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First Cash Financial Services Inc. Message Board

c_seguin 2 posts  |  Last Activity: Apr 20, 2016 10:00 PM Member since: Dec 9, 1997
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  • Reply to

    Proxy Voting

    by bcinvestadvisor Apr 19, 2016 12:14 AM
    c_seguin c_seguin Apr 20, 2016 10:00 PM Flag

    BC,
    I do not believe I invested for the wrong reasons. There are 2 parts to the story : Selling the land in Daytona. And then do something with the proceeds which can be 1031, or buying back shares/dividend. And of course, selling the company is always an option, either right now (before full monetization) or after monetization and 1031. Or never.

    The more cash you get for the land, the more you can invest. So of course, I invesed in CTO for the land in Daytona. Anyway, under your scenario, you want them to sell all their land, 1031 the proceed, transform in a REIT (and then the tax disappears...) and then CTO will be valued based on a cap rate.

    Understand that Winters can not wait so he is pushing for a sale before the scenario unfolds. So, we might not get top dollars for the land. And we might not get the benefit of any good 1031 deals.

    On the other hand, I did not like this investment in another REIT. What for ? 1031 ? And I did not like the convert that was issued last year so 1031 can be dpne in advance but we got diluted. And are you gonna vote for the potential issuane of shares to settle this convert ? They ask for it, but mention they will not use it ? What for ? Please tell me what you are voting on this one and why ?
    Finally, Winters has a point on the risk of the loan portfolio. Nice to save 40% taxes, less nice if it goes belly up and you loose 100%
    On the indebtness, funny to notice that they sold a bunch of properties this quarter. What for ? Deleverage ? Or needed the cash as the land sales were not closing fast enough ? And I am still puzzled by this option granted to NADG for the remaining of Tomoka town Center. Feeled like a fire sale to me.

    Anyway, I do not agree on all Winters points, and he might be pushing the sale a bit too soon for his own agenda. However, he did not seemed to like CTO management strategy as it evolved.

    Regards,

    Sentiment: Buy

  • c_seguin c_seguin Mar 30, 2016 1:32 PM Flag

    Mentionning that the company has a PE of 544 with a market cap of 1 billions does sound scary. This would imply net earnings of 1.8 millions. However, she does mention afterward that 2014 compensation for management was at close 4.7 millions or close to a quarter of net income. So net income would be say 20 millions in 2014 ???

    What she forgets to mention is that net income for USCR as per GAAP can be misleading. They do have a big loss of 60 millions in 2015. However, this loss is a non cash loss as it relates to the appreciation of the warrants issued when they come out of chapter 11 in 2011. Stock have been going up and therefore, value of the warrant also. So this should be taken out of the GAAP earnings. See their presentation on their website.

    And looking again, the main argument seems to be : housing market will roll over because of the rising interest rates. So less cement. So USCR will go down. Maybe. However, USCR is mostly in the commercial market. Cement for housing is used mostly for subdivision infrastrure.

    But again, they might be right if the economy and construction tanks, USCR will tank. Biut they will not be the only one. And some might be riskier...

    Regards,

FCFS
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