I still like FB over time, but I did put a short on at $45.25 because the billions to be raised in the Twitter IPO have to come from somewhere and, as most like to remain diversified, FB at these levels is a likely place for people to book some gains and move their money to participate in the Twitter IMO. GLTA
Maybe, but either way, monies will be moving out of FB short-term to fund the Twitter action IMO.
And all the noise seems to come from those who miraculously announce they just shorted at the recent top. It's the nature of boards when there is no news to support intelligent conversation. As the next quarterly report approaches, the stock will go up because it's pretty well baked in that they will report outstanding EPS (FX adjusted) and cash flow. I still think we see $20 by year-end with most of the run from here coming as earnings approach and pass. GLTA long or short.
I bought another 20K at $27 today. My view is that LINE has a secure 11% distribution with the potential for significant near-term share price upside with the BRY deal. If the BRY deal goes away, the stock may get hit, but it's still undervalued for its assets and would recoup its losses over time while continuing the distribution. Let's face it. They built this company on acquisitions and, if not the BRY deal, there will be others. Also, the risk language in their filing strikes me as standard and, IMO, they would not even bother filing the BRY deal if they didn't believe the SEC issues were behind them. In other words, why would BRY shareholders approve the deal for stock, if the SEC issues were a real overhang and why would LINE expect them to?
Unless expectations have changed, they are lower than VALE delivered last quarter when it would seem apparent they will deliver more than last quarter.
In my view as a former CEO of a public company having dealt with government agencies, it appears to me that the Company has accepted a lot of things that have no material effect on their business to satisfy and agency that wanted a pound of flesh. I say this knowing Raymond James said the changes would have no impact on the distribution (and they must have confirmed this with management before saying it publicly). I also say this because if the distribution were in jeopardy, they would not even bother to try to proceed with the BRY deal. IMO, when Goldman and others come out supporting the idea that these changes to language are not material and do not impact the distribution, the stock will return to where it was a couple of days ago and head towards the low $30's again.
Maybe. Rather than shorts, however, I think you have a lot of good people who worked really hard for their money and depend on it for retirement who have invested for the yield and are easily scared out of their positions when you combine new, confusing information with a precipitously declining stock price.
I don't give much credence to these SA articles, but I do expect the Raymond James analyst knows what he is doing when he claims the distribution is safe with the new approach to calculating it. Someone else suggested on this board that Goldman Sachs has concluded the same thing, though I have yet to find that one. GLTA
The reason they did is simple. It's 15% above $46 and they must have 15% upside on their target price when they put out a recommendation to call it an outperform. The analyst makes the numbers work so their trading desk can promote stock for fees. It's all a game.
Let's face it. Apple launches at the end of the quarter so they can ship just enough new phones to deliver the number they want for this period and the rest next period, both in terms of sales and cost of goods as they ship the highest cost phones now balanced by the lower cost phones that have already shipped this period. The downside is they have to put up with all the scare mongers saying they have supply problems.
1. BRY shareholders are motivated to be acquired. Their stock is exactly where it was 5 years ago and one year ago and the dividend is only 0.7%. If the deal falls apart, their stock is likely lower. An opportunity to either get out of an illiquid holding, or move into a stock with more potential for appreciation and an 11% distribution would seem appealing.
2. That said, Is it realistic for any deal to be completed for stock before the SEC inquiry is resolved? I think so, or LINE would not have moved forward with the new S-4 for a stock deal. They surely have spoken routinely with BRY management and know their Board and major shareholders are supportive of moving forward in the current situation with the SEC.
3. Is it realistic for BRY shareholders to accept the deal as currently written? Personally, I don't think so. I think the entire S-4 has been submitted with both parties agreeing the price will be negotiated and decided at the last minute as they are both committed to getting it done, if the S-4 is approved by the SEC.
4. Would a sweeter deal be too much for LINE. Not in my view. BRY has only 54.4M shares out. (LINE has 235M). So, once LINE distributes 1.25 shares for each BRY share, LINE will have 303M shares out. Let's say LINE has to go to 1.5 shares for each BRY share now. So what? It's only an incremental 14M shares or an additional 4.6% dilution above the 303M shares they would already go to on the original offer. They could also pay the increased price in cash through debt and avoid the dilution, if they could raise the debt.
My comment was intended to be hypothetical (i.e. what if there were a $6 spread at the time BRY shareholders vote). In reality, if the SEC clears the deal, the spread should close, LINE/LNCO should rise and BRY should fall to the extent they don't to approximate the deal price. Also, BRY owes $80M+ in a break-up fee, cash they do not have on hand, if shareholders fail to support the deal. So, the actual deal with a $6 spread, recognizing the break-up fee, may only need to be 1.4X, not 1.5X, anyway. The point was that in that circumstance LINE/LNCO could raise the offer without a material effect on the new combination.
Yes, it's very good for LINE shareholders.
If the SEC clears the S-4, this should be a catalyst for LINE stock. The completion of the deal should be a catalyst both because it would be accretive and, at minimum, secure the distribution. And, if management were to stick to its original plan of increasing the distribution from $2.90 to $3.08 per unit upon completion of the deal, it would be another catalyst.
IMO, if the SEC clears the S-4, the deal will get done and these catalysts will all fall in line. It may still happen at the 1.25X since LINE stock should rise with the S-4 clearance and BRY may actually fall towards the expected deal value per unit. Also, BRY has a nearly $2 per share break-up fee they would owe if the deal failed because their shareholders didn't approve it ($84 million that they do not have without borrowing it). But, if it gets done at a ratio somewhat higher, it's doesn't change the ultimate value of the combination materially IMO.
I would guess Barry and Kaiser are now in the waiting mode. On the substantive issues of whether LINE's distribution and ability to grow through acquisitions are in jeopardy, it would appear from the S-4 filing (and the additional acquisition announcement) that neither are in jeopardy. In fact, it would appear the ability to cover the distribution is enhanced by the new language and the newly announced acquisition. So, while Barry and Kaiser could perhaps pound their chests about being right on a few of the finer technical accounting points, on the substantive issues that shareholders care about and that will effect LINE valuation, they appear to have been dead wrong at the moment. Only time will tell as this entire saga plays out.
As I recall, Sept. 30th is the Record Date for the transaction which merely establishes the shareholders eligible to vote on the merger, so they know who to send the proxies out to. But, I missed the significance of the 25th. Is that the date by which if they don't have the S-4 cleared by the SEC that they are going to have to extend the Record Date? Thanks.
Get it when you don't need it because you can't get it when you do need it and at this nose bleed valuation it makes all the sense in the world to accept some modest dilution and build a fortress balance sheet.
Some pretty good news is already here. Iron ore prices are 40% higher than this time last year when the stock was trading above $18. All else being equal, the stock should trade 40% higher, or about above $25 (JPM PT). But, things aren't equal. They have cut billions from expenses. The Real has depreciated. They strongly beat last quarter estimates and even though this quarter should be better, the estimates are lower than last quarter, so they should blow the numbers away again. Perhaps China and emerging markets don't look as robust as this time last year, but China is coming back while Europe and the US appear stronger. So, if great news is coming soon, it would be a nice addition. Personally, I think they increase the dividend in 2014 back to the $6B they were paying out before they cut it to $4B and/or they institute a very large stock buyback to go along with their strong operating performance. GLTA
Both may be right. The SA guys appear to be right on the non-substantive minutia of fine accounting principles and Kramer appears he will be right on the substantive issues that the distribution is safe and the BRY deal will ultimately get done. Time will tell.
No paperwork is sent for a vote until after the record date on September 30th, or whenever the record date ends up being based when the SEC declares the S-4 effective.