So then explain why the stock was trading above $8 with the Converts in October? The converts were present then and are present now. Why was the stock 30% higher then?
Why is it their game? Why was the stock at $8.10 on 10-23 if the converts controlled the game and now its at $6.66? Converts were not in control then but are in control now? You make no sense.
Doesn't matter. But shares are easier. Too much cash and shares are too cheap. It's a no brainer. Company should be able to arbitrage the difference.
At these price levels, there is no way they can find a better return on capital than buying back shares. This is not a capital intensive business. They either buy a company - which they have proven to be inept at - or they buyback shares. Too much cash.
Actually, they wouldn't of run out money. They had a $75m Revolver untapped. And they easily could have raised any small deltas given their strong operating performance and order book. It is indisputable that the Notes were a huge mistake.
The convertibles were a mistake. But they are not the reason the stock is where it is. There is no demand. Create the demand and this problem goes away.
This stock was at $8.10 on 10-23 - post Convertibles. You cant blame it now on the convertibles if the stock acted fine previously.
What lawsuits? That wasn't a lawsuit that was filed. It was an ambulance chaser trying to coerce people to file a lawsuit. If he is spending time worrying about that nonsense, he is worse than we thought. You cant run a company looking over your shoulder the whole time. Buy back the shares now!
This wont get bought out by HAS or MAT. But it will get bought by a PE firm if it stays this low. Its easy money and they can get rid of CEO/CFO which is 99% of the problem.
Or they could just buy back some shares $10-15m should do it, and this long nightmare would be over...pretty simple way to stop the bleeding.
Good news is we have less than 2 months til the next report comes out.
Seeing that they had 2 out of the 3 mos. complete when giving us guidance I would expect them to beat again. I also would expect the cash generation to be quite compelling.
This combination should be a strong impetus for appreciation come end of April
In the interim, I would expect more of the same as the last 4 months with two possible exceptions.
1) EPS estimates are still not reflected across the Board yet. There are a lot of people out there who screen stocks by their low PE's and EBITDA/EV vs. Growth Rates. This should draw a lot of attention from people.
2) How these buffoons have not already announced some sort of share buyback is shocking. It would almost be shocking if they did not. I have to believe they are not as dumb as they look and sound and will commence this ASAP. This would stop the bleeding.
The only downside risk is again if these buffoons do an acquisition. Then I would say $3-4 share is possible.
The other potential upside is if the CFO quits or is terminated. And I am serious. The guy recommends a share buyback at $20 share but not at $6 when the financials were about the same. Same guy who issued $100m of Convertibles this June when they didn't even need the funds. Same guy has recommended numerous failed acquisitions. Same guy who declined a $20 share buyout. Cant imagine what he has in store for us next.
a) 44m shares so take out $72m
b) You need to subtract out the cash which will be about $175m
c) So then you would have a valuation of $350m with $57m of EBITDA - that's 6,1x EBITDA which would be great but probably wishful thinking
They can convert anytime they want. But it makes no sense for them to convert below what they paid - they get a fixed number of shares per the agreements. The BE point is about $8.74 for 2018 notes and $9.60 for the 2020 notes - probably a bit higher with transaction costs.