The neckline on this reverse head and shoulders (bullish) is a little over $19.00. Sure looks like we will get our volume tomarrow.....at $19.50 this writer would like to purchse more cxw.......Most likely they priced it at 19.50 to get a premium at closing Friday.
Stock looking to open at slight premium to $19.50 pricing. As you say it looks like they wanted to leave some "juice" on the table.
Yesterday WHC announced they are going to buy back 57% of their stock at $11/shr. from Group 4. Group 4 had bought Wachenhut and got the corrections side in the bargin which they did not want. What's a bit disturbng is that Group 4 had no luck over the last year selling their position to an outside investor. At $11 that is a $5 premium over stated book value (70%). WHC will retire those 12mm shares.
To put an equal number on CXW as compared to WHC (BV wise) put CXW well into the mid $30's. WHC is trading now at 12.5 times next years $1.75 company estimate. CXW clearly is trading at a large discount to WHC in many ways. I think over time that will change becasue of CXW's position in the capital markets and much large size. Once WHC settles down, I would think an interesting "pairs trade" might be to short WHC and go long CXW if you were market bearish.
Once you factor in CXW paying tax and do your earnings calculations with that in mind, you may find CXW & WHC now trade at very similar levels with regard to many matrix. I think CXW is better managed but they are similarly priced.
We will loose 1/3 of our EPS once these guys start booking a tax provision. Not a cash problem for two years but once it is More Likely Than Not that they will use their NOL they will have a big gain reversing their valuation allowance and then have to book a tax provision at 35% or so. We need a lot of growth to overcome that if it happens in 04' as I think it will.
Block trade of 395K among the early birds, plus more of 10k plus. How do you think this fits in with your expectations for today? Interesting just watching the "positioning". Hopefully this is forming the next base. Comments....anyone.... Thanks