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Beazer Homes USA Inc. Message Board

not_a_short 50 posts  |  Last Activity: Jul 24, 2016 6:17 PM Member since: Sep 9, 1999
  • Reply to

    3q Margin

    by cavalier2015 Jul 22, 2016 10:25 AM
    not_a_short not_a_short Jul 24, 2016 6:17 PM Flag

    I think they should continue the strong buyback at these cheap prices. Anything under $40 is an excellent price.


  • not_a_short not_a_short Jul 15, 2016 1:29 PM Flag

    Yahoo has "upgraded" them. Looks like a major change for the worse. Not sure why they changed anything since it really wasn't broken.

    I am a bit alarmed to lose the message boards. They are (were) an integral part of my stock research. I don't know of a comparable way to get the scuttlebutt on a company.

    I can only hope whoever buys yahoo gets rid of the management of the finance part. The way they makes changes is foolish and make me think they are either inexperienced or incompetent.


  • not_a_short not_a_short Jul 13, 2016 1:28 PM Flag

    I can read. I wasn't asking the best time to do a buyback, rather at what price, given the current situation, would it make sense to do a buyback. If the stock fell to $5 a share (PE of 1) and the earnings did not decline significantly, AAL could repurchase all the shares if the price stayed there. Clearly this could not happen. At some point all the freely traded shares would be removed from the market and the long-term shareholders would remain. The stock price would have to move upwards in a strong manner.

    My point is that even with declining fundamentals (like PRASM, Revenues, or overall Earnings) a stock buyback makes sense at a certain price.


  • not_a_short by not_a_short Jul 13, 2016 1:14 PM Flag

    This is an amazing figure. Earnings per share will be almost 9% higher going forward due to this activity for Q2 alone. (EPS/(1-.082). The average price paid was around todays price. If they continue at the same rate and average share price near todays price, they will retire an additional 8.9% in Q3. (They will run out of authorization, given that only about $1.1B remains authorized. I suspect they will do another authorization for remainder of year.)


  • not_a_short by not_a_short Jul 12, 2016 11:13 AM Flag

    I was forced into the new format finance section. It is a disaster. Took me 10 minutes to find the old format pages. This could be the end of mesages boards as we have known them. This may be my last post. Good luck to all.


  • not_a_short not_a_short Jul 12, 2016 11:09 AM Flag

    So I guess you are saying that there is no price that would favor a buyback if the fundamentals are not rising?

    I have to believe that a buyback makes sense at some price. I mean If the PE were to continue declining to 2 or 3, surely it would make senses to do a buyback even in the face of declining fundamentals.


  • not_a_short not_a_short Jul 12, 2016 12:50 AM Flag

    Thanks for your response. Not sure about the "Tulip and Pet Rock theory" unless you are referring to the 17th century tulip mania. I see nothing like that for the airline industry. I do remember the Pet Rock but again, not sure how that applies here.

    I agree that having strong reserves is essential in a capital intensive industry. You can never tell when the next recession will occur. I think $7B in cash qualifies are a very substantial cash reserve.

    You didn't say at what price it would make sense for AAL to buyback stock. Does that mean you wouldn't under any circumstances?


  • not_a_short by not_a_short Jul 11, 2016 3:15 PM Flag

    Once a stock is detached from normal valuations (like PE) , it can go on to amazing valuations - I wouldn't rule out $1500 this year.

    It makes you wonder if normal valuation metrics will ever take hold with AMZN.


  • not_a_short not_a_short Jul 11, 2016 12:20 PM Flag

    The increased borrowing is being primarily used to purchase new aircraft. This borrowing is being done at low fixed rates over extended maturities. The share repurchases are being done with cash flow. It does increase the fixed expensesa bit , but it looks very manageable.

    I understand and support the repurchase of stock at these very cheap prices. Don't you think it makes sense to buyback stock at these prices? If not at these prices, at what price would you think it makes sense?


  • Reply to

    Trading Shares

    by not_a_short Jul 10, 2016 12:42 PM
    not_a_short not_a_short Jul 10, 2016 12:48 PM Flag

    Part 2

    All these things make it clear to me that AAL has an exceptional number of speculators vs investors. This would explain why relatively modestly bad news (higher fuel prices, increased capacity) have had such a big impact on the stock price.

    Speculators have little patience with regard to a falling stock price.


  • not_a_short by not_a_short Jul 10, 2016 12:42 PM Flag

    One interesting factor that effects short term stock pricing is what proportion of shares are being held by investors for the long term vs the short term. By long term I am referring to investors that have made AAL a permanent part of their portfolio as opposed to the speculators that are buying fora quick, hopefully substantial gain. It is not possible to find this measure. It is not collected and I would doubt that it could be assembled. About all you can do is guestimate as to whether a stock is more highly speculated in compared to others.

    I would say that AAL (and most of the major air carriers) have an exceptional number of speculators vs investors. The reasons are many; (1) The natural shareholders (employees and very long time shareholders) experienced a bankruptcy at both American and USAir. These events would damper anyone's enthusiasm - particularly among this group. (2) The airlines are well-known as a cyclical business. It would be a good selection for a basket of stocks that act as a proxy for the cyclical part of the US economy. (3) the airlines are well-known for their exposure to oil prices. The sometimes substantial changes in fuel prices make quarter to quarter earnings fluctuate widely. It can't be helped are even if an airlines hedges fuel cost, the GAAP mark-to-market rules result in quarterly earnings that fluctuate widely. (the opposite of what most conservative, long term, investers desire). (4) AAL is a new beast created as a combination of three airlines. It is much harder to compare current results with historical results (as opposed to say Southwest). This will make many potential investors a bit hesitant since they cannot look back in time and see home the current entity performed in the past. (5) AAL is still combining cultures. In the investing world a major merger is seldom a good thing. A conservation investor oftenwill avoid these situations until a track record is established.


  • Reply to

    $10B in Market Cap lost YTD

    by not_a_short Jul 9, 2016 10:16 PM
    not_a_short not_a_short Jul 10, 2016 12:00 PM Flag

    For the share count I just projected a continuation of Q1 buying of about $500M per month of stock at average price for the stock for each month. It is just an estimate, it could be lower if they accelerated the buyback with the extremely cheap prices of the past couple of weeks.

    I don't know why you would add in the debt to come up with a "true" market cap. They have added a bit of debt to an already substantial amount, but they are in no way over-leveraged. They have a considerable cash cushion to support their elevated debt levels and virtually all their debt is at fixed, low rates (by historical standards) with a manageable repayment schedule.

    If their earnings hold up at this years level, they would be able to buyback all the stock within 6 years (something that clearly could not occur).


  • not_a_short by not_a_short Jul 9, 2016 10:16 PM Flag

    At start of year market cap was about $26B (624M shares @ 42.35). The current market cap is around $16B (537M shares - est @ 30.04). This loss of $10B in market cap is a bit hard to understand. Was the company that much over-valued at the start of the year? I don't think a PE under 8 at start of year would qualify as over-valued (especially with market PE in high teens). I realize the airlines business is viewed as both risky and very cyclical. I have not seen a big change in the outlook for any of the major carriers - this year will be one of the best on record. I have to conclude he reduction in market cap is more than a bit overdone.

    If the stock buyback made sense at $39.76 (avg price paid in Q1), it makes even more sense at $30.04. I sincerely hope management stays the course and continues the buyback.


  • not_a_short by not_a_short Jul 6, 2016 11:07 AM Flag

    it seems clear that AAL will hit $0 in less than 6 months. We have gone from $41.26 on April 20 to about 27.53 today. If you project a continue rate of decline of $13.73 every 77 days, you get to zero in 5 months and 4 days.

    Perhaps they should slow the buyback to keep some powder dry .


  • not_a_short by not_a_short Jul 6, 2016 10:53 AM Flag

    has been added to the already substantial debt for AAL. Normally I would be alarmed, but when I reviewed the recent 8Ks I saw they were able to get very favorable terms. Borrowing at a fixed rate low rates (3.2 - 4.375) % for an extended time (8-12 years) is a sound decision.


  • not_a_short by not_a_short Jul 6, 2016 10:45 AM Flag

    today was not entirely unexpected. I understand how hard it is to have an outperform on a stock that has fallen a lot. I was a bit surprised to see the stock go from outperform to underperform directly. Quite a turnaround from an analyst. I would not be surprised to see others follow (especially if they miss on Q2 earnings).

    I like the quote from TSC news article "American Airlines' strengths such as its notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself" In particular the last line. It seems to say "we think the stock is weak because it has gone down". Sparkling analysis.

    I hope AAL stays the course they have set. The buybacks in this environment (cheap stock that continues to get cheaper) make sense.


  • Reply to

    Effect of Buyback on Earning Per Share

    by not_a_short Jun 30, 2016 3:21 PM
    not_a_short not_a_short Jul 1, 2016 11:28 AM Flag

    I did buy some in the $40s and I do not consider it a mistake. Whenever you purchase and undervalued stock you recognize that it could get cheaper. My investment is for 3-5 years. If it outperforms the market over that time I will consider it a success. What it does in the next week or month or quarter mean little except for the opportunity to buy more at a lower price.


  • I doubt the current estimates fully reflect the buyback for 2 reasons; (1) analysts do not want to rely on management completing an announced buyback - better to wait for it to occur to ensure it will be done. (2) GAAP requires that a weighted share count be used versus actual shares count. For buybacks, this means more shares are used in the EPS calculation than are actually outstanding at the end of reporting period. This is one of those GAAP things that actually misleads rather than clarifies. This GAAP anomaly is usually not a problem since buybacks are seldom as large as the AAL buyback. However, in the case of AAL, it will result an EPS for Q2 that understates the actual EPS by 5% or more.

    The impact of the big share buyback will be substantial. If they do follow through with the current authorization, the shares outstanding will have been reduced to about 500M (from 697M at year end 2014). This 28.3% reduction in share count will result in a 39.4% increase in earnings per share.

    The buyback is not a mistake.


  • Reply to

    Bots win

    by iahphx Jun 29, 2016 9:57 AM
    not_a_short not_a_short Jun 29, 2016 2:24 PM Flag

    Go read what Ben Graham said about Mr. Market around 1950. It is as relevant today as it was back then.


  • Reply to

    Earnings Yield now 21%

    by not_a_short Jun 28, 2016 12:45 AM
    not_a_short not_a_short Jun 28, 2016 11:09 AM Flag

    I agree it has not helped the stock price much yet. In fact, if you consider the buyback, the stock has decline is even worse. (Each share now represents a much greater part of the company) However, the buyback has greatly reduced the number of shares outstanding (from 697M to around 500M by the end of the year). I have seen many buybacks done improperly. They often buyback over-priced stock in an attempt to prop up the price or to offset over-generous stock awards. That is not the case here.

    This is a meaningful buyback executed at compelling prices.


9.09+0.13(+1.45%)Jul 26 4:02 PMEDT