I read this board and can't help but wonder if many of the participants here did little more than use "Icahn owns shares".......or "company CEO Lawler say's no bankruptcy" .......as their justification for owning shares.
Over the decades Icahn has made lots of investing mistakes, including owning more than a dozen companies which filed for bankruptcy protection from creditors. If one wants to follow Ichan he should be buying shares in all of the companies in which Ichan invests, not just one of them.
CEO's of public companies (on a path to bankruptcy) never comment ahead of time that BK is forthcoming.
They say things similar to what the CHK CEO has been saying, for example "we have enough cash to weather the storm", or "we're working with creditors" or "we're lowering our operating expenses" etc... etc....This is common rhetoric for every CEO prior to filing for bankruptcy protection from creditors.
Guys, for your future investments I encourage you to buy companies in business you understand. This will improve your chances of making a successful investment decision.
Hope this helps.
Why would lower oil prices "trigger a global economic recession".
Most industries, and certainly consumers, benefit from lower oil prices.
I am certain that for the past several months CHK management has been trying to sell land assets at "fire sale" prices. But there are no buyers.
Certainly there are companies interested in some of CHK's land assets. But why buy the company (and inherit its massive debt obligations), when CHK's land assets may in the future be available in a bankruptcy court liquidation proceeding ?
The USA is much too dependent on China to twist China's arm about their aluminum industry production and distribution.
Actually, management has guided that it would be the "value added" division (downstream business lines) which would inherit the bulk of Alcoa's debt obligations.
Presumably the reasoning behind this is that without much debt, Alcoa's legacy primary aluminum business (upstream , what you refer to as old Alcoa) might then somehow equal the downstream (as a compelling investment stock going forward).
The proposal for a split of the company is truly absurd. All it does is add costs , reduce economies of scale, eliminate synergies etc.... I am actually surprised AA's Board of Director's permitted company CEO KK to make public such a ridiculous plan. I doubt very much it will ever happen, especially if Alcoa's business continues to deteriorate as has been evidenced during recent Quarters.
Alcoa' management top priority right now should be addressing the company's weak balance sheet. Unfortunately (for current shareholders) , to meet its debt obligations I think AA will have to raise a few billion dollars by issuing new stock. This will give the company a few years of breathing room until some of the newer initiatives may start to bear fruit. For the near term, though, the company is not earning enough to comfortably meet its debt obligations.
A secondary public offering, or perhaps a private placement in exchange for warrants-to-purchase stock, would dilute current stock holders but may be a necessary financial solution.
Hope this helps.
1) yes, aluminum pricing is the primary factor affecting CENX (and AA) business results (and stock prices).
2) there is about an 75% chance CENX will have to file for bankruptcy protection from creditors.This is why CENX stock price is where it is, due to fears of a BK filing.
Hope this helps.
Nomura's recent analysis includes much of what I have been posting here. For example, the challenge Alcoa has to overcome low aluminum and alumina pricing pressure. Also, the relatively insignificant revenues/profits which Alcoa receives as a supplier of Ford F150 truck material.
Hope this helps some here better understand AA's current stock price situation.
Only the combined divisions are capable of generating enough revenues and cash flow to make the debt payment obligations. This is one of the primary reasons that dividing Alcoa is a nonsensical idea., and one which will likely never materialize.
Considering factors such as AA's debt load, an expected very weak Q4 business operations results,
continued weak aluminum pricing environment, questionable plans for a division of the company etc.... it is within to reason to expect AA stock may trade in the $5 to $7 per share price range, especially if the overall stock market major index pricing performance trends lower.
Hope this helps.
As you wrote " the plan to go to 2 haves and what good will that do except they chop off the bad half like a rotten spot on an apple"
But actually, it is worse than that. The so-called "good half" (value added) is planned to be the division which inherits AA's massive debt load. That other half, which is Alcoa's legacy business, will have the more attractive balance sheet.
All factors considered if the company division actually happens one year from now, my expectation is that AA's legacy business will be the more appealing stock investment.
Any way a knowledgeable investor looks at the situation, it's a mess. Depending on overall stock market psychology and the direction of the major indexes, spot aluminum prices etc... over the next couple of months
AA could trade down to the $5 to $7 per share range. If that should occur I believe a an activist investor might accumulate enough shares to force KK's ouster, cancel the plans for a split, and bring some buying interest to AA stock.
Considering CROX reported a Q3 operational loss , the stock help up well today.
Depending on the overall stock market, for the next Quarter or two, absent of any significant new information I expect CROX stock will trade in a price range of about $7 to $11 per share.
You seem like a nice enough lady. I am a gentleman and do not want to offend you, so please don't take this the wrong way, but it is obvious you know nothing about Alcoa's business operations.
Allow me to suggest you try buying some stock in your favorite department store or panty hose company. If you invest in a company in which you know something about its product s and services, your chances of having a successful investment greatly improve.
Hope this helps, ma'am..
Cramer's most recent commentary was that he "likes AA under $8, buy it under $8". Hardly a ringing endorsement.
I think Cramer was on board with KK's plans to develop the company, specifically by adding some highly engineered products to Alcoa's legacy aluminum business lines. My guess is that while Cramer understand the proposed division of Alcoa makes little sense, he does not want to appear on the air bashing KK's idea. Instead, he recommends buying the stock at a price lower than it's current level.
Obviously. Wall Street does not like the idea of AA being divided into two separate companies.
The added costs, the debt assigned to the value added division, the lack of business product line diversity each of the divisions will have, the loss of balance which AA's two divisions currently provides the entire company , the uncertainty surrounding the proposed division of the company etc..... Really, the list of negative factors is a long one.
I expect that if AA's stock price trades down to the $6.50 to $7.50 range then AA's Board of Directors may insist that the plans to divide the company are abandoned. Under those circumstances, whether KK would be retained or replaced, I am not sure.
Hope this update helps some here better understand AA's recent stock price action.
It would not be wise for Alcoa to operate smelters at a loss, so just like Century Aluminum, Alcoa has no sensible choice but to close its USA smelters. Sadly, this brings us to a point where National Security is now at risk. Aluminum is a key component product to the USA's well being. Eliminating the country's capacity to produce aluminum is absolutely an alarming situation.
As for AA stock prospects, at this time the outlook is dim. Little to no company revenue growth combined with declining profits is usually the recipe for a lower stock price. In essence this is what AA stock holders have been suffering from for the past year.
For the upcoming Alcoa investor analyst presentation I assume there is nothing company CEO Klaus Kleinfeld will point to as a near term catalyst for company revenue or profit growth. Instead I believe he will guide investors and analysts to expect that 2018 or 2019 as the time when some of Alcoa's downstream initiatives and acquisitions will be contributing growth, and that perhaps by then higher spot aluminum pricing will drive Alcoa's upstream business lines as well.
Hope this helps some here better understand Alcoa's current business operations and stock price dynamics.
At $1 per share the chance of a RAD bankruptcy was about 80-20.
CENX at $3.50 has about a 50-50 chance of bankruptcy.
Here at $9 per share the chance of an AA bankruptcy is about 30-70.
To a certain degree you guys are correct that the weak balance sheets of all these companies have been factored in to their respective stock prices. As RAD's operational business results have improved so, has its stock price.
Due to the declining price of sport aluminum, operational results for both CENX and AA have deteriorated. If aluminum pricing does not improve, both CENX and AA stock prices face the real threat of bankruptcy protection from creditors.
Hope this helps you better understand the relevance of aluminum prices to AA's business results and stock price, regardless of the newer downstream division initiatives.
AA's downstream attracts interest from amateur stock buyers.Evidence of that is all over this message board.
However, experienced successful money managers are focused not on Alcoa's hype or press release headlines, but on Alcoa's actual business operation numbers. Specifically, in the last couple of years AA paid very high price-to-sales multiples to acquire some added downstream business lines. And Alcoa discloses that their acquired companies (Total, Firth Rixon, RTI) will not start growing AA revenues-profits until 2019.
In the meantime, AA's weak balance sheet including about $10 billion debt, multi billion dollar underfunded pension etc... combined with an alarming negative environment for spot aluminum pricing, make for serious headwinds against AA's stock price appreciating.
The weak balance sheet and low aluminum pricing are hurting AA stock . One possible help would be for AA to do an offering of new stock shares to try and raise a few billion dollars (for the purpose of paying down debt). Buyer appetite for new stock would be at prices lower than the current $9 per share, but if AA could raise a significant amount of cash, and make a significant dent in the company's debt obligations, it would provide AA a few years of breathing room and give the recent acquisition-initiatives some time to develop and start contributing.
For the upcoming AA investor presentation company CEO Kleinfeld should focus on Alcoa's financial numbers and specify how Alcoa plans to deal with its debt obligations, including the underfunded pension. This is the topic professional money managers want to learn about.
It would be counter productive for KK to talk much about his proposed split of the company, planned for a year from now when nobody knows what will be spot aluminum pricing and, or, the state of the
world economy.At this time there are just too many conditional variable at play to make any details of a company split at all relevant or accurate.
Hope this helps.
If spot aluminum prices continue to decline then both CENX and AA may need to seek bankruptcy protection from creditors. On this front CENX balance sheet is better than AA and (in a declining aluminum price environment) CENX would likely be able to hold on longer than AA.
If aluminum prices increase then both CENX and AA stock shares will have price appreciation. In this case I would expect CENX, given its pure aluminum business lines (relative to AA's overall business) and higher beta stock characteristics, will appreciate in price more so than AA.
It will be about 3 years from now that AA's downstream business lines will make a materially significant contribution to revenue and profit growth (according to AA's management guidance regarding recent acquisitions), so at this time that component of the business is not attracting much stock buyer interest ..
In summary, both CENX and AA, at current prices, are both very risky buys .However, if one wishes to speculate that spot aluminum prices will strengthen, CENX shares may provide greater price appreciation than AA shares.
Hope this helps some here better understand these two different companies, AA and CENX.