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Jescamillo

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  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    See? The company reported, and the stock is soaring...
    The problem with most analysts is that they do static analysis-- of the numbers are they are now. This is often right: Debt is debt. But sometimes, especially after 2 bankruptcies, where a company has become skilled at taking debt haircuts...
    In other words, you have to read the players, not just the game.
    Mar 21 02:33 PM | 2 Likes Like |Link to Comment
  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    Answered like a true gentleman. There's indeed no place for personal animus in the stock game. It's merely poker with marked cards.
    Your analysis is correct-- what I think you are missing is the fact that management has an interest in keeping the bankers jittery, or the latter won't sell bonds to the former at cut-rate prices. In other words, this is not a case for static analysis, but a dynamic one: So long as the bankers remain jittery, the 3 bil becomes 2 or 2.5 bil. But for the bankers to be jittery, the shareholders have to be jittery too... The only reason for mgt to reassure sh.holders is if they despair of getting a debt haircut (the bankers became wise to them), and they (mgt) now go for an equity issue (PIPE, perhaps, to Paulson, Watsa, etc. Bass probably will sell into the runup).
    But other than missing the poker, your analysis is good, imo. Keep it up.
    Cheers,
    JE
    Mar 14 09:34 AM | 1 Like Like |Link to Comment
  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    BTW, I hope Scott Pearson does an honest Mea Culpa about DXM, once he sees he's been wrong, and before the stock doubles from here. (Then it will double again, but the second double will take about 3-4 years).
    NB:
    I have a high regard for his analytic abilities (his DNDN short is probably right), but spotting a "cross-over," moreover one that plays chicken with its bankers to force them to give it a debt-haircut, is not easy. DXM is only the third such I have seen in my career-- but then I am probably 50% older than SP, so my career has been longer.
    Cheers,
    JE
    Mar 13 03:14 PM | Likes Like |Link to Comment
  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    This stock is a multi-bagger. Fearson's analysis is usually good. What he misses here are two things:
    1. Cross-over
    2. Debt paydown.
    A cross-over occurs when an old product line (here: print) is dying, while a new product line (here: digital) grows. At a certain point, the combined decline in revenues, masks real growth in the new product line, while the old line is "milked" for cash to (1) finance growth of the new line, and (2) pay down debt.
    This usually creates an uncommon opportunity. It is usually more common in tech, where product life cycles are short.
    At any rate, this stock is going up a lot-- Prem Watsa, the Canadian Warren Buffett is now into it in a big way, and so is Bass. (And in a somewhat smaller way, me.)
    We shall see...
    Mar 13 10:16 AM | Likes Like |Link to Comment
  • Zacks' Bull Of The Day: Conn's [View article]
    The major shareholders sold in July 2013 almost all their shares-- more than $100 million worth of stock-- just a few months before the company revealed they gave too much credit to deadbeats, and didn't follow up:

    http://yhoo.it/1isgjgL

    The stock tanked, rose again on broker's "reiterating" a Buy, then tanked again. There is now a bunch of lawsuits about it. Here is one:

    http://yhoo.it/1isgl8a

    Anyone doing analysis of this based on numbers alone, is asking for it...
    Mar 10 03:37 PM | Likes Like |Link to Comment
  • Dear Warren, About IBM... [View article]
    IBM's main issues (imho) are, oddly enough, the CEO. Ginny Romerty is a very impressive sales/marketing manager-- Warren Buffett bought the stock after he met her. However, it seems she has the typical bias of the salesperson to get the sales even at a so-so price, while promising something that can be attained only with moderate probability.
    -
    Recently the city of Philadelphia cancelled two contracts with IBM because of long delays, and the revenues from the contracts were allegedly not enough to fix them.
    Now, this is not to disparage Ginny Romerty-- she is terrific-- but she is a salesperson. And a top salesperson made CEO often has to change his outlook from Sales to Profits.
    -
    Per contra, Meg Whitman, CEO of HPQ (previously CEO of EBay), is an operator. She has fixed the margins' problem in one of HP's division by sitting with the team, changing the top guy (who was, btw, an excellent salesman-- with the same kind of flaws of Ginny R of IBM), and putting procedures in place that will eliminate generous giveaways in the future.
    -
    So: I don't share the view that IBM is screwed because of the cloud. I don't even think IBM is screwed. I think (based on my own due diligence) that it will take more than a year, perhaps as much as two, for the CEO to change some inherent aspects of her personality, from enthusiastic go getter, to tighter bottom-line watcher. It won't have to be a big change, but it will be a critical one.
    -
    To sum up: I think IBM is an "Avoid" for a year or two. Then, it will come back.
    And, don't forget, Uncle Warren is a big shareholder. If he could educate Kathryn Graham of the WashPost, who was a neophyte when she came into the job, he can certainly give some gentle pointers to Ms. Romerty.
    -
    Please note: The above shows my bias of doing due diligence on the top people, rather than try to second guess them. Whether IBM should be in the cloud more heavily, less heavily, or not at all, or whether it should make quantum computers or DNA computers-- I can have an opinion, but it would be wrong (imho) to base my Buy/Sell on it. I used to run large companies, and doing this would be like second guessing my divisional managers. They are those who decide. Same with CEOs of companies in whose stocks I invest. My job is to see if they are suitable to what I think the job is, and if they are not, whether it is critical, and then I sell, or whether they are learning, and I should have patience.
    Here I think I should have patience-- from the sidelines.
    IMO.
    Nov 29 07:51 PM | 2 Likes Like |Link to Comment
  • BlackBerry - Significant Risk With Potentially Great Rewards [View article]
    You missed some things:
    1. The company also has about $5 billion in purchase liabilities-- about $10/share!-- presumably raw materials it committed to buy, for the new Blackberries. If the new CEO now nixes the new phones, the company's purchasing managers would have to scramble to cancel these contracts-- at a cost.
    2. The company took delivery of a $26 million Challenger biz jet 3 months before it fired 40% of the workforce.
    Who approved the purchase? The CEO? The Board? Does it mean they didn't know how severe the situation was? At the least, it raises questions of competence, being out of touch, etc.
    3, The entire old strategy was nonsensical: First rule of turnaround is: You cannot grow your way out of trouble. you must cut and trim and get to positive CF, then grow, maybe. Yet they company did just that.
    In sum, the situation is more dire than most assume.
    The stock is worth-- perhaps-- $4/share.
    Nov 29 09:23 AM | 1 Like Like |Link to Comment
  • Dex Media: Time Is Running Out For The Yellow Submarine [View article]
    DXM is playing poker with its lenders: It wants to buy back its debt at discount, so it must show itself in near-bankruptcy, or the sucker-bankers would sell it the debt at a steep discount.... If DXM showed even a small recovery, the bankers would want full debt repayment, no discount. So every 3 months, DXM scares the bankers.
    -
    Of course, DXM also thereby scares the common shareholders... But this is where opportunity lies.
    -
    Luckily, this scare-the-banker game is very much like poker-bluffing, so it's amenable to a poker-playing A.I. algorithm (based on fundamentals, and some trading parameters). I ran one on it, and it came up with a very high probability of occurrence for the next few weeks. I will only give here the forecast for next two days.
    -
    Here is what my A.I. is forecasting (as at Wednesday, Nov. 27, 5:02pm) for DXM's stock price:
    -
    DXM will open Friday (Nov 29) at about the same as today-- $7.35 - 7.40, then it will zoom about $2.00 (+26%), to finish the day at $9.35, plus or minus ten cents. Most likely it will zoom on no news.
    -
    Monday, (Dec. 2) DXM will open where it will end Friday-- about $9.35, though very likely it will open 5 cents higher, at $9.40, as more demand comes in (the bankers will finally understand they have been played), and then DXM will shoot about $1.50 or so more (+16%), to finish Monday at around $11.00-- again, most likely on no news.
    -
    BTW, the A.I. says that the probability of this forecast happening is 93.7%.
    -
    Good enough for me...
    -
    Cheers!
    Nov 27 07:11 PM | Likes Like |Link to Comment
  • Improving A Simple SPY Trading Model [View article]
    It is so easy to forecast the past...
    Nov 26 11:16 AM | 2 Likes Like |Link to Comment
  • Dex Media, Inc. - A Potential Multi-Bagger [View article]
    To Glen Bradford:
    What you miss, is that panic is part of the poker games that forces bureaucrats to do what they don`t want to do.
    Of course the huge debt is a burden. But I believe (let`s put it in these mild terms) that the company will not show much improvement and integration before it bought back much of the debt from the panicky bankers. Only then, will the results suddenly improve.
    if you want to buy a dusty painting you think is a Rembrandt, you don`t show the seller the signature at its bottom. he will not sell. Same here. The company has no incentive to accelerate the integration or show good results, before they got all the debt haircut they could.
    It is Chinatown out there...
    I am not sure $80 is the target. Our own calculations show more like $40 - 50. But I will be happy to be proven too conservative.
    Cheers!
    Nov 21 04:37 PM | 2 Likes Like |Link to Comment
  • Dex Media, Inc. - A Potential Multi-Bagger [View article]
    Right on.
    The main thing to remember, though, is that the company has an interest in panicking the market... This is because it is trying to buy back (bid for) its debt, held by banks.
    Banks are bureaucrats, and they can recommend an unpleasant action to their bosses (a debt haircut) only when they can say that the alternative is worse-- bankruptcy.
    So, for the next while, you will hear a lot of bad stuff about the company (there was a gloomy bear here saying the company will go bankrupt for the third time), even while the banks give it a debt-haircut after haircut.
    This sucker is going to 10 by January, then to 15 by mid next year, and to 20++ by 2014 year-end.
    I invite all the bears to short the stock-- they would only add to the 50% (of float) short position-- and will give me more stock to buy...
    Cheers!
    Nov 21 03:20 PM | 1 Like Like |Link to Comment
  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    To all the shorts:
    You will have your posterior handed to you-- because you do not understand what is being played here...
    The gist is:
    The company wants to buy back its debt as cheaply as possible. So it also must convince the debt holders to sell, because otherwise the company will go BK.
    The debt holders are bureaucrats. They never do anything unless they have to-- and can prove to their boss that they had to. -- And the boss can prove to his / her boss, etc.
    So: THE COMPANY MUST PANIC THE MARKET. When the market panics, the bonds tumble too, and the company scoops them up. This will happen again and again.
    I scooped some more shares at 4.42, and now have a bunch.
    This stock is going first to 9-10, then to 15-16, then to 20+.
    It is really an electronic digital advertising agency, not media. Agency. The kind Warren Buffet used to buy-- and no wonder that Prem Watsa, the Canadian WB is now buying DXM...
    As for the comments about lower revenues: The company is revamping its sales force (btw, they are among the best selling to Main Street.) But its cash flow is huge. Look it up.
    No company has gone bankrupt with such a huge cash flow.
    We will see a year from now, and two, and three...
    Cheers.
    Nov 15 02:46 PM | Likes Like |Link to Comment
  • Dex Media: A Rare 'Chapter 33' Bankruptcy In The Making [View article]
    By way of background:
    I had a triple in the stock, when it was still DEXO, before it merged, even though the numbers spelled bankruptcy. Why? Because it was clear to me that the company was scaring its bankers into giving them a debt haircut, via a threat of a Pre-pak Chapter 11-- a wonderful invention, where only 67% vote is req'd, and where sh.h. keep some equity. This created a prisoner's dilemma, or "sauve qui peux," and gave the bankers a good reason to tell their bosses-- Give them a haircut, or we all lose our job!
    The stock more than tripled. At 20+ Kyle Bass sold, Paulson bought. I didn't mind Bass selling. I did mind Paulson buying-- he's a one-trick pony. I sold too.
    The stock fell by 2/3. The numbers are bad, yes. But not a bankruptcy. There's 2 bil debt, yes, but there's a huge cash flow. the only question is, who does it belong to? The debt holders, or the sh.holders?
    Mr. Fearon here rightfull fears (couldn't resist it, sorry...) that it's the former, and the latter will be left BK.
    But co's don't go BK with such a huge cash flow.
    I began to buy from $8 downwards, and have a good position.
    BTW, Prem Watsa of Canada (from where I too hail), has been buying. He's a great value investor, though his sense of timing often stinks (see Blackberry)-- though not as badly as that of bro' Paulson.
    to sum up:
    I think DXM is going back to 20++, perhaps to 30+.
    As they say on Wall Street: Time will tell...
    Cheers.
    Oct 23 01:34 PM | 1 Like Like |Link to Comment
  • Lone Star Long: Cashing In On Texas With Capital Southwest  [View instapost]
    Before you all get super-excited, remember what grandpa said:
    THE PROOF OF THE PUDDING IS IN THE EATING.
    Or:
    How did CSWC do as compared to the market? Say holding SPY?
    This is simple to see: On any chart, plot CSWC:SPY, and see if the line is uppish, or downish.
    Very soon you'll see that CSWC did about the same as the market-- and what's worse, with far bigger fluctuations...
    Yes, it did pay a dividend. But so does the market-- just buy the biggest, say, 10 - 20 companies, and you'll get div's too.
    And yes, it did pay out once a capital gain dividend. Once. So?
    So:
    Beyond all the hype (An undisocvered Berkshire!), lies a market index with a one-time capital gain dividend.
    Whoopee.
    In general, any stock claiming to be a good l-o-n-g t-e-r-m investment, that had already existed for 15-20 years, must satisfy (for me) the condition of having already done better than the market over the last 15-20 years.
    (Extraordinary claims, and so on.)
    Because if it hadn't so up to now, its managers must convince me that in future they will do what they haven't done yet.
    And this one hasn't. All they claim is that "they are in Texas..."
    But so what? So are many others. And this one in the past has done just what the SPY did, but much more volatile.
    Whooppee...
    Doesn't anyone here check the data, before getting super-excited?...
    (But that's okay. Just more money in the market pot, for those who do check, to take away...)
    Oct 23 01:23 PM | Likes Like |Link to Comment
  • Capital Southwest Corporation: A Texas Berkshire Hathaway On Sale [View article]
    Before you all get super-excited, remember what grandpa said:
    THE PROOF OF THE PUDDING IS IN THE EATING.
    Or:
    How did CSWC do as compared to the market? Say holding SPY?
    This is simple to see: On any chart, plot CSWC:SPY, and see if the line is uppish, or downish.
    Soon you'll see that CSWC did about the same as the market-- and what's worse, with bigger fluctuations.
    Yes, it did pay a dividend. But so does the market-- just buy the biggest, say, 10 - 20 companies.
    And yes, it did pay out once a capital gain dividend. Once.
    So:
    Beyond all the hype (An undisocvered Berkshire!), lies a market index with a one-time capital gain dividend.
    Whoopee.
    In general, any stock claiming to be a good l-o-n-g term investment, and that had already existed for 15-20 years, must satisfy (for me) the condition of having done better than the market over the last 15-20 years.
    Because if it hadn't, its managers would have to convince you that in future they will do what they haven't done yet.
    And this one hasn't.
    Doesn't anyone here check the data, before getting super-excited?...
    But that's okay. Just more money in the market pot, for those who do check, to take away...
    Oct 23 01:17 PM | Likes Like |Link to Comment
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