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Marchex, Inc. Message Board

buyacramer 27 posts  |  Last Activity: Feb 12, 2016 7:05 AM Member since: Feb 10, 2011
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  • Given fed stress tests and high capital requirements, C has been building capital capital by not paying out earnings in the form of a dividend or doing stock buy backs. As such, C balance sheet is now flush with capital from retaining multiple years of strong earnings. Sell off to multiyear lows make no sense as the company 's balance sheet is strongest now than in recent history.

  • What can be better as an investment in turbulent times than prime US real estate? No global exposure, currency risk, etc. Great assets this company owns, poor execution...

  • As is usual with new mgmt., set the bar low to show improvement or knock it out of the park.

  • Reply to

    Why not convert to apartments?

    by buyacramer Feb 9, 2016 12:16 PM
    buyacramer buyacramer Feb 9, 2016 4:31 PM Flag

    The industry just seems to be a horrible industry, despite all the talk about aging demographics yadda yadda. Look at the publicly traded senior living companies and you will see none of them get a good valuation, profitability is low, and to make matters worst, there appears to be additional senior living facilities being built, that is further pushing down occupancy rates. Not sure why this industry is attracting investment for more facilities, but it isn't apparent to me this industry is worth the investment. Apartment companies like AvalonBay have been extremely profitable with close to full vacancy. Why go through all the hassel with providing senior services anyways? Healthcare worker costs are very high, which forces prices to be high like you said. At least in the DC metro area, the Brookdale facilities are located in many prime real estate areas, and could easily get full occupancy and high rents by converting to apartments. BKD has some great assets, it is s shame they can't do more with it.

  • Some of these properties are in highly desirable metro areas or just on the outskirts. Apartment rents are at all time highs and here seems to be not enough supply. Why are businesses in the senior housing business anyways, when it is more profitable and less complex to just run a passive apartment complex like Avolon Bay communities. Overall though, BKD has some nice assets worth twice the price the stock is trading for. I do hope the big buyers today, and there were big buyers who were buying late morning, are activists looking to unlock this value and shake up management. BKD has great potential and the right team can unleash it.

  • buyacramer by buyacramer Feb 9, 2016 11:47 AM Flag

    Agree with folks who are frustrated with management, and as the stock goes into freefall, that means things can only get better with activist investors circling this thing as we all know, the value of the real estate alone is worth almost twice the stock price.

    Without a shakeup, the best thing for management is to sell down properties that are non-core, outside their focus area, and use cash from operations and real estate sales to pay down debt and buyback stock. With the stock at this price, there is no better investment than buying back own stock, so additional acquisitions/new builds should be off the table until the stock price recovers to the extent that using cash to buyback, no longer is more accretive than building or buying additional facilities. Absent some big structural change to unlock value, building the stock back with status quo internal operations will take time.

  • Reply to

    Smith is worthless

    by reveered Feb 9, 2016 1:41 AM
    buyacramer buyacramer Feb 9, 2016 10:45 AM Flag

    Fair, and the stock is reflecting that.. Maybe given this low price, an activist investor will take a position and get rid of existing management and unlock value. The lower the stock, the more management has got to be worried about getting canned.

  • Reply to

    Smith is worthless

    by reveered Feb 9, 2016 1:41 AM
    buyacramer buyacramer Feb 9, 2016 7:25 AM Flag

    Why do you think Emeritus deal he got fleeced? It was a stock, rather than levering up and using cash to get deal done.

  • Reply to

    Do we have an oversuupply problem?

    by buyacramer Feb 8, 2016 10:29 PM
    buyacramer buyacramer Feb 9, 2016 7:15 AM Flag

    The one difference I can see is Boeing and Airbus having discipline to reduce deliveries (as recently announced) and therefore helping prevent what happened in shipping and deep water drilling. Oversupply will hurt plane prices and in turn damage the suppliers, so good that we have a duopoly in plane manufacturers.

  • With a potential global slowdown, do you all think we have a lurking oversupply problem? Don't get me wrong, I'm not saying this industry is showing signs of weakness however, the selloff makes me draw memories of drybulk shipping and drill ships. When times were good, shippers and drillers would order a never ending supply of ships and drill rigs. Eventually as those backordered ships hit the market, the market became oversupplied and rental rates plunged. Do you think this industry could be facing a similar problem? Why or why not?

  • After today's and the recent fall, FIT no longer priced for perfection. The are trading at like 12-13X earnings and even less when you factor in the cash on their balance sheet (they just added another $100M in Nov secondary).

    So although fears of competition are valid, there still isn't a great alternative to FIT. Look at your collegues, friends and family and you will notice 9 out of 10 who own fitness bands are on FITBITs.Those considering a fitness bands are also talking about fitbits. The space is rapidly growing with no signs of slowing with many companies giving them out as Christmas gifts or part of a fitness plan. Competition will intensify, but fitbit is still the go to solution. Microsoft, LG, Motorola make great phones, but everybody still gravitates toward Apple and Samsung. Fitbit, likewise could hold this lead in the fitness band space, with better software and hardware, for a long time to come. With the rapid growth in this segment just beginning, and real competition probably at least a year or 2 away, the gopro doom and gloom just doesn't fit this scenario.

  • buyacramer buyacramer Feb 8, 2016 5:17 PM Flag

    Isnt WAHA Capital, the Saudi fund buying AER? I guess it is also unfortunate that AER did a lot of stock buyback back when the price was a lot higher rather than pay down debt.

    But, if debt is the problem, seems like every financial crisis these lessors get slammed, but business isn't really materially hurt. I remember last crisis (2008-2009), many of these lessors simply bought back their own debt that was trading at like 50 cents on the dollar.

  • Anyone know or have a thought on why AER is getting slammed so much worse than everybody else in the sector. Most other lessors are down -5% why AER down close to 10%. AER more risky?

  • Reply to

    At $16 BKD has got to be on someone's radar

    by lankyosis Jan 12, 2016 9:44 AM
    buyacramer buyacramer Jan 14, 2016 11:11 PM Flag

    Example of why depreciation, which is subtracted from revenue to get to earnings is a bad way to look at the business. BKD builds a building for $10 mil. Let's say they depreciate the building over 20yrs and therefore take expense (not a real cash outflow) of $500K/year for 20 yrs. Let's say annual revenues are $1 mil from this facility and other costs like labor are $550K/yr. It appears BKD is losing $50K per year ($1M - $500K Dep - $550K other cost). In 20 yrs, they turn around and sell this same building for $18 million. They've actually made $8M on the building, but in the last 20 yrs, they were getting dinged on earnings by a $500K/yr depreciation expense. That is why earnings aren't a good measure.

  • Reply to

    At $16 BKD has got to be on someone's radar

    by lankyosis Jan 12, 2016 9:44 AM
    buyacramer buyacramer Jan 14, 2016 12:05 PM Flag

    Depreciation expense is heavy in this type of industry, but real estate doesnt really depreciate, other than general maintenance upkeep. So earnings, which factors in heavy depreciation, shows little if any earnings, but that isnt the right metric to use. They can go sell one of their buildings that took millions in depreciation expense, and turn around and sell it for more than they bought/built it for. EBITDAR or CFFO, more a measure of cash, is used to value these firms.

  • buyacramer buyacramer Jan 13, 2016 11:17 PM Flag

    Exactly the debt. Instead of buy backs, market will likely reward cyh if they delever with the strong cash flows they have. HCA holding up well because they aren't as levered. If management cuts acquisitions and excess capital spend and focus on chipping away at debt, we could be at $35 12 months from now. So much better to be an insurer these days, don't need expensive facilities and a need to manage debt while sitting back and just managing payments. Healthcare providers have got to balance the profit/risk pie as it is clearly in favor of insurers. Just look at the market cap of insurers vs hospitals. Largest insurer is pretty much larger than most the hospitals traded combined.

  • Reply to

    At $16 BKD has got to be on someone's radar

    by lankyosis Jan 12, 2016 9:44 AM
    buyacramer buyacramer Jan 13, 2016 8:33 PM Flag

    Is the global turmoil negatively going to impact BKD business going forward? I think no.
    - Strong USD: BKD not a multinational so $ strength is not negatively impacting their financials
    - US Economy: Holding up well as the recent almost 300K job growth shows
    - Declining oil: This arguably helps BKD in the form of millions in energy bill savings. Also have mild winter
    - Valuation: Real estate alone is worth more than current stock price according to even the most conservative analyst
    - Cashflow: CFFO expected high $2 range, so trading at like 5X
    - Potential cost cutting: Merging with Emeritus creates lower overhead savings
    - Key risk is retirements get destroyed by market collapse and seniors cant afford going to BKD

    With strong cashflow, company should pay down debt and do stock buybacks as opposed to building facilities or acquisitions. Simple/stable business with favorable demographics and selling for low valuations that is immune from international issues. BKD will come back, just hang tight.

  • What changed that caused THC to really plunge? Was Glenview, who was buying the the 50s, 40s, and 30s just out of his mind, or is there real value here, and THC is just in oversold territory probably further hurt by tax loss selling? Debt is definitely on the higher end for THC, so delivering a bit with proceeds from GA hospital sales, followed by a share buyback towards the end of next year with free cashflow generated, seems to be a path to getting a better valuation. Market seems to hate highly levered companies lately, but not sure if that is why THC as gotten hammered so hard.

  • Another year of improvements in sales volume, Fujairah terminal up and running, 10% or so EPS growth, and increasing of the dividend but the stock crashes 40%. Absolutely a mediocre year, but 40% is steep. Guess the question is where are the growth opportunities to further lift the long term valuation of ANW?

  • Should set up BKD nicely for a January rally. Stock is way oversold now and is trading well below pre-merger levels. Bargain hunting, earnings release, potential stock buyback plan, activist investors, are all catalysts for the stock.At these levels, fund managers will see value as CFFO is expected in the high $2/share range when stock is trading at $18.

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