Well, after your previous call, it went to about $28.60.
Now back to $29.74 as this is written, up 45 cents today.
This week we got Coverage Initiations with Buy Recommendations from Citi and from Raymond James.
I am waiting for my Dec 30 calls to expire. Its a covered call position.
Right now I am primarily writing modestly out-of-the-money put options.
Short a put is an equivalent position to a covered write.
Do you mean to say you write 200+ per month of covered calls against your equity position?
Interesting. The monthly dividend rate makes it mostly uneconomic to exercise for dividend capture, I suppose.
I bought 2,000 a few minutes ago on the offer at $2.48 and it was like a dam burst.
Very reminiscent of Mr. Livermore.
It appears the trend is our friend.
Aah, intelligent life detected!
I had not thought about inclusion in the S&P 500, but it does not seem unreasonable post-COLE.
One of the things I think has kept a lid on valuation here maybe is the speed at which the company has been transformed combined with the structure with multiple partnerships.
I definitely have more work to do, but the deal for COLE is very confirmatory to a view that the problems are transitory. Transitory problems tend to result in intermediate term stock appreciation...and it certainly is nice to be well paid to wait.
The stock is getting a fairly typical "Barron's Bounce" this morning. I will probably be looking for an entry point in the coming week....perhaps by selling put options against it (though that forfeits the monthly dividend).
Thanks to both of you for your comments. See you soon.
Very bullish writeup in Barron's this weekend highlights the 7% yield
pro forma for the COLE acquisition expected to close by the end of 14H1.
Indicates that competitors NNN & O trade with yields in the 5%-6% range,
leaving ARCP with upside to those yield levels from here.
Of course, rising interest rates remain a price risk for all REIT shares.
Article highlights ARCP's pro forma size.
I also noticed that Moody's recently issued its first rating on ARCP,
Baa3 (investment grade) with a Stable Outlook. Usually they won't do
that unless a bond offering is in the works.
Is there any intelligent life on this board?
Given that the stock is at the same approximate level at which it traded in the Spring of 2012,
i.e. pre-Einhorn, I would have to guess no.
So, there are three positive factors working in the favor of put sellers and stock holders from now until the end of the year:
1) Window dressing (yes, folks, some managers will want to show this in their portfolio because it is a big winner for the year).
2) The Audit news: anything but a substantial restatement will be a positive for the stock, and essentially lets the buyback loose. Management may take reward action immediately after this news, and the best possible outcome would be the Dutch tender auction type of news.
3) Short squeeze: Yes, brother Ackman is still short lots of stock and those from whom he bought puts will continue to want to hedge part of their positions, putting upward pressure on put premiums.
He fails to comprehend that BKS need not fund Nook operating losses forever.
In fact, buyers of the stock are buying because they KNOW that BKS won;t fund Nook operating losses forever.
And when they stop funding them, the stock goes into the mid-20s to reflect the value of the rest of the business.
Singy-- Yap all you want, I won;t see it because your idiocy is on "Ignore"
There are a couple of reasons.
One is that people still just think "copiers" uggh. This thought process remains even among professional money managers.
Another is that alot of people think the company's balance sheet stinks but fail to make the adjustments needed to account for the leasing business.
Third is that although the ACS integration has been completed, earnings growth has been very lackluster. This is a function of the macro environment both domestically and in Europe.
Fourth, there is a lack of understanding that revenue growth will accelerate over the next few years as the services business moves closer and closer to 65% of revenues from the current 56%.
Yes, the shares did hit a new 52-week high this week, which points to higher prices ahead.
Given the 2014 guidance for CFO and FCF, the shares remain cheap.
The company continues to
1) Buy back shares
2) Reduce debt (although they likely will come to the market soon to refinance a bond maturity)
3) Grow the services division revenue base even as the hardware division revenue shrinks, shifting the balance between them now to 56% services, with an objective of 66% by 2017.
At the recent Analyst Day, I believe they disclosed an expectation of $300 million to be put toward dividends in 2014. That seems to imply a dividend increase to about the $0.30/share annual rate from the current $0.23/share level. That would be a 2.7% yield at $11.
XRX has a fair amount of exposure to Europe, where the economic downturn is easing.
Bwaaa, haa, haa, haa
Let's do the math at a $100/share LBO price: $10 billion.
The equity in such a deal likely will be on the order of nearly 40%, but let's go with 30% to see if its a stretch.
That means they finance $7 billion.
At a $6% interest rate (easily done in this financing market), that would be $420 million in PRETAX interest expense. At a 25% tax rate (again conservative), they will save $105 million in taxes, so the actual incremental cost of the debt would be $315 million.
In each of the past two quarters, HLF has generated more than $200 million in CFO, an annual rate of $800 million. Capex of $100 million leaves $700 million. THAT's what's available to pay the interest on $7 billion of 6% debt, Don;t forget, there are no quarterly dividends going out or share repurchases to fund.
Moreover, these guys are buying this company because it and its FCF are growing like a weed. I a few years that $800 million of CFO will be closer to $1.2 billion.
So, unless you find a math mistake, these guys can fund an LBO easily at $100 a share.
So, short, live and learn. Time to pay your tuition.
Moody's had a negative outlook. Now it is on Negative Watch.
Downgrade is likely, but that is fine.