:42 PM | 2 Likes Like |Link to Comment
  • TheStreet: An Interesting Play Below $2 [View article]
    The most likely outcome is that management drives the stock into the ground via acquisitions and/or poor results (letting Cramer leave?) and then when the price is in the pennies, management buys itself out (with help of TCV) and lives happily ever after. This happens over and over again with PIPE transactions. Once the PIPE deal is done, the buyer of the PIPE essentially owns the company, even if it does not technically run the company. It makes no sense that TCV (a private equity firm) would invest $55M in TST and be satisfied with owning just 10% of a website. It wants to own the whole thing. This is not being run as a public company, it is being run as a pre-private company. Management and TCV are conspiring against the shareholders.
    Apr 25, 2015. 08:41 AM | Likes Like |Link to Comment
  • TheStreet: An Interesting Play Below $2 [View article]
    TCV purchased the preferred shares (and 1.1M of warrants) when the stock was in the teens. Assuming TCV shorted roughly 4.5M from that level, the investment has come out quite well. Now, however, it is dead money and a very small position, just $7M. I could see TCV authorizing a large repurchase at say $2 that might shrink the shares by 30%. Then TCV would own roughly 16%. Maybe TST management is sandbagging results to drive the stock down to a level where it makes sense to buy back a lot of shares.
    Apr 24, 2015. 05:27 PM | Likes Like |Link to Comment
  • Citigroup Earnings Normalization Yields 65% Upside And Optionality Via Warrants [View article]
    As long as dividends are under 10c/quarter there is no adjustment in the strike price. That means that in practice the dividend will never go over 10c/quarter, assuming C management doesn't want the dilutive warrants to trigger, which is reasonable.

    You seem to have reached your conclusion (warrants are cheap) and all evidence to the contrary (warrants trade at massive implied volatility, are not adjusted for dividends) is discounted.
    Apr 23, 2015. 09:45 AM | 1 Like Like |Link to Comment
  • Citigroup Earnings Normalization Yields 65% Upside And Optionality Via Warrants [View article]
    I don't know what the right premium for really long dated options is (assuming that B-S undervalues long-dated options), but 43% volatility seems too high. We're not talking about a small amount, either. The different is about $5.
    Apr 23, 2015. 09:18 AM | Likes Like |Link to Comment
  • Citigroup Earnings Normalization Yields 65% Upside And Optionality Via Warrants [View article]
    Also keep in mind that the strike price of the warrants is NOT reduced for any dividends, unlike traditional options.
    Apr 23, 2015. 07:00 AM | Likes Like |Link to Comment