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Silicon Graphics International Corp. Message Board

brennonvc 5 posts  |  Last Activity: Feb 22, 2015 8:50 PM Member since: Feb 25, 1998
  • Reply to

    march options

    by archin35312000 Feb 20, 2015 10:20 AM
    brennonvc brennonvc Feb 22, 2015 8:50 PM Flag

    oscoutspa,

    But you are paying 5.00 for the option, so you are buying the spinco/New ATLS for 5 and it is implied value based on the buyout is 4.47. And there is a 2-1 split, so 4.47 = 8.94 on Tuesday when it starts to trade WI.

    There is no deal in the options unless you believe the new ATLS will trade higher than 8.94.

  • Reply to

    ex dividend

    by analyst112 Jan 20, 2015 1:50 PM
    brennonvc brennonvc Jan 28, 2015 11:56 AM Flag

    How are you valuing PATI at $100-110 million? Just curious, as that could sell off after the spin and would be nice to some base level of valuation to compare with whatever pricing results.

    I looked at the filings, and the problem with the trucking business is all their free cash is spent every year on trucks and parts, very little cash left over on a normalized basis. Too much maintenance cap-ex required to run it, does not appear to be a great biz.

  • Reply to

    Can anyone say COMPS?

    by dmj587 Dec 26, 2014 9:07 PM
    brennonvc brennonvc Dec 29, 2014 10:50 AM Flag

    Unfortunately, dmj587 you are correct. Quigly7 does not understand spinoff's, pricing dynamics after spinoffs, and general valuation work.

    Quigly7, buy a copy of You Can Be a Stock Mkt Genius and read the chapter on spinoffs. This is a classic example of the species.

    You are comparing the current share price at ~28-30 to the opening spin price of ~22 to come up with your "overvalued" scenario. The opening spin price has very little to do with a fair value of VEC and is strictly based on supply demand dynamics around the spin, not inherent value per se.

    Dmj is valuing the company, doing absolute valuation work and then comparing it to other companies in the defense industry. Not only is VEC cheap compared to other defense contractors, it is cheap relative to all other stocks in the mkt. On a TTM basis it is one of the 30 cheapest stocks in the Russell 3000 ranked by Earnings Yield and ROIC. See the link here for a free login: https://www.magicformulainvesting.com .

    One final point, VEC does not need War to be a successful stock. They have almost zero capital requirements, have no inventory to speak of, and therefore are able to very quickly match their expenditures with revenues, ensuring profitability in a rising or declining revenue environment. (This is why they have such strong ROIC metrics and is why the MF ranks them so high).

    Check out Lands End as an example. They were spun out of Sears, revenues are flat to down, store count is down, but mans are improving due to a freed up mgmnt team acting now as a stand alone company.

  • Reply to

    What happened to the PPS today?

    by predpilot58 Dec 17, 2014 11:52 PM
    brennonvc brennonvc Dec 24, 2014 10:26 AM Flag

    And on the conference call the analyst from Stifel (who has not published yet on VEC, upgrade coming?) pressed management to acknowledge that they were going to grow revenues in 2015. The CFO would not commit to guidance yet, but it's pretty clear that they have low balled expectations, a very common occurrence with spin offs.

    With only 10 million shares out, strong management incentives in place - just look at the form 10 from the spinoff filings - uneconomic selling due to very different shareholder constituencies, and you have a classic under valued, under followed company.

  • Reply to

    What happened to the PPS today?

    by predpilot58 Dec 17, 2014 11:52 PM
    brennonvc brennonvc Dec 24, 2014 10:20 AM Flag

    quigly7, not sure if you are just trolling here, but a very quick review of the Q3 press release reveals the following:

    Significant Recent Awards
    Vectrus was recently awarded three key contracts which will add approximately $1.4 billion of backlog to its enduring base business in the fourth quarter. The periods of performance of these contracts extend beyond 2020 and will help mitigate the revenue decline from Afghanistan contracts.
    "We are very pleased with the award announcements by the U.S. Army Corps of Engineers and the U.S. Air Force," said Ken Hunzeker, chief executive officer of Vectrus. "The awards broaden our customer base, expand our geographic footprint, and demonstrate our ability to win new large-scale programs in a competitive environment."
    Details of these programs include:
    The U.S. Army Corps of Engineers Enterprise Information Management and Information Technology Support Services contract, with a total contract value of $517 million, runs over five years. This contract provides information management and information technology support services to more than 37,000 Army Corps of Engineer customers. Work will be performed in all 50 states plus Washington, D.C. and Puerto Rico. The ACE-IT contract award was protested by the incumbent contractor on Sept. 2, 2014. The protest is pending decision by the GAO, which is expected to occur within 100 days of the protest submission.
    The U.S. Air Forces in Europe Turkey Spain Base Maintenance Contract II, with a total contract value of $458 million, runs through September 2021. Support services include the full spectrum of day-to-day base operations and maintenance. Work will be performed in multiple locations in Turkey, primarily Incirlik Air Base, as well as in Spain at Morón Air Base.
    In October 2014, the U.S. Air Force Space Command awarded a Danish company owned by Vectrus the Thule Base Maintenance Contract with a total contract value of $411 million, running through September 2022. The primary location

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