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  • wwwhead222 wwwhead222 Jan 2, 2008 11:59 PM Flag

    Management buyout?

    Is it possible that Patrick Byrne is intentionally making goofy statements to depress the stock price? With a $360M market cap and levered free cash flow of $30M, surely there are entities out there considering a buyout / management buyout of

    This is really just conjecture and partially random thought. But, wouldn't Byrne get a lot of satisfaction knowing that he screwed the 5M short shares (30% of OSTK float shares are short). After all, the SEC has proven ineffective at keeping OSTK off the Reg SHO list. Why not take matters into your own hands?

    OSTK management/insiders hold a total of 10.39M shares (44%). Then, you have institutions that hold 61% of the shares. OSTK has a float of 16.59M shares (23.81M outstanding). Major institutional holders include AXA 9.00%, Barclays Global 6.61%, TOUCHSTONE 2.28%, FAIRFAX FINANCIAL 14.23%.

    I know that OSTK was more than double its current share price just two months ago (Closing at $39.13 October 31st). Even so, given the current environment don't you think institutions and managmement may be amenable to a buyout around the $25 level? A lot of shares have traded hands to new investors in the last two months. Many of us new longs are in at prices below the $17.50 level.

    OSTK has proven they can make money and are not going out of business anytime soon. Bring in some better management and inject some cash with a buyout and you've got a real competitor.

    Any opinions from longs or shorts?

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    • Thanks for the useless responses - here's what I found on my own:

      Meanwhile, capital expenditures have declined steadily, resulting in positive trailing-12-month free cash flow for the first time since December 2004.


      After rising steadily for more than four years straight, Overstock's (trailing-12-month) sales began a steady decline that only turned around last quarter.

      Operating costs took a few months to turn around but have dropped significantly in the past couple of quarters.

      The inventory picture improved dramatically, falling with each succeeding quarter before ramping up slightly last quarter in anticipation of Christmas sales.

      Overstock posted positive EBITDA for the first time in a non-Q4 quarter last quarter.

    • << OSTK has proven they can make money ... >>

      I give up, when did they prove that? They haven't had a single profitable year and only 1 or 2 profitable quarters as I recall. I think most people would define "making money" as making a profit, not just generating revenue.

      Anybody can generate revenue. Give it a try sometimes. Buy a car, used or new, and then put it up for sale for 10 cents on the dollar. Let us know how that works out for you, including how hard it was to sell and how much money you "made".

    • OK, quick question - why does Yahoo show levered free cash flow of $30M when the financial statements show a continuous string of losses. For example, the quarter ending Sept 30th, 2007 shows a loss of $4.7M, which is the smallest quarterly loss in 2007. Then, the annual loss in 2006 shows Overstock lost $100M. What gives?

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