fluff and shadows work a lot longer than you think they should. Perception is the driver, not results. This is far from a mature company, and the "spring training" optimism that I've been writing about for months is still a major factor in the share price. Skepticism is healthy and understandable, particularly in wake of the last dozen years or so in the market, but this company has yet to make its first inevitable acquisition, and has still appreciated measurably in anticipation. There is no indication Jacobs or his followers are going to flame out and fail and that is why the price is up and the dilution did not hurt the stock. Share price is not opinion, it is fact. Where it is going is opinion. I'm sharing my views on why I am enjoying the ride and have since the company was called Segmentz and traded at .42. I have bought and sold regularly since that time and admittedly "fell in" to Jacobs. Im holding and adding, you do whatever helps you sleep at night.
Well, at present, I'm not long, and I'm not short. I'm intrigued by the possiblities on either side - just looking for a compelling reason to go one direction or the other. I'm obviously skeptical here, but my normal bias in investing is to go long, so I'd love to be persuaded. It's not happening for me, for the reasons I've laid out - but that's why I keep inviting you to try to persuade me.
I was referring to the internal IT infrastructure/tech platform required to onboard & integrate multiple acquisitions and improve operations. Mario H. from Oakleaf Waste Management who is now in charge of IT at XPO is probably only a handful of people our there who can scale up the IT piece of this puzzle so that the weight (and complexity) of all the upcoming acquisitions doesn't derail overall momentum.
To your point though, the XPO team needs to start converting on their deal pipeline to keep investors interested and onboard. Having been through the M&A game before, I know this is difficult work and very time-consuming. Keep in mind, as outsiders, we don't have visibility into any of the BUSTED deals that may have already occurred. A few will get to the finish line soon enough...
What technology platform? In the logistics world today you need some proprietary technology that is a game changer. Those winning today do (CHR, Transplace, Echo). We need something that gets the world excited.
Also we need at least one nice acquisition that clearly makes sense to the big picture. The P/E going up is fine if we have a story to tell to paint a picture of stregnth in the market.
Right now we are all buying into a story of a man that has done this before in 2 prior businesses. That is fine for a while. Eventually people want to see something happening. So far we have all been rolling the dice big time and winning - the question is when do we stop rolling the dice?
so with a forward PE of almost 50, doublng the shares = forward PE of 100. I hope they have specific purposes for this offering because in this economy with rates at almost zero and dummied down inflation stats (really much higher for the average consumer), cash is like a guaranteed negative real return. I was once long but closed my position due to failure to grow earnings as revenues expanded and this went on for years. I don't understand why this is at $16. I would be happier with a finincing if they had already demonstrated a working, "un"-disappointing business model.
"...I would be happier with a finincing if they had already demonstrated a working, "un"-disappointing business model."
Think back. Earlier in 2011, CEO Jacobs bought nearly half the company at a price of $7/share. And just a few months ago, this stock dipped into the $6.00's. Today, the CEO is getting big money to buy in at $15.75/share after doing little more than reshuffling management and posting poor earnings. And you think getting big money to buy in at $15.75 is bad? No, I think it's a freaking miracle! I don't know how Jacobs pulled off this stunt. But my hat is off to him. This proves he has some serious clout.
Besides, investors need this high priced dilution to buffer the $7 dilutive hit that Jacobs creamed investors with. Averaging up by 125% in less than 6 months is a smart play in my book. We'll see how the street responds over time.