Spoke with Kath P at IR and my main takeaways were:
1. The intangibles and goodwill would probably have to be written down at some point in the future, but apparently these sorts of assets are "tested" each quarter for value and the co. feels no action is necessary for now.
2. Backlog from 2Q will not be completely worked off in 3Q and still be providing work well into 2014.
3. They're still looking for a good 3Q.
4. May need to jigger loan covenants a bit, but plenty of flexibility and BK default, according to Kathy, not even an issue.
5. I suggested they get D. Heckmann and (preferably)/or Johnsrud on Cramer immediately to present the current NES case in light of t_v's recent article but company didn't feel it would be a good ploy in that the 10 or 15 minutes allotted would not be sufficient to thoroughly make the NES case without the possibility of it being distorted. Not what I wanted to hear. I mean it didn't seem to bother them in DH's first 2 appearances. I just don't buy that line of reasoning. My challenge to NES management: If the company really is getting turned around and lawsuits are either insignificant or without merit, get in front of those TV lights and MAKE YOUR BULL CASE. I know 10-15 minutes isn't much time, but if the company really is in recovery mode and has nothing to hide it can and should be done. JMHO.
S not sure if Mad Money is the place for what you talk about, maybe they need to be more creative which by the way would be refreshing as I see little other than silence for a very long time. Even the road show produced little in the form of news or actual information or for that matter anything or substance.
I do not know the answer but if it were my company I would have been on the phone with my lawyers and PR company (if they actually have one) and do something to invoke confidence. It would seams as they think a fair size insider buy is all they needed to do fact is a mil shares at 2.39 is chump change imo since it was MR J who needs the pps to go up substantially thus it appears he is just talking his book. If on the other hand other insiders stepped up with 100k+ buys it would do more to validate NES and just may instill confidence in NES unlike the one other 25k buy which means zip I bought more and have much less $ I may have jumped the gun this time I will continue to try and research NES which may require another visit out on location but my time has been limited with a new business start up. I will keep you informed if I do in fact make the trip as always G
PS even a poor TA guy like me knows the chart sucks
Gary, Simon & T_V, thanks for disseminating your insights & info. They are VERY MUCH appreciated. This thing sounds a little like it's beginning to quack like a duck. I say this while watching "American Greed" on CNBC so maybe it's made me more cynical. Gary, as a bit of a car nut myself, best wishes in your new venture! (I once bought a '71 Corvette in Portland, Maine, then a '90 Corvette in Portland, OR.) Please continue the info stream, especially if you get a chance for a personal site visit.
Sentiment: Strong Buy
I completely agree with pretty much everything in your post, g. t_v in the comment section to his article noted that Johnrud's 2.1M share buy while the stock was falling was a tiny percentage of what he already owns and makes him look clean and "saintly" if the co. defaults. Would love to see other substantial insider and insty buys to help instill some confidence.
If you do head out on location, please let us all know what you discover. I have great respect for your abiity to suss things like this out. Next to Bogwa, you are the most valuable poster on the bull side. GLTU. PS What does your start-up do/make?
kathy works far away from the company. her job is to say ONLY what the company has said before, and nothing more. otherwise it would be illegal. so...
she couldn't tell you if an impairment was coming, that'd be illegal, like forewarning of a big EPS miss
she can't tell you if results are tracking better or worse than guidance/expectations, that'd be illegal
she can't tell you if there is or isn't an impending bank problem, that would also be illegal.
so you basically got nothing new. you need to do work outside of talking to the company otherwise your sense of false comfort (from listening to the company) could come back to bite you.
A careful reading of my post should have convinced you that the company up to the present has provided me anything but a "false sense of comfort". I'm about as uncomfortable as I can get with this investment, especially after talking with IR. I think it's still a valuable exercise to hear how the company is spinning their thesis though, just as I find it valuable to examine how you spin yours. You, of course, are less restricted in what you can state or alledge, and provide far more verifiable evidence than IR. However, your self-interest is far greater than Kathy's who has no money of her own invested on the long side and whose main concern is keeping her job and continuing to receive a paycheck. I'm trying to stay objective on my assessment of this rather secretive company. They test my patience.
I can’t imagine NES getting more than 5 minutes on Cramer. I think that’s about all Heckman got in his last appearance. Absent that, I think NES management should send out some PR release but the other question is can they comment on the lawsuits, pending litigation and all that sort of rubbish? They need to communicate something positive. No news in bad news at this point; dead money for now. IMO
5 min is probably more like it, Sterling. Neither Kathy nor I in our conversation actually used my 10-15 min timeframe which is admittedly probably more time than they would get. But even at 5 mins in conjunction with a more comprehensive PR I think the interview would be worth the risk of a possible distortion. There are, I would hope, some key points that could be made and some key misconceptions and misrepresentations, if they are truly misconceptions and misrepresentations, that could be addressed and hopefully clarified. Not sure if they could comment on the lawsuits or not, but for now, I look at them as relatively minor hitches in the NES getalong. When a company allows these news vacuums to persist, especially a co. like NES which has been far less than forthcoming in the past and whose pps has over the last 2 years been decimated, the assumption that forms, whether true or not, is that the co. has stuff to hide and has no defense of its business decisions. JMO.