Has there been any news that suggests they did not place these shares? Generally price is set based upon demand. I would think the $14 was based upon an order book that was filled at that price. I thnk the offering was announced the morning of the 13th when the stock was around $18. On june 17-18 the volume jumped which is likely when these were issued.
At this point is seems unlikely the overallotment would be exercised but they have 30 days
I added another blog post on SA about deal. The amount of leverage and likelihood of a capital raise are reasons why I'm going cautious on CMTL for now . Will do more analysis after the Dec conference call to har more.
Not a big surprise to see this acquisition given the actiivism and board committee to explore. Seems like a relatively modest premium though CMTL had seen a pull back after their earnings miss and TSYS has been pretty strong this year. I allocated 25% of my TSYS invesment back into Comtech as a flyer. Solid balance sheet. 10% deal pull back discount. 5+% yield with solid coverage ratio. I think they can do even better than the announced synergies as i've always felt TSYS was bloated, especially in G&A.
Still holding a small position here but can't justify increasing given te lackluster performance of late. Need to get some of these options converted to funded orders.
Hey Adam-I probably won't have much time to analyze CMTL until early Dec. I did take a postiion today on the selloff open. Having a 10% haircut with a solid balance sheet and good dividend coverage along with a relatively small premium for TSYS was enough for me to take a flyer. Nice to be up about 5% already and I really think Mark Jordon will come out with some favorable remarks soon based upon his histoy with both companies. Should provide a little assistance.
More later on my blog or on bridgetunnel
I took a small position in CMTL after the selloff this am. I think there is a lot of untapped value in TSYS along with a bloated cost structure. Not a bad risk/reward with the stock down 10%:
- CMTL has solid cash flow
- CMTL claims this is cash accretive and will have some solid synergies in two years
- CMTL buying back stock
- CMTL pays 5% dividend
- CMTL has seen declining revenues
- CMTL has exposure to oil segment
- CMTL is quite small so integration will be risky/challenge
Mark Jordan of Noble also follows CMTL and has a buy on them, He will likely do a bullish outlook with his recent buy upgrade on TSYS.
Hope everyone had a reasonable outcome with TSYS!
The best thing about this particular stock set up is that they have already announced earnings and guidance so we have 3 months before they could disappoint which is what generally has caused the selloffs.
Q3 was pretty weak on top line in both segments. Only saving grace on revenues and margin was the IP sale. The strategic review is ongoing and I think they said it would cost another $1m in Q4 so must be pretty thorough. The cost cutting that they mentioned is long overdue though the G&A line is where they have the most work to do. Backlog looks pretty solid now so any new order announcements will likely result in some incremental growth next year. Fwd PE is very reasonable so this is the type of company investors are rotating into. Undervalued and ones that don't have a lot of credit issues. Noble upgrade was pretty significant as he has been a long term follower and has not been shy to downgrade in past.
Congrats on going green. I sold my early high basis stock to take a tax loss a couple years ago but have done very well since now up over 60% even after selling 20% for a profit prior to this past cc. This looks like it wants to rally to $5 so I'm trying to sell some covered calls at that level for Dec.