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TravelCenters of America LLC Message Board

  • deepvaluejpm deepvaluejpm Aug 13, 2009 8:57 AM Flag

    Equity Story

    What is the deal with TA guys. It has a book value of over $20 and now on death bed? This is becasue of huge rent liability only? WHat is deal? valuation?

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    • Here's a quick summary regarding TA:

      1) More than $7 a share in net cash after payment of deferred rent.

      2) More than $20 in tangible book value.

      3) No long term bank or bonded indebtedness.

      4) Owns nine sites outright and seven vacant parcels of land for future development. These properties are valued at more than $100 million and have no mortgages attached.

      5) Only 16.6 million shares outstanding. A small increase in gallons pumped will push TA into positive income. $1 - $2 bucks a share in income is possible.

      The negatives include potential impact of Pilot/Flying J combination and the onerous HPT leases which may have to be renegotiated.

    • Hey deepvalue, seems you're interested in this too. Looks to me like a typical LUK deep-value asset play. Maybe the cheapest stock in America at the moment? What is there to lose? Even if they lose $30 million every year, it'll take 10 or more years to reach the current market cap. So you have small downside and large upside, the assymetry makes it probable you'll make some money. It may be a cigar-butt, but the price is collateralized by cash and some real estate. If management succeeds to just break even...The only question is if the business model is broken because HRPT stuck them with an onerous lease. Is $100 million or so in rent per year too much to make this model work - or not? The CEO also seems to be getting into insurance(!), somebody asked on the CC call why the hell are you entering insurance when you're in the travel centre business. He said something like it'll help make a dent in the business losses - not a very encouraging statement, does he think the core business will NEVER make money?

      • 1 Reply to besterman2006
      • Thanks Besterman. This looks like a great option story to me. I mean they have BIG sales, only need small margin to make this work. Cheap cheap option. where is the downside risk in short term with that b/sheet? Where do they find these things! To me you have to buy some of LUK's gems outright because even if this is 10-bagger for LUK it would not make a dent in your LUK holdings. I am still markting over not buying ACF at $5 sitting there for me.

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