What I thought interesting was their 2007 EPS Estimate is 40 cents, which, at current share pricing implies a PE over 37 on a go forward basis. Buford, Mr. Skisilev, it appears you guys paid an awful lot for the 2007 earnings stream, much of which BBT attributes to fluctuations in the currency markets (rather evidently, than structural improvements in Chiquita's core markets).
With the onerous debt level here I'm not perceiving a risk-reward at these price levels, especially with the headwind currently facing Fresh Express. Thoughts?
"Wow, if you're actually aware of the 3-4 after hours transactions that happen every week, you must really be desperate to cover."
Basic due diligence in my book Mr. Bernard2222. I think this thread will also show you mentioned you were unaware of any prior waivers. Your confused replies don't surprise me however as you have previous mistaken facts ( a multitude of prior credit waivers for example) for opinions (see Forrestgrump and black_river_gold).
In any event I shorted more.
Wow, if you're actually aware of the 3-4 after hours transactions that happen every week, you must really be desperate to cover.
When I was talking about another waiver request, I wasn't taking about the temporary one that preceeded the actual one. It shouldn't be too hard to find since they continually happen according to you. Anyways, I don't think we're going to make any progress here, good luck to you.
"Well I would be curious to see a link to a filling indicating there's been a waiver request under this management. Not that it would change anything to my position. Also, the stock has a 52-week low of 12.52."
Chiquita has traded well under $12.52 afterhours within the past 2 months Mr. Bernard2222. Here is the link to the second to last waiver request, the last one they received is supposedly the permanent fix - time will tell there.
Well I would be curious to see a link to a filling indicating there's been a waiver request under this management. Not that it would change anything to my position. Also, the stock has a 52-week low of 12.52.
Anyways, we clearly do not have the same investing philosophy and that's okay. There's more than one way to obtain a reasonable return, and I believe that 15-20% is a reallistic one for a small investor. It has been for me. I do not read third-party reports because I stick with my own analysis and try not to be influenced by others' opinions. Until then, I will simply try to continue learning from the greats.
Bon succ�s M.sop_81!
"And by the way, it doesn't "continually seeks waivers from its lenders", this is the first time they've done it."
Mr. Bernard2222 are you certain you want to stand by that statement? Please don't take my word for it, the multitude of waivers are a matter of public record and are easily located at both Yahoo and the SEC website. BTW - have you read the latest S&P credit report on CQB? OUCHHHHHH!!!!!!
As for Mr. Skiselev I believe he has a time stamp here saying CQB was part of his diversified portfolio. My point being his return expectations are unrealistic - unless that is he is the second coming of Buffet et al, which IMO he is not.
As for my short position I am in no danger of being wiped out. I think we both agree far more than we disagree. I also think you'll find CQB has traded under $12.50 this year.
Perhaps I have been ruined by the OTCBB but I find it puzzeling why the longs here settle for entry points around $13 when the stock can be had much cheaper. If you guys were smart you'd be on your knees begging me to post the facts......oh well......;)
As for me and diversification I don't believe in it for my risk capital.........4 stocks at most plus ca$h to take advantage of future opportunities. I hold only two long positions presently (GEMS and HNIN). NMKT is on deck.
Cheers Mr. Bernard2222 and thank you for contributing.
Buffett's annualized returns are at 15-20% because as he has said himself, he has too much money now to obtain better results. He has had to get away from Graham's ideas over the years and go toward more of a Fischer/Munger approach, investing a lot of money in good businesses (not necessarily good short-term investments). However, he has also guaranteed that if he only had a million dollar, he could obtain a 50% return on it. Smaller amounts of money allow you to invest in small caps (which have given a much higher return over the last 80 years), arbitrage situations, and "cigar butts".
Mr. Skiselev's portfolio probably is not diversified, he probably only has, as I do, a couple of stocks which he believes are undervalued. That's the way to beat the market. "Professional" money managers cannot beat the index quite simply because they all follow each other like sheep. And why not? If they do like everyone else, they'll never get blamed for a lower than average return. They also use the beta as a risk indicator which is idiotic (as Buffett has said many times). Undervalued stocks have basically no risk. The stock price either reaches the intrinsic value you believe it has or stays at the current level.
As for Chiquita, it is very likely that new challenges will rise and affect the company SHORT-TERM. They may also cause some more fluctuations of the stock price, but honestly I do not care about that. CQB has a moat (brand image, quality product, market share) that will allow them to survive (as evidenced by this year) through tough times. They have not lost a single customer this year. Once they are able to generate a good cash flow as they did in 2005 and return to a 40% debt/capital ratio, good things will happen. The bankruptcy in 2001 was under completely different management and had nothing to do with the current situation.
CQB has a margin-of-safety, and if you take away the goodwill and the long-term debt coming from the Fresh Express acquisition, you see a very nice Tangible Net Worth on the balance sheet. And by the way, it doesn't "continually seeks waivers from its lenders", this is the first time they've done it. This has nothing to do with sector or risk, those notions to me are ridiculous. I look for undervalued companies, period.
The reason why shorting is a bad idea is that it is impossible to predict the fluctuations of the market over the short run. If CQB goes up too high, you will get wiped out. I understand that you see the large amount of debt here as a negative, but why don't you take the money you have short on CQB right now and invest it in another company that you consider to be undervalued? Bad news after bad news have come out about Chiquita this year (no dividend, waiver, E.Coli, hot weather in Europe, -2.33 EPS vs positive expectations!) and it STILL hasn't gone under 12.50. What makes you think it will next year?
"As for diversification Mr.sop_81, Graham actually thought most people should diversify (to the point of investing in an index fund)"
Exactly Mr. Bernard2222. Perhaps Mr. Skiselev is the second coming of Graham, Lynch or Buffet with his 15-20% annualized returns. Probably not though. So if you can't beat the market with a diversified portfolio why not join it via indexing?
My interest in this subject derives from preparing Schedule D's for my clients whom had "professional" money managers and who never seemed to generate more return the market itself and most often way less.
As for my risk capital, which is the only funds I use to buy individual equities (I index my long term money), I am willing to speculate and accept more ri$k.
Interestingly sir, you and Mr. Skiselev both brought up the concept of normalized earnings at some point in time in the future which I personally consider a fool's game. Our collective crystal balls work only so far out and while I think we all acknowledge the current head winds currently facing Chiquita will eventually abate none of us know the new ri$ks that will arise or if Chiquita will be able to capitalize on new opportunities.
A cursory glance at the corporate history reveals Chiquita has been bankrupt on numerous occasions, the last time in 2001. And those last three K's you mention show the drastic deterioration in the financial strength as measured by Tangible Net Worth (and many other measures as well or Chiquita wouldn't need to be continually seeking waivers from its lenders). Chiquita evidently is not for widows and orphans......
Mr. Buffett is correct in his reasoning on investing in the best companies. FDP has a far stronger balance sheet than Chiquita in the same industry and is the true value play (IMHO). Why gamble on a Chiquita turnaround when there is a company in the sector that provides the same exposure with far less risk? (I would question the need to own more than one stock in this sector in a diversified portfolio.)
As for my reason for shorting, IMHO this downtrend has not played itself out, and while like you I speculate on potential I'm not in the habit of putting my money down in a place it is likely to be dead for a long time.