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Compass Diversified Holdings Message Board

Brennus01 20 posts  |  Last Activity: Dec 15, 2014 11:35 AM Member since: Feb 26, 2002
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  • brennus01 brennus01 Dec 15, 2014 11:35 AM Flag

    I think our 30 cent dividend just got used to buy Microfinancial. $10.20 per share times 14.4MM (MFI) shares...divided by 440MM dividend paying (FIG) shares. That's about 33 cents.

    So probably no top up this year. So no top up, and nothing management does to 'add value' seems to grow the distribution. I wonder if FIG mgmt actually understand the nature of the MLP structure?

  • Reply to

    Today's presentation

    by beekay425 Dec 8, 2014 5:14 PM
    brennus01 brennus01 Dec 8, 2014 7:53 PM Flag

    sec.gov/Archives/edgar/data/1421517/000143774914021774/ex99-1.htm

  • brennus01 brennus01 Dec 7, 2014 9:42 AM Flag

    BC, I think FIG management, on that same conference call, backpedalled fast from the idea that they were going to pay out all of DE. This is part of a serious credibility issue with FIG mgmt. Paying out 100% of DE is an april/may idea. They wanted investors to believe through the middle of the year that policy meant it exactly what it said: pay out 100% of distributable earnings.

    But as the date of payment gets closer FIG management are changing their tune. Paying out all of DE doesn't mean paying out all of it. It means paying out less than all of it. Or maybe it means paying out all of it averaged over a three year period. And buying back units counts as a payment. Yeah, that's the ticket!

    Bottom line, FIG doesn't have a clear distribution policy like other publicly traded asset management partnerships because FIG management know they don't want to be held to it. And this is why. Apparently they can't be trusted to follow it.

  • Reply to

    Monster 4q on the way

    by dualdelta32 Nov 11, 2014 9:06 AM
    brennus01 brennus01 Nov 12, 2014 8:01 AM Flag

    There is certainly the possibility of a very large 4q.

    Listen to the call for additional understanding of the inventory issue, though. There are three things at play. The first is your point: ERII is building inventory to satisfy mega project order(s) that are imminent. However, there has been a recent change in business mix to favor pumps & such. This acts to increase inventories as well.

    And finally, don't forget that FEEC switched form weighted average inventory accounting to FIFO inventory accounting. FIFO doesn't automatically mean a bump up in inventory valuation...it might mean a bump down depending on circumstances. But it does serve to muddy the waters.

    But the first order effect, in my opinion, is an inventory build to satisfy mega project orders.

  • Everybody should listen to the call in general and specifically starting at about 33:40.At this point Rooney starts talking about installation costs an per year energy savings 'return' on that investment.

    In his example, a $3MM installation saves about $1.4MM to $1.5MM in recaptured energy every year. More generally, payback can be 2 to 3 years depending on this size of the installation.

    He says ERII targets a 3 year payback as a pricing point. CFO's are generally happy with 6 to 7 year payback PROVIDED THAT payback is correctly risk adjusted. Customers don't have a good feel for how to risk adjust ERII's product yet, so ERII tries to eliminate that concern with a compelling value proposition (3 year payback vs 6 year payback rule-of-thumb)

    What ERII have been able to show with their Saudi Aramco data is that ERII's technology doesn't add risk to the plant. It removes risk from the plant. This is accomplished by removing complex, failure prone equipment from the system and replacing it with ERII's simpler, more reliable equipment. Rooney talks about three pumps in a plant, two of those three pumps are replaced by ERII technology. Pumps require periodic maintenance and it's not unusual to have a pump break down. ERII technology has three 9's reliability...that is 99.9+% up time.

    So in reality, not only does ERII technology save a lot of money each and every year, but it also improves plant utilization by de-risking the aggregate system. The bottom line is that real-world data show the true payback on that $3MM system installation is more like 9 months.

    Apparently, Aramco is working on a white paper to publicize this fact sometime next year.

    This is the data that makes ERII say O&G revenue is inevitable. It's going to happen. Timing may be in question but it will inevitably happen.

  • Reply to

    SEC

    by alludeilludin Nov 10, 2014 10:04 AM
    brennus01 brennus01 Nov 10, 2014 10:29 AM Flag

    Lorentzen isn't an insider. He's just an investor that holds a lot of shares.

  • brennus01 brennus01 Oct 28, 2014 12:43 PM Flag

    Search for oilandgasawards southwest-2014
    Search for oilandgasawards judges

  • As decided by peers at Shell, Exxon, Apache, Noble, Breitling, Anadarko, BHP, Chesapeake, etc.

    Not some new proppant. Not some new packer. Not some new directional drilling tech. Not some down hole tech. Not some new fraccing tech. None of that.

    ERII pressure exchange technology. Best of the year. Doesn't guarantee a flood of O&G orders this quarter...but more evidence that the technology is viewed as legit throughout the industry.

  • brennus01 brennus01 Oct 15, 2014 10:11 AM Flag

    Well, we do have this direct quote from management:

    "And at year-end, our quarterly distribution will also take into account net incentive income. In aggregate, we expect to distribute substantially all of our DE in any given year. "

    FIG earned 59 cents DE in 1h14. They will earn about 40 cents DE in 2h14 (probably a little more). Total distributions so far amount to 34 cents. A 40 cent 2h14 distribution will be no problem.

    Insiders hold a lot of units. They are tired of waiting for their cash distributions, too. The Nomura situation was unique. Expect a top off this year.

  • The REGULAR QUARTERLY dividend is funded by net management fees. This will be 8 cents per quarter just like normal. That's 16 cents in 2h14.

    Additionally, FIG have committed to an ANNUAL TOP UP dividend funded by incentive income and the difference between distributions already made and full year distributable earnings. 1h14 DE amounted to $0.59 per unit. 1h14 distributions amounted to $0.34 per unit. So there is 25 cents 'spillover' DE for 2h14. According to management:

    "And at year-end, our quarterly distribution will also take into account net incentive income. In aggregate, we expect to distribute substantially all of our DE in any given year. "

    So, bare minimum, we should expect the regular quarterly dividend(s) plus 25 cents spillover or .08 + .08 + .25 = 0.41 in 2h14. Any DE earned in 2h14 will add to that.

    That's conservative. Not even accounting for realizations that will drive additional distributions. Not even counting DE that will be earned in 2h14 (which will almost certainly amount to another 40 cents.

  • REGULAR QUARTERLY: Funded by net management fees. 8 cents per quarter just like normal

    QUARTERLY TOP UP: Funded by realizations. There are 540MM in additional gains embedded in the balance sheet. That's $1.20+ per unit. Management told us they are going to pick up the pace of realizations.

    "We expect that realizations and corresponding top up dividends–subject to Board approval–will continue to trend up in the next few years."

    Realizations will be lumpy and we may not know they have occured before FIG announce the quarterly top up

    ANNUAL TOP UP: Funded by incentive income and the difference between distributions already made and full year distributable earnings. 1h14 DE amounted to $0.59 per unit. 1h14 distributions amounted to $0.34 per unit. So there is 25 cents 'spillover' DE for 2h14. According to management:

    "And at year-end, our quarterly distribution will also take into account net incentive income. In aggregate, we expect to distribute substantially all of our DE in any given year. "

    So, bare minimum, we should expect the regular quarterly dividend(s) plus 25 cents spillover, or 41 cents distributed in 2h14. More likely FIG will generate 40 cents DE in 2h14...meaning we should expect .08 + .08 + .25 + .4 = 0.81 in 2h14. Optimistically, FIG could generate another 15 cents in realizations and we could get 96 cents in distributions in 2h14.

  • Reply to

    Q3 dividends/thoughts JIMHO.

    by bobstewart1952 Sep 30, 2014 8:25 PM
    brennus01 brennus01 Oct 4, 2014 6:55 PM Flag

    "As far as the special/topoff dividends, your guesses are as good as mine."

    I think I can help you dial that estimate in a little.

    First, let's understand the three buckets management are putting into the distribution. REGULAR QUARTERLY dividends are funded by net management fees. QUARTERLY TOP UP dividends are funded by realizations. ANNUAL TOP UP dividends are funded by incentive income and/or the difference between already distributed cash and full-year DE.

    Now, I get what you are saying...it's tough to predict what the QUARTERLY TOP UP dividend is going to be because we don't have perfect insight into what realizations are. But we do know that FIG told us (and this is a direct quote):

    "We expect that realizations and corresponding top up dividends–subject to Board approval–will continue to trend up in the next few years."

    So do expect realizations.

    We also know (again, this is a direct quote from management):

    "And at year-end, our quarterly distribution will also take into account net incentive income. In aggregate, we expect to distribute substantially all of our DE in any given year. "

    Now, FIG have distributed 34 cents in the first half of the year & . During that time DE was 59 cents. If FIG just grind out net management fees & do their basic blocking/tackling in the back half of the year they'll generate another 40 cents in DE. No further realizations required.

    So 25 cents spillover DE from 1h14 plus 40 cents DE from 2h14. Bottom range of 2h14 distributions is 65 cents. Though most of that may be in the form of a TOP UP dividend.

  • brennus01 brennus01 Oct 3, 2014 7:21 AM Flag

    beekay, were you replying to me or to Ex.13? Yahoo! message boards make it hard to tell which way the thread goes sometimes!

  • Reply to

    As greg points out, technical indicators positive

    by brennus01 Sep 25, 2014 5:57 AM
    brennus01 brennus01 Oct 3, 2014 7:19 AM Flag

    yesterday felt like a short covering rally to me. Just like after the last conference call. Wonder if it will carry through today?

  • Two months will go fast over the holiday season.

    At the investor day conference we will get significant updates on progress in the Oil and Gas segment. And significant will really mean significant. Don't forget the sales effort only started in February of this year and right out of the gate they had $100MM in RFP. And 'materially more' than that by 2q14. Oil and Gas installations happen during scheduled maintenance turnarounds and most maintenance turnarounds in the gas processing industry happen during shoulder season...which is late calendar 3q, early calendar 4q.

    So when we're talking 'significant' oil and gas updates...we could be talking about some really significant headline grabbing numbers.

    AND DON'T FORGET that the day before the last company conference call ERII signed a contract with a customer in a new market segment. We will officially find out what that market segment is during the 05dec investor's day. And it's not going to be some pie-in-the-sky marketing powerpoint slide deck. It's going to be signed client, hardware in the field, preliminary data sort of update.

    Right now, the stock is coming off an oversold condition. If you want to play the run into December's good news now might be a pretty good time. 01oct would have been better, yes, but right now isn't too bad.

  • brennus01 brennus01 Sep 29, 2014 5:36 AM Flag

    Two months ago, on 02jul14 IG announced net proceeds of 25.2MM resulting from an equity offering.

  • greg pointed out yesterday was a daily doji. What's a daily Doji? Don't get caught up in the vocabulary...it just means a stock was UNCH for the day.

    A daily Doji is a weak positive indicator. Don't take my word for it, though. Pull down the daily price history of the S&P500 over the last two decades. Identify all the days where opening price = closing price. Fast forward two months. Is it higher or lower at that two month point? You'll find that 53% to 55% of the time, it's higher.

    Pick another stock. Let's say AAPL. Take the last two decades of daily price action. etc, etc. You'll see that 53% to 55% of the time, two months after a daily Doji, the stock price is higher.

    Let's try another one...IBM. Oh! Even better. 66% of the time the stock is higher in two months.

    Anyhow, I don't recommend trading on technical indicators. Just through it would be interesting to put some numbers behind the bullish Doji indicator greg mentioned. ESPECIALLY given that in two months time, we'll be looking at ERII's investor update presentation.

  • brennus01 brennus01 Sep 24, 2014 6:11 AM Flag

    You've got some interested readers, Ex.13. ;-) Now they're taking your posts...adding 'not' a few times...and reposting it as their own! Ha!

  • ERII reported blowout numbers on huge revenue and the stock ran way up. That's going to happen again.

    All negative posters were talking about the same things THEN that they are talking about NOW. Negative posters don't have any insight into ERII or the ERII business model. They say the same things about the company regardless of underlying business conditions. Look at their track record with other stocks.

    Right now, business conditions are good for ERII. New business is coming along slowly but it is definitely coming along.

  • brennus01 brennus01 Sep 19, 2014 9:10 PM Flag

    Straight out of your own playbook here is what was said on the call. Taken from the transcript:

    "Embedded in your question is the assumption that because we haven't issued press releases around mega project victories we don't have any. In point of fact we do. We made a decision 9 months ago to de-emphasize press releases on MPD projects. In fact, I don't think we've had a press release on MPD projects in maybe a year. I can tell you as a matter of fact that we have mega projects under contract."

    Just for context, they were talking about the inventory build and how there wasn't anything on the horizon to warrant the inventory. ERII's answer is: don't assume that just because we didn't announce mega project contracts that we don't have mega project contracts.

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