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Assured Guaranty Ltd. Message Board

cohsgrad 66 posts  |  Last Activity: 6 hours ago Member since: Feb 27, 2000
  • Reply to

    More like QTM

    by mshi295688 Nov 4, 2014 7:00 AM
    cohsgrad cohsgrad Nov 4, 2014 11:38 AM Flag

    Not that simple. I tend to think $1.20-$1.30 is a reasonable bottom. Steel Partners has a track record of buying companies like AVNW and I think they will resume buying at that level (why they were buying at $1.80 baffles me).

    Of course, if Steel doesn't buy or begins to sell it certainly would plunge. I don't know what their plans are.

  • Reply to

    More like QTM

    by mshi295688 Nov 4, 2014 7:00 AM
    cohsgrad cohsgrad Nov 4, 2014 10:48 AM Flag

    Hard to imagine it going back down to $1 a share but stranger things have happened. If Steel decided to dump their shares it certainly would but I don't think they will.

  • Reply to

    Earnings

    by cincyyyyy Nov 3, 2014 4:16 PM
    cohsgrad cohsgrad Nov 4, 2014 9:24 AM Flag

    Not bad. Turns out the PSC was right and Noranda was fibbing.

  • cohsgrad cohsgrad Nov 3, 2014 1:58 PM Flag

    Calculate enterprise value without the accrual for the lawsuit and then subtract out whatever probability weighted scenario you actually envision being the result.

    Seemed pretty aggressive to not accrue the full amount given that it is in appeals but I have sure seen a lot of decisions overturned so it isn't like it is a zero probability event.

  • Reply to

    Late 10-K

    by cohsgrad Sep 25, 2014 9:41 AM
    cohsgrad cohsgrad Nov 3, 2014 1:00 PM Flag

    There was an amendment to their debt agreement (resulting from failure to file 10-K) last week. The deadline to file was in early December. Seems reasonable to assume the filing is still a couple of weeks away and they can report 1st quarter.

  • Reply to

    S-3 filing

    by firehorse_ca Oct 29, 2014 12:36 PM
    cohsgrad cohsgrad Nov 3, 2014 10:00 AM Flag

    Hey Firehorse, Long time since I've posted. Good to see you still here.

    It might mean that but these are new shares that have to be registered before they can be sold. In other words, if you were a qualified institutional investor and bought shares directly from the company the company wouldn't have to file registration statements when issuing the shares as is done with a normal IPO. It is faster but then you would be stuck with shares that you couldn't sell on the public markets either (in effect can only be sold to other rich people). Once the registration statement is filed, you could sell on the stock exchange.

    Exony accepted shares that could not be sold in the public markets. Now they can be sold in the public markets but whether they will do is unclear. They probably will but the registration doesn't mean they definitely will do so.

  • cohsgrad cohsgrad Nov 2, 2014 5:01 PM Flag

    Realized the tax adjustment was a non-cash item. They might be building reserves for potential tax claims. Would be interesting to know what it is for. Lots of things can pop up in the developing world.

  • Reply to

    Should we give up

    by ranger956 Oct 31, 2014 9:22 PM
    cohsgrad cohsgrad Nov 1, 2014 3:10 PM Flag

    Hate to agree but yea that is what business is typically about. Have to be terribly persistent and willing to grab the margin where you can. I do think CRNT management has that ability although they did so poorly in South America over the last year I should probably take it back.

  • Reply to

    Should we give up

    by ranger956 Oct 31, 2014 9:22 PM
    cohsgrad cohsgrad Nov 1, 2014 1:47 PM Flag

    It is hard to say. I completely understood everything with the exception of the discounting of the letter of credit and with the possible exception of that the results were actually o.k. They earned a couple of percentage points lower margin than I expected but they brought in revenue of a couple of percentage points higher than I expected which netted out.

    The comments about focusing on margins didn't mean anything in my opinion. Every business has those debates although they usually keep the discussion to themselves. If a person hasn't been in the room where they are discussed I have a hard time believing they really understand. You just can't read too much into it aside from acknowledging that no one is earning really good margins.

    The weak performance outside of India was worrisome but they have a good size backlog. The backlog provides a safety cushion and they need that cushion because even after the equity issuance they don't have a lot of cash cushion unless they can factor their receivables. It is similar to discounting that letter of credit, if they can sell those receivables at a small discount they are o.k. but if they are having to sell them at a 10-20% discount that is a problem. Just another point, I really wanted them to talk about Russia. Huwaei got the Megafon deal and if they aren't a secondary provider or still talking that is disappointing.

    Consolidation is needed. I don't see anyone trying to do it and think Ceragon is the one who should be doing it but with a share price equal to 60% of book value they can't even think about it.

  • cohsgrad cohsgrad Oct 30, 2014 9:47 PM Flag

    Can be profitable in one part of the world and lose money in others. Also some taxes have adjustments (non-deductible expenses), like maybe adding back wages, amortization, etc. They do business all over the world.

    My guess is that they owe taxes in India but it is impossible to say for sure unless you are on the inside.

  • Reply to

    revenue guidance 99 or 105-115...

    by shuki2020 Oct 30, 2014 11:12 AM
    cohsgrad cohsgrad Oct 30, 2014 12:31 PM Flag

    Obviously, if sales decline in the next fiscal year and margins don't improve they would begin to generate material losses but this is roughly a break-even business. I don't want to say that things can't go bad, they can but there are material assets here.

  • Reply to

    revenue guidance 99 or 105-115...

    by shuki2020 Oct 30, 2014 11:12 AM
    cohsgrad cohsgrad Oct 30, 2014 12:27 PM Flag

    You are wrong about generating cash at these revenue levels. These levels are high enough to generate cash once the accounts receivable cycle runs.

    They were roughly at break even in third quarter weren't they? $1 million loss ignoring the finance expense, $4 million including.

  • Reply to

    revenue guidance 99 or 105-115...

    by shuki2020 Oct 30, 2014 11:12 AM
    cohsgrad cohsgrad Oct 30, 2014 11:33 AM Flag

    The margin guidance wasn't a real problem in the fourth quarter IMO although it was certainly disappointing to hear that gross margin percentage will decline. Dollar amounts will likely be flat to up. The big risk is FY15 as you indicated.

  • cohsgrad cohsgrad Oct 30, 2014 11:28 AM Flag

    Agree although maybe there are cash basis deals to be done. I made it sound like they were doing deals there last quarter and wanted to say that wasn't the case.

  • cohsgrad cohsgrad Oct 30, 2014 10:58 AM Flag

    Not selling at a loss. They are able to cover their manufacturing costs with the exception of Venezuela and Argentina where they did indeed lose money due to exchange rate losses on accounts receivables. They just aren't able to cover their operating costs. If someone wanted to say they are not viable on a long-term basis, I'd say there is a good chance they are right but still, the business is worth something.

  • Reply to

    will climb back to $2

    by luxury67897897 Oct 30, 2014 10:32 AM
    cohsgrad cohsgrad Oct 30, 2014 10:44 AM Flag

    Should draw in some of the value crowd but there is going to be a lot of tax loss selling and Needham has to be bugged.

  • Reply to

    Last Chance to Guess

    by cohsgrad Oct 30, 2014 7:54 AM
    cohsgrad cohsgrad Oct 30, 2014 10:41 AM Flag

    Depends on how you look at it. Overall margins (dollar terms) were around where I expected. What I didn't expect was the percentage to decline by around 4% and that was substantial. It is even more substantial if you factor in that they discounted some AR (shown in financial expense) and as they didn't provide enough detail on this one can reasonably speculate that it might be 10-15% which is obviously very bad, like Dragwonwave bad.

    I'm pretty confident they did the discounting thing very early in the quarter prior to the stock issuance but that is just a guess because they didn't provide the data and that reflects poorly on them. Fudged a bit too much and that plus the comments about walking away from deals probably destroyed confidence of investors and Needham. Needham has never really understood their balance sheet risks in my opinion.

    Very lucky that the sales were there because without them it would have been grim. In the end though, it was an economic loss for the quarter of probably around $1 million. That isn't that bad provided sales don't collapse. Next quarter should be break-even to mildly profitable if they don't have to discount any more receivables. After that, it will start to get tough if they don't pick up some new deals.

    I can see an argument for it trading slightly below book value but book value is above $2. I've been buying a lot of shares this morning.

    They will be able to drum up some interest in the shares when they visit the U.S. in a couple of weeks but in the mean-time I'd say there is a chance Needham walks away if they have not already.

  • Reply to

    Last Chance to Guess

    by cohsgrad Oct 30, 2014 7:54 AM
    cohsgrad cohsgrad Oct 30, 2014 9:08 AM Flag

    Dangerous trade. I do think they will be profitable in 4th quarter.

  • Reply to

    Last Chance to Guess

    by cohsgrad Oct 30, 2014 7:54 AM
    cohsgrad cohsgrad Oct 30, 2014 9:04 AM Flag

    Can't believe they had another $3 million in currency losses. I just don't see how this occurred and it needs to be asked about. The Real declines should have gone through equity as the local currency is the functional currency.

    Currency rates can and do fluctuate but when you have inflation rates as high as South American countries do they are inevitable. They just weren't thinking or were simply desperate for those sales in previous quarters. When you operate in inflationary economies margins tend to be overstated with losses coming in subsequent quarters. They need to begin providing disclosures on this.

    Well, guess we'll see what guidance is. Imagine it will be o.k.

  • cohsgrad cohsgrad Oct 30, 2014 8:36 AM Flag

    Whatever drives efficiency needs to be done. ANR should even finance deals like this if necessary. Raise equity capital if it has to be done.

    Of course, probably not possibe.

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