rather than ride it down further you should consider selling before they have to reduce the dividend which is what the price of the equity is indicating. I think this could fall 10-20% if/when the dividend is cut.
A large percentage of their stores are in California and California is going to raise the minimum wage to $15 an hour over the next 5 years. Labor costs are going to go up every year and Amazon keeps cutting into retailers by offering more and more goods. I just think retail is a bad sector.
Company just issued debt at 12% interest rate. There is $2 billion is total debt and $300 in market cap. The issuer of the last debt was able that kind of interest rate in a zero interest environment because the financials are #$%$. I am in a partnership investment that just acquired an apartment in Austin, Texas and we got a 4.5% interest rate for 10 years. Calumet is toast and lenders will not allow a distribution or dividend to be paid again.
they are issuing 50% more shares to reduce debt by $1 billion. How is this oversold with this kind of dilution?
I think the oil price will hit $60 but that is a guess as Europe could fall apart as an economic unit and this would create a recession around the world which impacts oil prices. Of course the Middle East is not very stable as that part of the world has been fighting wars for the last 15 years and the oil and gas infrastructure can be damaged further in that part of the world.
Market cap is at $330 million and debt exceeding $2 billion, Wall Street brokerages and investors are anti heavy debt load in a market that is overpriced. That is why there is no investor demand for these shares.
Under the transaction recently announced by WLL they will issue approximately 100 million shares to retire one billion in debt. Since there are only about 200 million shares of WLL at this time, the additional shares should in my opinion cause the share price to decline by 50% unless oil prices rise substantially.
My fear is that Europe is breaking apart. England separates from the EU this week. Germany and the northern Europeans keep bailing out Greece, Italy, Spain and Portugal, how long before the citizens in those countries want to withdraw from the European Union. This should impact economic growth in Europe which will reduce energy demand. I see a recession in Europe from all of this fallout.
Investors need to evaluate how 50% more shares over the coming months is going to impact the $1 billion reduction in debt on WLL's balance sheet. I sold my shares at $10 this week which were acquired for $5 this year. I was looking for a return to $20 a share but now with 50% more shares being issued my opinion is that this drops back to $5. I will wait to enter at $5 again. Then hold until oil reaches $70 in a year, hoping for a return in the stock price to $10-15.
The point I was trying to make is that CVI gets distributions from both CVR and CVR Partners (UAN). The loan interest rate to the fertilizer portion of the distributions is at a crazy 9.25%% which in this day of low interest rates is very telling in terms of how lenders view the risk and the rate of interest charged. If either the refinery margins or fertilizer prices stay low the CVI earnings will take a hit, which means the dividends take a hit and unit/share prices of the entities will take a hit.Remember, Icahn bought CHK at $18 per share and it fell all the way to $1.50 a share. Commodities are like gambling.
You need to look at the debt taken on in the new bond issue and 9.25% interest rate paid on the $650 million. The interest rate says it all about the cash flow prospects. I was just involved in a third refi in real estate and this loan was for 7 years at 4.5% while one of the CVI entities is paying double the interest rate. Watch what happens if/when the dividend is cut on the refineries. The bond holders get paid first. A dividend cut will cvi and cvr, just watch.
CVR Partners which they own a ton of just sold 7 year bonds for 9.25%. This in an era of low interest rates. In Germany and Japan the 10 year bonds are negative interest. Banks in the U.S. are paying 1-2% for 2-5 year deposits. I just invested in an apartment building in Texas and we got a 10 year loan for 5%.
CVR basically paid double the interest that we paid for an apartment complex. On another apartment purchase this year we obtained a 4% interest rate due in 5 years. The lender must have been concerned about the income that could be generated by CVR Partners and CVR could not borrow at the 50% discount we are receiving in comparison to that 9 .25%.
Most high distribution investments have had to cut their distribution during the last year and this will probably be no exception. Why else is the equity price in free fall?
I see $5 per share in value in 24 months as natural gas prices will be back to $4mcf as U.S. gas shipments around the world will be significant in two years along with ever increasing exports to Mexico. Not to mention that oil should go up $10-20 a barrel over the next 2-3 years.
You are wrong. PWE had a distressed sale of assets this month. This was similar to a liquidation value. The rest of the assets are "going concern" assets which should reflect the value when natural gas and oil sell at higher prices in 2017 and 2018, etc. In addition future reserves will be proved on their lands and this will also increase valuation. Company will be worth close to $5 per share in 2017 or 2018. Anyone that invests up to $2 per share should make a killing in 24 months.
Frankly CHK management is the problem. They issued 10% more shares in the last 1-2 months to retire 1% of their debt. Not a good formula. So, even though NG prices have gone from $1.95 up to $2.40 in the same time period, institutions and brokerages are afraid of this name and tell their clients and readers to stay away.
Unfortunately I own a great deal of CHK. The problem is that CHK has been issuing shares, approximately 10% additional equity in the last 30 days to retire a few hundred million in bonds when they have $9 billion in bond indebtedness. Also, they signed fixed price contracts a few years ago to move their oil and gas through pipelines when prices were $100 for a barrel of oil and $6mcf for natural gas. The transportation expense of moving their product makes the revenue from sales unprofitable.
I agree this goes to $5-6 in the recession. I see no way they are profitable for the rest of the year. Last quarter was a 5 cent loss per share and I expect this to continue. So paying the dividend when you are not making money is not wise.
My wife and I buy all of our sport shoes online.
The newspapers yesterday reported that Sports Authority was unable to sell any of their stores in bankruptcy and would liquidate the inventory. This is going to take 3-6 months to sell off 450 stores of inventory. Frankly, I think Big 5's recent loss could widen if this much inventory impacts Big 5 more than all think.
Not wise to buy at this price as the share price has been dropping all year, month after month and imagine it will continue until the end of the year.
CHK basically holds natural gas and price of NG is around $2/mcf, down from $6/mcf two years ago. Big glut. Selling gas at $2 or below is not profitable.
problem is they are not very profitable as earnings are declining and most retail stores are taking a big hit including Walmart, Nordstroms, etc.
Investors need to think about the these numbers and what they tell us.
Retire 1% of your debt for 4% of your stock. That dilution if extrapolated tells a great deal about how management. It equates to retiring 10% percent of your debt or around $1 billion of debt for 40% of the stock. That is quite a dilution which should tell all investors a great deal.
you are right on. There is a ton of inventory to be liquidated out of these huge stores and why the CEO of Big Five thought it would be a sale for a couple of months. This could take six months before the inventory is gone which will clean out so much inventory that sales for the year will be lousy.
Also, Nordstrom's, a very good retailer missed on earnings and the shares dropped almost 8 dollars today. Missing with retail stores is the kiss of death for the stock. I would suggest that shareholders dump there shares and buy back at $8 or $7 or $6 or $5 because the news is going to be bad again for the second quarter which is over in 6-7 weeks.
You are right. It is going to take a year to sell out the inventory of the two competitors with 250 stores to empy and this is going to impact sales of Big 5 for the entire year of 2016. If management was smart it would have eliminated the dividend for the year instead of paying out cash when they will have losses all year as they are unable to compete with the stores being liquidated. Those stores are double or triple the size of a Big 5 store and they are wrong that the liquidations will take 3 months. It is not 250 stores being liquidated it is equal to 750 Big 5 stores being liquidated. This is going to take time.
Management needs to be changed but that will not happen.
Big 5 internet sales will not be able to compete against the Amazon model.
Why are they paying dividends when they are not making money at Big 5. This is a recipe for further disaster.